As filed with the Securities and Exchange Commission on June 19, 1998
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FORD CREDIT AUTO LOAN MASTER TRUST II
(In which the Certificates evidence undivided interests)
FORD CREDIT AUTO RECEIVABLES LLC
(Originator of the Trust described herein)
(Exact name of registrant as specified in its charter)
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Delaware 6146 38-3372243
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
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The American Road
Dearborn, Michigan 48121
(313-594-7742)
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------
R.P. Conrad, Esq.
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
(313-594-7765)
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
STEPHEN B. ESKO, ESQ.
BROWN & WOOD LLP
One World Trade Center
New York, New York 10048
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box./ /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /_________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, 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. / /
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
=================================================================================================================================
Title of each Amount Proposed Maximum Proposed Maximum Amount of
class of securities to be Offering Price Aggregate Registration
to be registered Registered Per Unit(1) Offering Price(1) Fee
- ------------------------------------- ---------------------- ---------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
Certificates..................... $1,000,000 100% $1,000,000 $295
- ------------------------------------- ---------------------- ---------------------- ----------------------- ---------------------
</TABLE>
(1) Estimated solely for purpose of calculating the registration fee.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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. Information contained herein is subject to completion or
amendment. A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. These securities may not be
sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such state.
SUBJECT TO COMPLETION, DATED ______ __, ____
PROSPECTUS SUPPLEMENT
- ---------------------
(TO PROSPECTUS DATED ________, 199__)
$-------------
FORD CREDIT AUTO LOAN MASTER TRUST II
SERIES 199__-__ [FIXED RATE] [FLOATING RATE] AUTO LOAN
ASSET BACKED CERTIFICATES,
[LOGO]
FORD CREDIT AUTO RECEIVABLES LLC
TRANSFEROR
FORD MOTOR CREDIT COMPANY
MASTER SERVICER
-------------------
The [Fixed Rate] [Floating Rate] Auto Loan Asset Backed Certificates,
Series 199__-__ (the "Certificates"), offered hereby evidence undivided
interests in certain assets of the Ford Credit Auto Loan Master Trust II (the
"Trust") created pursuant to a Pooling and Servicing Agreement among Ford Credit
Auto Receivables LLC, as the transferor ("FCAR" or the "Transferor"), Ford Motor
Credit Company, as master servicer ("Ford Credit" or the "Master Servicer"), and
The Chase Manhattan Bank, as trustee. The assets of the Trust include wholesale
receivables (the "Receivables") generated from time to time in a portfolio of
revolving financing arrangements (the "Accounts") with automobile dealers to
finance their automobile and light duty truck inventory and collections on the
Receivables. Certain assets of the Trust will be allocated to the
Certificateholders, including the right to receive a varying percentage of each
month's collections with respect to the Receivables at the times and in the
manner described herein. The Transferor will own the remaining interest (the
"Transferor's Interest") in the Trust not represented by the Certificates or the
certificates of any other Series issued by the Trust. From time to time, subject
to certain conditions, the Transferor may offer other series of certificates
(each, a "Series"), which may have terms significantly different ________ from
_______ the _______ terms _______ of _______ the ________ Certificates ________
offered hereby. (COVER CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" HEREIN ON PAGE S-10 AND IN THE PROSPECTUS ON PAGE 17 FOR
CERTAIN FACTORS TO BE CONSIDERED IN PURCHASING THE CERTIFICATES.
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO
NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE TRANSFEROR, THE MASTER SERVICER
OR ANY AFFILIATE THEREOF. NEITHER THE CERTIFICATES NOR THE RECEIVABLES ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
-----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-----------------
==============================================================================
Price to Underwriting Proceeds to
Public (1) Discount (2) Transferor (1)(3)
- ------------------------------------------------------------------------------
Per Certificate........ % % %
- ------------------------------------------------------------------------------
Total.................. % % %
==============================================================================
(1) Plus accrued interest at the applicable rate from and including
_________, 199__.
(2) Ford Credit has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses, estimated to be $__________.
-----------------
[UNDERWRITERS]
-----------------
The date of this Prospectus Supplement is ________, 199__.
(COVER PAGE CONTINUED)
Interest with respect to the Certificates will accrue from _________,
199__, and is payable [semi-annually] [quarterly] on or about the ________ day
of ________ and ________, commencing on _______, 199__ and ending on the related
maturity date or, under certain limited circumstances described herein, monthly
on or about the ______ day of each month. Principal of the Certificates is
scheduled to be paid on the _______ Distribution Date, but may be paid earlier
or later under certain circumstances described herein.
The Transferor's Interest will be subordinated to the rights of the
Certificateholders to the limited extent of the Available Subordinated Amount
[(or, in certain circumstances, the Aggregate Available Subordinated Amount)] as
described herein.
The Certificates are offered by _________ (the "Underwriters") when, as and
if issued, delivered to and accepted by the Underwriters and subject to certain
other conditions. It is expected that delivery of the Certificates will be made
in book-entry form only through the facilities of The Depository Trust Company,
Cedel Bank, societe anonyme or the Euroclear System on or about ________, 199__.
-----------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
-----------------
The Certificates offered hereby constitute part of a separate Series of
Auto Loan Asset Backed Certificates being offered from time to time pursuant to
the Prospectus dated _________, 199__. This Prospectus Supplement does not
contain complete information about the offering of the Certificates. Additional
information is contained in the Prospectus and investors are urged to read both
this Prospectus Supplement and the Prospectus in full. Sales of the Certificates
may not be consummated unless the purchaser has received both this Prospectus
Supplement and the Prospectus.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CERTIFICATES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING AND
MAY BID FOR AND PURCHASE THE CERTIFICATES IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING".
SUMMARY OF SERIES TERMS
The following is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Reference is made to the Index of Principal Terms in
the Prospectus for the location therein of the definitions of certain
capitalized terms used herein. Certain capitalized terms used herein but not
otherwise defined have the meanings assigned to them in the Prospectus.
Trust............................ Ford Credit Auto Loan Master Trust II.
Title of Securities.............. $___________ [Fixed Rate] [Floating
Rate] Auto Loan Asset Backed
Certificates, Series 199__-__ (the
"Certificates").
Initial Invested Amount.......... $____________.
Allocation Percentage............ ____%.
Required Participation
Percentage..................... ____%.
Certificate Rate................. [___% per annum] [Three-Month LIBOR plus
___ basis points per annum].
Accumulation Period
Commencement Date.............. ___________, 199__.
Interest Payment Dates........... The _______ day of each _________ and
________ (or, if such day is not a
business day, the next succeeding
business day).
Expected Final
Payment Date................... The __________ Distribution Date.
Cut-Off Date..................... ___________, 199__.
Closing Date..................... ___________, 199__.
The Receivables.................. The aggregate amount of Receivables
included in the Trust as of ________,
199__ was approximately $___________.
Initial Principal Amount of
Certificates................... $__________.
The Certificates................. Each of the Certificates offered hereby
represents an undivided interest in
the Trust. The Trust's assets will be
allocated in part to the
Certificateholders (the
"Certificateholders' Interest"), in
part to the holders of certificates of
any other outstanding Series (such
other holders, together with the
Certificateholders, are referred to
herein as "certificateholders"), with
the remainder allocated to the
Transferor (the "Transferor's
Interest"). The Certificates will
evidence an undivided beneficial
interest in the assets of the Trust
allocated to the Certificateholders'
Interest and will represent the right
to receive from such assets funds up
to (but not in excess of) the amounts
required to make [quarterly]
[semi-annual] (or in some cases
monthly) payments of interest on the
Certificates at the Certificate Rate
and to make the payment of principal
on the Expected Final Payment Date or
earlier or later under certain limited
circumstances.
On the Closing Date, the Invested Amount
will equal the Initial Principal
Amount, and will represent the
principal amount of Certificates
invested in Receivables as of the
Closing Date (the "Initial Invested
Amount"). The Invested Amount is
subject to reduction during the
Accumulation Period, the Early
Amortization Period and at such other
times as deposits are made to the
Excess Funding Account in connection
with the payment of Receivables as
described under "Series
Provisions--Excess Funding Account" in
the Prospectus.
Allocations...................... The Certificateholders' Interest will
include the right to receive (but only
to the extent required to make
payments under the Pooling and
Servicing Agreement) varying
percentages of Interest Collections
and Principal Collections collected
during each calendar month (each, a
"Collection Period"). Interest
Collections, Principal Collections and
Defaulted Receivables for any
Collection Period will be allocated to
the Certificateholders' Interest as
described below and as more fully
described under "Series
Provisions--Allocation Percentage"
herein and in the Prospectus. Interest
Collections, Principal Collections and
Defaulted Receivables not allocated to
the Certificates will be allocated to
the Transferor's Interest and the
interests of certificateholders of
other Series.
Interest Collections and Defaulted
Receivables will be allocated at all
times to the Certificateholders'
Interest based on the Floating
Allocation Percentage applicable
during the related Collection Period.
The Floating Allocation Percentage for
any Collection Period is the
percentage obtained by dividing the
Invested Amount on the last day of the
immediately preceding Collection
Period by the aggregate amount of the
principal balances of the Receivables
(the "Pool Balance") on the last day
of the immediately preceding
Collection Period.
During the Revolving Period, subject to
certain limitations, Principal
Collections allocable to the
Certificateholders' Interest will be
allocated and paid to the Transferor
or allocated to any other Series in
exchange for the allocation to the
Certificateholders' Interest of an
equal interest in the Receivables
balances that are new or that would
otherwise be part of the Transferor's
Interest or the interest of the
certificateholders of such other
Series.
During the Accumulation Period and any
Early Amortization Period, Principal
Collections will be allocated to the
Certificateholders' Interest based on
the Principal Allocation Percentage.
The Principal Allocation Percentage
for a Collection Period during the
Accumulation Period and any Early
Amortization Period is the percentage
equivalent of a fraction, the
numerator of which is the Invested
Amount on the last day of the
Revolving Period and the denominator
of which is the Pool Balance on the
last day of the immediately preceding
Collection Period. Unless an Early
Amortization Event shall have
occurred, monthly deposits in respect
of principal of the Certificates to
the Principal Funding Account will not
exceed the Controlled Distribution
Amount and, subject to certain
limitations, any Principal Collections
allocated to but not paid to the
Principal Funding Account will be paid
to the Transferor or allocated to any
other Series as described herein. See
"Series Provisions--Allocation
Percentages" herein and "Series
Provisions--Allocation
Percentages--Principal Collections for
all Series" in the Prospectus.
Subordination of the Transferor's
Interest....................... If the Interest Collections, Investment
Proceeds, [Enhancement Payments, if
any,] certain amounts in the Reserve
Fund and certain other amounts
allocable to the Certificateholders
for any Collection Period are not
sufficient to cover interest payable
on the Certificates on the next
Distribution Date (plus any overdue
interest and interest thereon, to the
extent lawful), the Monthly Servicing
Fee for such Distribution Date, any
Investor Default Amount for such
Distribution Date, [Enhancement
Payments, if any,] for such
Distribution Date and certain other
amounts, a portion of the Transferor's
Interest will be applied to make up
such deficiency. Generally, the amount
of the Transferor's Interest subject
to such subordination is the Available
Subordinated Amount. The Available
Subordinated Amount for the first
Determination Date will equal
$_______________. See "Series
Provisions--Available Subordinated
Amount" herein and "Series
Provisions--Distributions from the
Collection Account; Reserve
Fund--Excess Servicing" in the
Prospectus.
[Asset Composition
Event.......................... An "Asset Composition Event" will occur
if during the Revolving Period (a) the
sum of all Eligible Investments and
amounts on deposit in all of the
deposit accounts (the "Accounts")
represents more than ___% of the total
assets of the Trust on each of ______
or more consecutive Determination
Dates, after giving effect to all
payments made or to be made on the
Distribution Date next succeeding each
such respective Determination Date; or
(b) on each of _____ consecutive
Determination Dates, the sum of all
Eligible Investments and amounts on
deposit in all Accounts represents
more than ___% of the total assets of
the Trust, in each case after giving
effect to all payments to be made on
the next succeeding Distribution Date.
Upon the occurrence of an Asset
Composition Event during the Revolving
Period, an amount equal to the
Allocation Percentage of the Asset
Correction Amount will be distributed
in respect of the Certificates on the
next succeeding Distribution Date. At
any time, the "Asset Correction
Amount" will equal the amount that, if
distributed, would result in
compliance with the percentage
limitation the violation of which gave
rise to the Asset Composition Event.]
[Asset Composition
Premium........................ With respect to any distribution of an
Asset Correction Amount, an additional
payment equal to the Asset Composition
Premium for the Certificates shall be
paid to the Certificateholders to the
extent that funds are available
therefor as described under "Series
Provisions--Distributions from the
Collection Account; Reserve Fund" in
the Prospectus. The "Asset Composition
Premium" will equal the excess
(discounted as described below), if
any, of (a) the amount of interest
that would have accrued at the
Certificate Rate on the principal
portion of such Asset Correction
Amount paid to the Certificateholders
from the Distribution Date on which
such amount was distributed to the
Expected Final Payment Date over (b)
the amount of interest that would
accrue on such principal portion over
the same period at a per annum rate of
interest (the "Asset Composition
Discount Rate") equal to the sum of
(i) an amount equal to the yield
(determined on the Determination Date
prior to the Distribution Date on
which the Asset Composition Premium is
required to be distributed) on the
United States Treasury Notes to be
auctioned on ________ 199__ with a
settlement date of _________, 199__,
and a maturity date of _________,
199__ plus (ii) _____%. Such excess
amount will be discounted at the Asset
Composition Discount Rate from the
Expected Final Payment Date to such
Distribution Date.]
[Interest Rate Swap.............. On the Closing Date, the Trustee, on
behalf of the Trust, will enter into
one or more interest rate swap
agreements (collectively, the
"Interest Rate Swap") with Ford Credit
(the "Swap Counterparty"). In
accordance with the terms of the
Interest Rate Swap, the Swap
Counterparty will pay to the Trust, on
each Distribution Date, interest at
the Certificate Rate on the
outstanding principal balance of the
Certificates as of the preceding
Distribution Date (after giving effect
to all distributions on such date). In
exchange for such payments, the Trust
will pay to the Swap Counterparty, on
each Distribution Date, interest at a
per annum rate equal to [the lesser of
(a) ___________ and (b) ____________
less _____%,] on the outstanding
principal balance of the Certificates
as of the preceding Distribution Date
(after giving effect to all
distributions on such Distribution
Date), which rates will be reset on
various dates in each month. With
respect to each Distribution Date, any
difference between the monthly
obligation of the Swap Counterparty to
the Trust and the monthly obligation
of the Trust to the Swap Counterparty
will be referred to herein as the "Net
Trust Swap Receipt", if such
difference is a positive number, and
the "Net Trust Swap Payment", if such
difference is a negative number. Net
Trust Swap Receipts, if any, will be
distributed in the same manner in
which Certificateholder Interest
Collections are distributed on each
Distribution Date and Net Trust Swap
Payments, if any, will be paid out of
Certificateholder Interest Collections
and Investment Proceeds on each
Distribution Date.
In the event that the Interest Rate Swap
is terminated in accordance with its
terms, any Deficiency Amount will be
paid to the extent funds are available
therefor by applying, in addition to
any amounts allocated with respect to
the Available Subordinated Amount,
Interest Collections and Principal
Collections allocated to the
Transferor to the extent of the Swap
Available Subordinated Amount. See
"Series Provisions--Interest Rate
Swap" herein.]
Revolving Period................. The "Revolving Period" will be the
period beginning on ________, 199__
(the "Cut-Off Date") and ending on the
earlier of (a) the day immediately
preceding the Accumulation Period
Commencement Date and (b an Early
Amortization Event occurs.
Accumulation Period.............. The "Accumulation Period" will be the
period beginning on the close of
business on ________ 199__ (the
"Accumulation Period Commencement
Date") and continuing until the
earlier of (a) an Early Amortization
Event, and (b) the Expected Final
Payment Date. See "Series
Provisions--Accumulation Period"
herein and "Series
Provisions--Distributions from the
Collection Account; Reserve
Fund--Principal Collections" in the
Prospectus.
Optional Repurchase.............. The Invested Amount will be subject to
optional repurchase by the Transferor
on any Distribution Date after the
Invested Amount is reduced to an
amount less than or equal to
$____________ (I.E., ____% of the
Initial Invested Amount). The purchase
price (the "Reassignment Amount") will
be equal to the sum of the Invested
Amount and accrued and unpaid interest
on the Certificates (and accrued and
unpaid interest with respect to
interest amounts that were due but not
paid on prior Distribution Dates)
through the day preceding such
Distribution Date. See "Series
Provisions -- Optional Termination".
Registration of Certificates.... The Certificates will initially be
represented by one or more
certificates registered in the name of
Cede & Co., as the nominee of DTC. No
purchaser of a Certificate will be
entitled to receive a definitive
certificate except under certain
limited circumstances described herein
under "Series Provisions-- Definitive
Certificates" in the Prospectus.
Tax Matters...................... In the opinion of special tax counsel
for the Transferor and the Trust, the
Certificates will be characterized as
debt for federal income tax purposes.
Each Certificateholder, by acceptance
of a Certificate, will agree to treat
the Certificates as debt for tax
purposes. See "Certain Federal Income
Tax Considerations" and "Certain State
and Local Tax Considerations" in the
Prospectus for additional information
concerning the application of federal
and state tax laws.
ERISA Considerations............. The Certificates may be eligible for
purchase by Benefit Plans. See "ERISA
Considerations" in the Prospectus.
Certificate Ratings.............. It is a condition to the issuance of the
Certificates that they be rated in the
highest long-term rating category by
at least one nationally recognized
rating agency. The rating of the
Certificates addresses the likelihood
of the ultimate payment of the
principal of and interest on the
Certificates. However, a Rating Agency
does not evaluate, and the rating of
the Certificates will not address, the
likelihood of payment of the
outstanding principal of the
Certificates by the Expected Final
Payment Date. [The rating of the
Certificates also will not address the
likelihood of payment of the Asset
Composition Premium.] A rating is
based primarily on the credit
underlying the Receivables and the
level of subordination of the
Transferor's Interest. A security
rating is not a recommendation to buy,
sell or hold securities and is subject
to revision or withdrawal in the
future by the assigning Rating Agency.
See "Risk Factors--Ratings of
Certificates" in the Prospectus.
RISK FACTORS
LIMITED AMOUNTS OF AVAILABLE SUBORDINATION
Credit enhancement of the Certificates will be provided by the
subordination of the Transferor's Interest to the extent of the Available
Subordinated Amount (as described in the Prospectus) and amounts on deposit in
the Reserve Fund. The amount of such credit enhancement is limited, and will
be reduced from time to time as described in the Prospectus. See "Series
Provisions--Available Subordinated Amount" herein and "Series
Provisions--Allocation of Collections; Deposits in Collection Account; Limited
Subordination of Transferor's Interest" in the Prospectus.
[ASSET COMPOSITION PREMIUM
The Asset Composition Premium will be payable to the extent certain
funds are available after the occurrence of an Asset Composition Event. Any
unpaid Asset Composition Premium will be payable on each Distribution Date
following an Asset Composition Event to the extent funds are available
therefor after making all required distributions and deposits with respect to
the Certificates, including payments with respect to principal (including
payments to the Excess Funding Account), Net Trust Swap Payments, Monthly
Interest, the Monthly Servicing Fee, the Reserve Fund Deposit Amount and the
Investor Default Amount for such date as described in "Series
Provisions--Distributions from the Collection Account; Reserve Fund" in the
Prospectus. The rating of the Certificates does not address the likelihood of
payment of the Asset Composition Premium.]
THE DEALER FLOORPLAN FINANCING BUSINESS
FORD CREDIT
Ford Credit is the primary source of financing for Ford-franchised
dealers in the United States. In the first three months of 1998, Ford Credit
provided financing for approximately 81.5% of new factory sales to Ford
dealers in the U.S, compared with approximately 77.4% for the first three
months of 1997. In the first three months of 1998, Ford Credit provided
financing to approximately 5,732 domestic automotive dealers. In the first
three months of 1998, Ford Credit arranged wholesale financing for
approximately 1.1 million vehicles, up approximately 2.3% from the first three
months of 1997. Ford Credit services the wholesale portfolio through its home
office in Dearborn, Michigan and through its 150 branch and regional offices
throughout the United States. As of March 31, 1998, 1.08% of the total dealers
in the Ford Credit U.S. Wholesale Portfolio were suspended, compared with
1.37% as of March 31, 1997.
As of March 31, 1998, average credit lines per dealer in the Ford
Credit U.S. Wholesale Portfolio for new and used vehicles were $2.07 million
and $290,000, respectively, and the average balance of principal receivables
per account was $1.88 million. The aggregate total receivables balance as a
percentage of the aggregate total credit lines was 123%. As more fully
described in the Prospectus, the credit lines are guidelines, not limits,
which dealers are permitted to exceed for business reasons. See "The Dealer
Floorplan Financing Business-Dealer Monitoring" in the Prospectus.
As of March 31, 1998, Used Vehicles represented approximately 2.08%
of the aggregate principal amount of receivables in the Ford Credit U.S.
Wholesale Portfolio (and approximately 10.56% in the case of the PRIMUS U.S.
Wholesale Portfolio). As of March 31, 1998, Used Vehicles represented
approximately 2.9% of the aggregate principal amount of Receivables in the
Trust.
REVENUE EXPERIENCE
For the three month period ended March 31, 1998, the weighted
average yield on the Ford Credit U.S. Wholesale Portfolio (calculated on the
basis of interest payments actually received thereon during such period over
the average aggregate principal balance thereof at the beginning and end of
each month therein) was 7.38%. However, the weighted average yield is likely
to fluctuate from time to time and there is no assurance that such yield will
not occur at levels significantly different from that currently experienced.
DEALER "STATUS"
Under certain circumstances, Ford Credit will classify a dealer as
"Status". Such circumstances may include failure to remit any principal or
interest payment when due, any notifications of liens, levies or attachments,
or a general deterioration of its financial condition. As of March 31, 1998,
the number of dealers assigned to dealer Status was 45 (I.E., 0.78% of the
total number of dealers in the Ford Credit U.S. Wholesale Portfolio); as of
December 31, 1997, 94 dealers (I.E., 0.76% of the total number of dealers in
the Ford Credit U.S. Wholesale Portfolio); and as of March 31, 1996, 51
dealers (I.E., 0.88% of the total number of dealers in the Ford Credit U.S.
Wholesale Portfolio). Once a dealer is classified as Status, any further
extension of credit is rare.
PRIMUS
PRIMUS services its wholesale portfolio through its home office in
Franklin, Tennessee and through 29 regional offices throughout the United
States. In the first three months of 1998, PRIMUS provided wholesale financing
for approximately 860 automotive dealers. In the first three months of 1998,
PRIMUS arranged wholesale financing for approximately 305,000 automobiles and
light trucks, up approximately 22.7% from the first three months of 1997. As
of March 31, 1998, average credit lines per dealer in the PRIMUS U.S.
Wholesale Portfolio of Eligible Accounts for New and Used Vehicles were $1.3
million and 6.4 million, respectively, and the average principal balance of
receivable per credit line was $56,000. The aggregate total receivables in the
PRIMUS U.S. Wholesale Portfolio as a percentage of the aggregate total credit
lines. For the three month period ended March 31, 1998, the weighted average
yield on the PRIMUS U.S. Wholesale Portfolio (calculated on the basis of
interest payments actually received thereon during such period over the
average aggregate principal balance thereof at the beginning and end of each
month therein) was 8.62%.
As of March 31, 1998, the number of dealers in the PRIMUS U.S.
Wholesale Portfolio assigned by PRIMUS to dealer status was 11 (1.28% of the
total number of dealers in the PRIMUS U.S. Wholesale Portfolio); as of
December 31, 1997, 7 (0.85% of the total number of dealers in the PRIMUS U.S.
Wholesale Portfolio); and as of December 31, 1996, 7 (0.96% of the total
number of dealers in the PRIMUS U.S. Wholesale Portfolio). As of March 31,
1998, 1.9% of the total dealers in the PRIMUS U.S. Wholesale Portfolio were
suspended, compared with 3.16% as of March 31, 1997. See "The Dealer Floorplan
Financing Business--General" in the Prospectus.
THE ACCOUNTS
GENERAL
As of March 31, 1998, with respect to the Accounts in the Trust: (a)
there were 8,961 Accounts and the Principal Receivables balance was
approximately $17.2 billion; (b) the average credit line per Account was $2.08
million (based on the average New Vehicle credit line of $2.2 million and the
average Used Vehicle credit line of $150,000); (c) the average balance of
Principal Receivables per Account was $1.734 million; (d) the aggregate total
Principal Receivables balance as a percentage of the aggregate total credit
line was approximately 117%; and (e) the weighted average spread over the
prime rate charged to Dealers (calculated on the basis of the New Vehicle Base
Rate and Used Vehicle Base Rate, as applicable) was 1.02%. As more fully
described above, the credit lines are guidelines, not limits, which dealers
are permitted to exceed for business reasons. See "The Dealer Floorplan
Financing Business--Dealer Monitoring" in the Prospectus.
LOSS EXPERIENCE
The following table sets forth the average principal receivables
balance and loss experience for each of the periods shown with respect to the
combined Ford Credit and PRIMUS U.S. Wholesale Portfolios. Because the initial
Eligible Accounts will represent only a portion of the entire combined Ford
Credit and PRIMUS U.S. Wholesale Portfolios, actual loss experience with
respect to the Eligible Accounts may be different. There can be no assurance
that the loss experience for the Receivables in the future will be similar to
the historical experience set forth below with respect to such Portfolios. In
addition, the historical experience set forth below reflects financial
assistance to Dealers provided by Ford and other manufacturers and
distributors in certain limited instances, in the case of the Ford Credit U.S.
Wholesale Portfolio, and primarily by non-Ford manufacturers or distributors
in certain limited circumstances, in the case of the PRIMUS U.S. Wholesale
Portfolio, as described above under "The Dealer Floorplan Financing Business
- -- Relationship with Ford and Other Manufacturers". If a manufacturer or
distributor is unable to or elects not to provide such assistance in the
future, the loss experience in respect of the Ford Credit and/or PRIMUS U.S.
Wholesale Portfolios may be adversely affected. See "Risk Factors--Trust's
Relationship to Ford and Ford Credit; Financial Condition of Ford" in the
Prospectus.
<TABLE>
<CAPTION>
LOSS EXPERIENCE FOR THE COMBINED FORD CREDIT AND PRIMUS U.S. WHOLESALE PORTFOLIOS
THREE MONTHS ENDED YEAR ENDED DECEMBER 31,
MARCH 31,
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Average Principal
Receivables Balance(1)........ $18,386 $17,074 $17,392 $17,488 $14,855 $12,411
Net Losses
(Recoveries)(2)............... $1.2 $10.0 $3.5 $5.5 $1.6 $(1.4)
Net Losses/Liquidations......... 0.005% 0.011% 0.004% 0.007% 0.002% (0.002)%
Net Losses/Average
Principal Receivables
Balance....................... 0.006% 0.059% 0.020% 0.032% 0.011% (0.012)%
</TABLE>
- ---------------------
(1) Average Principal Receivables Balance is the average of the monthly
average principal balances (based on beginning and ending balances) for
the twelve months ending on the last day of the period.
(2) Net losses in any period are gross losses less recoveries for such
period. Recoveries include recoveries from Related Security in
addition to the vehicles. With respect to the Receivables of certain
dealers to which Ford Credit has made loans in addition to the advances
under the Accounts, the Trust's interest in Non-Vehicle Related
Security, if any, will be subordinate to the interest of Ford Credit in
such Non-Vehicle Related Security. See "The Dealer Floorplan
Financing Business-Intercreditor Agreement in respect of Security
Interests in Vehicles and Non-Vehicle Related Security" in the
Prospectus. Consequently, the Net Losses experienced by Ford Credit as
shown above may be more favorable than the Net Losses to be experienced
by the Trust.
AGING EXPERIENCE
The following table provides the age distribution of vehicle
inventory for all dealers in the combined Ford Credit and PRIMUS U.S.
Wholesale Portfolios as a percentage of total principal outstanding at the
dates indicated. Because the Eligible Accounts will represent only a portion
of the entire combined Ford Credit and PRIMUS U.S. Wholesale Portfolios, the
actual age distribution with respect to the Eligible Accounts may be
different.
<TABLE>
<CAPTION>
AGE DISTRIBUTION FOR THE COMBINED FORD CREDIT AND PRIMUS U.S. WHOLESALE PORTFOLIOS(1)
THREE MONTHS ENDED YEAR ENDED DECEMBER 31,
MARCH 31,
DAYS 1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1-120...................... 73.3% 81.6% 77.1% 73.6% 77.3% 79.9%
121-180.................... 13.4% 7.4% 11.2% 9.2% 10.5% 9.9%
181-270.................... 8.3% 5.6% 6.2% 10.6% 5.2% 5.9%
Over 270................... 4.9% 5.4% 5.5% 6.6% 7.0% 4.4%
- -------------------------
(1) Measured from the date of shipment with respect to New Vehicles.
</TABLE>
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of the
vehicle inventory for all dealers in the combined Ford Credit and PRIMUS U.S.
Wholesale Portfolios on the basis of Eligible Receivables outstanding and the
number of dealers generating such Receivables.
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS IN THE COMBINED FORD CREDIT AND PRIMUS WHOLESALE PORTFOLIOS
AS OF MARCH 31, 1998
RECEIVABLES
OUTSTANDING PERCENTAGE OF
(THOUSANDS OF RECEIVABLES TOTAL NUMBER PERCENTAGE OF
STATE DOLLARS) OUTSTANDING OF ACCOUNTS NUMBER OF ACCOUNTS
<S> <C> <C> <C> <C>
California................................ $860,323.4 11.0% 638 10.4%
Texas..................................... $926,321.5 11.9% 664 10.8%
New York.................................. $615,202.1 7.9% 584 9.5%
Florida................................... $449,765.8 5.8% 212 3.5%
Michigan.................................. $326,671.1 4.2% 166 2.7%
Other(1).................................. $5,473,056 70.2% 4,499 73.5%
Total..................................... $7,791,317 100% 6,125 100%
</TABLE>
- ----------------------
(1) No other state includes more than 4.4% of the outstanding Receivables.
MATURITY CONSIDERATIONS
The Pooling and Servicing Agreement provides that the
Certificateholders will not receive payments of principal until the Expected
Final Payment Date, or earlier in the event of an Early Amortization Event
which results in the commencement of the Early Amortization Period.
Certificateholders will receive payments of principal on each Distribution
Date following the monthly period in which an Early Amortization Event occurs
(each, a "Special Payment Date") until the Invested Amount has been paid in
full.
On each Distribution Date during the Accumulation Period,
Certificateholders' Principal Collections and certain other amounts allocable
to the Certificateholders' Interest will be deposited on each Distribution
Date in a trust account (the "Principal Funding Account") and, together with
any amounts in the Excess Funding Account, used to make principal
distributions to Certificateholders when due. [The amount to be deposited in
the Principal Funding Account on any Distribution Date will be limited to an
amount equal to the Controlled Distribution Amount.] See "Series
Provisions--Distributions from the Collection Account; Reserve Fund--Principal
Collections" in the Prospectus.
Should an Early Amortization Event occur with respect to the
Certificates and the Early Amortization Period should commence, any amount on
deposit in the Principal Funding Account will be paid to the
Certificateholders on the first Special Payment Date, and the
Certificateholders will be entitled to receive Available Principal Collections
on each Distribution Date with respect to such Early Amortization Period or
following the Expected Final Payment Date, as the case may be, as described
herein, until the Invested Amount is paid in full. See "Series
Provisions--Early Amortization Events" in the Prospectus.
The ability of Certificateholders to receive payments of principal
on the Expected Final Payment Date depends on the amount of outstanding
Receivables, delinquencies, charge-offs and the generation of new Receivables
by the Transferor and the potential issuance by the Trust of additional
Series. The Transferor cannot predict, and no assurance can be given, as to
the actual rate of payment of principal of the Certificates or whether the
terms of any subsequently issued Series might have an impact on the amount or
timing of any such payment of principal. See "Risk Factors--Payments" in the
Prospectus.
In addition, the amount of outstanding Receivables and the
delinquencies, charge-offs and the generation of new Receivables may vary from
month to month due to seasonal variations, legal factors and various economic
factors affecting vehicle sales generally. There can be no assurance that
collections of Receivables with respect to the Trust, and thus the rate at
which the Certificateholders could expect to receive payments of principal of
the Certificates during an Early Amortization Period, or the rate at which the
Principal Funding Account could be funded during the Accumulation Period, will
be similar to the historical experience set forth in the tables contained in
this Prospectus Supplement. In addition, the Trust, as a master trust, may
issue additional Series from time to time, and there can be no assurance that
the terms of any such Series might not have an impact on the timing or amount
of payments received by the Certificateholders.
MONTHLY PAYMENT RATES
The following table sets forth the highest and lowest monthly
payment rates for the Ford Credit and PRIMUS U.S. Wholesale Portfolios,
respectively, during any month in the periods shown and the average of the
monthly payment rates for all months during the periods shown, in each case
calculated as the percentage equivalent of a fraction, the numerator of which
is the aggregate of all collections of principal during the period and the
denominator of which is the average aggregate principal balance for such
period. There can be no assurance that the rate of Principal Collections will
be similar to the historical experience set forth below. Because the Accounts
will be only a portion of the combined Ford Credit and PRIMUS U.S. Wholesale
Portfolio, actual monthly payment rates with respect to the Accounts may be
different.
<TABLE>
<CAPTION>
MONTHLY PAYMENT RATES FOR THE COMBINED FORD CREDIT AND PRIMUS U.S. WHOLESALE PORTFOLIOS
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31,
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Highest Month.............. 48.7% 67.3% 53.0% 54.6% 67.1% 64.0%
Lowest Month............... 41.6% 40.1% 39.6% 33.1% 36.4% 43.8%
Average of the Months in
the Period................. 45.7% 49.1% 45.8% 42.5% 48.7% 49.7%
</TABLE>
Because an Early Amortization Event may occur which would initiate
an Early Amortization Period, the final distribution of principal of the
Certificates may be made prior to the scheduled termination of the Revolving
Period or prior to the Expected Final Payment Date. See "Series
Provisions--Additional Early Amortization Events" herein and "Series
Provisions--Early Amortization Events" in the Prospectus.
SERIES PROVISIONS
The Certificates will be issued pursuant to the Pooling and
Servicing Agreement, the forms of which have been filed as exhibits to the
Registration Statement of which the Prospectus and this Prospectus Supplement
are a part. The following summary describes certain terms applicable to the
Certificates. Reference should be made to the Prospectus for additional
information concerning the Certificates and the Pooling and Servicing
Agreement.
INTEREST
Interest on the Certificates will accrue from the Closing Date on
the unpaid principal amount thereof at the Certificate Rate. Interest will be
distributed on ________, 199__ and on the _______ day of each ________ and
________ thereafter [(each, a "Semi-Annual Payment Date")] [(each, a
"Quarterly Payment Date")], to Certificateholders in whose names the
Certificates were registered at the close of business on the last day of the
calendar month preceding the date of such payment (each, a "Record Date");
provided, that if an Early Amortization Event [or an Asset Composition Event]
shall have occurred, interest will be distributed to the Certificateholders on
the first Distribution Date following such Early Amortization Event [or Asset
Composition Event (but, in the case of an Asset Composition Event, only to the
extent needed to cure such event)] and, subject to certain exceptions, on each
subsequent Distribution Date until the Certificates are retired. "Distribution
Date" shall mean the _________ day of each month (or, if such date is not a
business day, the next succeeding business day). Interest for any [Quarterly]
[Semi-Annual] Payment Date will accrue from and including the preceding
[Quarterly] [Semi-Annual] Payment Date (or, in the case of the first
[Quarterly] [Semi-Annual] Payment Date, from and including the Closing Date)
but excluding the next [Quarterly] [Semi-Annual] Payment Date and will be
calculated on the basis of [the actual number of days elapsed during the
related Accrual Period and a 360-day year] [a 360-day year consisting of
twelve 30-day months].
Interest payments in respect of the Certificates on any [Quarterly]
[Semi-Annual] Payment Date will be funded from Certificateholder Interest
Collections, withdrawals, if any, from the Reserve Fund, Investment Proceeds,
if any, [receipts, if any, under the Interest Rate Swap] and, under certain
circumstances, Available Transferor Collections to the extent of the Available
Subordinated Amount.
PRINCIPAL
In general, no principal payments will be made to the
Certificateholders until the Expected Final Payment Date or, upon the
occurrence of an Early Amortization Event [or an Asset Composition Event],
each as described in the Prospectus, until the first Distribution Date
following such event. On each Distribution Date in the Revolving Period,
collections of Principal Receivables allocable to the Certificateholders'
Interest, subject to certain limitations, will either be (a) allocated to the
Excess Funding Account as described in the Prospectus, (b) allocated to one or
more Series that are in amortization, early amortization or accumulation
periods to cover principal payments due to the certificateholders of any such
Series or that provide for excess funding accounts or similar arrangements or
(c) if no such Series is then amortizing or accumulating principal or
otherwise does not provide for excess funding accounts or similar
arrangements, paid to the Transferor to maintain the Certificateholders'
Interest or held as Unallocated Principal Collections. See "Allocation
Percentages--Principal Collections for all Series" and "Distributions from the
Collection Account; Reserve Fund--Principal Collections" in the Prospectus.
Unless and until an Early Amortization Event shall have occurred and
until the outstanding principal balance of the Certificates is paid in full,
on each Distribution Date in the Accumulation Period, collections of Principal
Receivables allocable to the Certificateholders' Interest, plus certain other
amounts comprising Monthly Principal, will no longer be paid for the benefit
of another Series or to the Transferor as described above but instead [an
amount thereof up to the Controlled Distribution Amount for each such
Distribution Date] will be deposited in the Principal Funding Account. The
funds on deposit in the Principal Funding Account (including any amounts
deposited therein from the Excess Funding Account) will be used to pay the
outstanding principal balance of the Certificates on the Expected Final
Payment Date. If on such date the amount in the Principal Funding Account is
less than the outstanding principal balance of the Certificates, the amounts
in such accounts will nevertheless be distributed to Certificateholders on
such date, the Early Amortization Period will commence and on each Special
Payment Date thereafter the Certificateholders will receive distributions of
Monthly Principal and Monthly Interest until the outstanding principal balance
of the Certificates has been paid in full or the Termination Date has
occurred.
["Controlled Distribution Amount" means, for any Distribution Date
in the Accumulation Period, $_____________.]
Unless an Early Amortization Period will have occurred, the
Accumulation Period will be [one, two, three, four or five] month(s) long. On
__________, 199__, the Master Servicer will determine the Accumulation Period
Length. The "Accumulation Period Length" will be calculated as the product,
rounded upwards to the nearest integer, of (a) _______ and (b) a fraction, the
numerator of which is the Invested Amount as of ___________, 199__ (after
giving effect to all changes therein on such date) and the denominator of
which is the sum of the Invested Amount and the Invested Amount as of
____________, 199__ (after giving effect to all changes therein on such date)
of all other outstanding Series the respective revolving periods of which are
not scheduled to end before the last day of the ___________ 199__ Collection
Period. If the Accumulation Period Length [is one month, two months, three
months, four months or five months], the "Accumulation Period Commencement
Date" will be the first day of the _____________ 199__ Collection Period, the
___________ 199__ Collection Period, the ___________ 199__ Collection Period,
the ___________ 199__ Collection Period or the ___________ 199__ Collection
Period, respectively. Notwithstanding the foregoing, the Accumulation Period
Commencement Date will be ____________, 199__ if, prior to such date, any
other outstanding Series shall have entered into an early amortization period.
In addition, if the Accumulation Period Length shall have been determined to
be less than [five] months and, thereafter, any outstanding Series shall enter
into an early amortization period, the Accumulation Period Commencement Date
shall be the earlier of (i) the date that such outstanding Series shall have
entered into an early amortization period and (ii) the Accumulation Period
Commencement Date as previously determined.
Other Series issued by the Trust may have either an accumulation
period or an amortization period. Such accumulation periods or amortization
periods may have different lengths and begin on different dates. Thus, certain
Series may be in their revolving periods, while others are in periods during
which Principal Collections are distributed to, or reserved for, such other
Series. Under certain circumstances, one or more Series may be in their early
amortization periods or accumulation periods, while other Series are not.
ALLOCATION PERCENTAGES
AVAILABLE SUBORDINATED AMOUNT. The Available Subordinated Amount for
the first Determination Date is equal to the Required Subordinated Amount. The
"Required Subordinated Amount" will mean, as of any date of determination, the
sum of (a) the product of the Subordinated Percentage and the Invested Amount
and (b) the Incremental Subordinated Amount. On the Closing Date, such amount
will be $___________.
The Available Subordinated Amount for a Determination Date will
equal (a) the lesser of (i) the Available Subordinated Amount for the
preceding Determination Date, minus, with certain limitations, the Draw Amount
for such preceding Determination Date, minus funds from the Reserve Fund
applied toward any portion of the Investor Default Amount, plus the amount of
Excess Servicing available to be paid to the Transferor as described under
"Series Provisions--Distributions from the Collection Account; Reserve
Fund--Excess Servicing" in the Prospectus, [plus any amounts distributed as
Asset Composition Premium,] minus the Incremental Subordinated Amount for such
preceding Determination Date, plus the Incremental Subordinated Amount for the
current Determination Date and (ii) the sum of (A) the product of the
Subordinated Percentage and the Invested Amount plus (B) the Incremental
Subordinated Amount for the current Determination Date, minus (ii) the
Subordinated Percentage of funds added or to be added to the Excess Funding
Account since the prior Distribution Date to the succeeding Distribution Date,
plus (c) the Subordinated Percentage of funds withdrawn or to be withdrawn
from the Excess Funding Account since the prior Distribution Date to the
succeeding Distribution Date and paid to the Transferor or allocated to one or
more Series.
The "Incremental Subordinated Amount" on any Determination Date will
equal an amount equal to the product of (a) a fraction, the numerator of which
is the sum of the Invested Amount on the last day of the immediately preceding
Collection Period and the Available Subordinated Amount for such Determination
Date (calculated without subtracting or adding the Incremental Subordinated
Amount for such Determination Date as described in clause (a) above), and the
denominator of which is the Pool Balance on such last day and (b) the excess,
if any, of (i) the sum of the Overconcentration Amount, the Installment
Balance Amount and the aggregate amount of Ineligible Receivables on such
Determination Date over (ii) the aggregate amount of Ineligible Receivables,
Receivables in Accounts containing Dealer Overconcentrations and Receivables
in Installment Balances, in each case that became Defaulted Receivables during
the preceding Collection Period and are subject to reassignment from the
Trust, unless certain insolvency events relating to the Transferor have
occurred, as further described in the Pooling and Servicing Agreement.
The "Subordinated Percentage" will initially equal the percentage
equivalent of a fraction, the numerator of which is ___% and the denominator
of which will be the excess of 100% over ____%. The Transferor may, in its
sole discretion, at any time increase the Available Subordinated Amount for so
long as the cumulative amount of such increases does not exceed the lesser of
(a) $_________ or (b) ____% of the Invested Amount on such date. The
Transferor is not under any obligation to increase the Available Subordinated
Amount at any time. If the Available Subordinated Amount were reduced to less
than the Required Subordinated Amount, an Early Amortization Event would
occur. The Transferor could elect to increase the Available Subordinated
Amount at the time such an Early Amortization Event would otherwise occur,
thus preventing or delaying the occurrence of the Early Amortization Event.
[SWAP AVAILABLE SUBORDINATED AMOUNT. In the event that the Interest
Rate Swap is terminated in accordance with its terms (which event shall result
in an Early Amortization Event), any Deficiency Amount shall be paid to the
extent funds are available therefor by applying, in addition to any amounts
allocated with respect to the Available Subordinated Amount, Interest
Collections and Principal Collections allocated to the Transferor to the
extent of the Swap Available Subordinated Amount. The Swap Available
Subordinated Amount for the first Determination Date is $__________ (the
"Initial Swap Subordinated Amount"). The Swap Available Subordinated Amount
for each subsequent Determination Date will be the Swap Available Subordinated
Amount for the previous Determination Date minus the amount, if any, of such
draws made on the Swap Available Subordinated Amount.]
[INTEREST RATE SWAP
On the Closing Date, the Trustee, on behalf of the Trust, will enter
into the Interest Rate Swap with Ford Credit (the "Swap Counterparty"). In
accordance with the terms of the Interest Rate Swap, the Swap Counterparty
will pay to the Trust, on each Distribution Date, interest accrued from and
including the preceding Distribution Date at the Certificate Rate on the
outstanding principal balance of the Certificates as of such preceding
Distribution Date. In exchange for such payments, the Trust will pay to the
Swap Counterparty, as of each Distribution Date, interest accrued from and
including the preceding Distribution Date at a per annum rate equal to the
lesser of (c) _________ and (b) ___________ less ____% on the outstanding
principal balance of the Certificates on such preceding Distribution Date,
which rates will be reset on various dates within each month. Amounts payable
under the Interest Rate Swap will be calculated on the basis of the actual
number of days in the related period of accrual and a 360-day year. Net Trust
Swap Receipts (obligations of the Swap Counterparty to the Trust) will be paid
to the Collection Account on each Distribution Date and Net Trust Swap
Payments (obligations of the Trust to the Swap Counterparty) will be paid of
Certificateholder Interest Collections, Investment Proceeds, the Reserve Fund
and Available Transferor Collections (in the case of Available Transferor
Collections, to the extent of the Available Subordinated Amount) on each
Distribution Date.
In the event that the Interest Rate Swap is terminated in accordance
with its terms, any Deficiency Amount will be paid by applying, in addition to
any amounts allocated with respect to the Available Subordinated Amount,
Interest Collections and Principal Collections allocated to the Transferor to
the extent of the Swap Available Subordinated Amount.
In the event that the Interest Rate Swap is terminated in accordance
with its terms, any Deficiency Amount will be paid by applying, in addition to
any amounts allocated with respect to the Available Subordinated Amount,
Interest Collections and Principal Collections allocated to the Transferor to
the extent of the Swap Available Subordinated Amount.
"Adjustment Date" shall mean the second London Business Day
preceding the first day of each Interest Period.
"London Business Day" shall mean any business day on which dealings
in deposits in United States dollars are transacted in the London interbank
market.
Pursuant to the terms of the Interest Rate Swap, an initial payment
will be made on the Closing Date. In the event such payment is to be made by
the Trust, the amount of such payment will be contributed to the Trust by the
Transferor.]
[ADDITIONAL EARLY AMORTIZATION EVENTS
An "Amortization Event" refers to the following events which is in
addition to the other events specified in the Prospectus:
(a) on any Determination Date, as of the last day of the preceding
Collection Period, the aggregate amount of Principal Receivables relating to
Used Vehicles exceeds ____% of the Pool Balance on such day; or
(b) on any Determination Date, the average of the Monthly Payment
Rates for the ______ preceding Collection Periods, where the Monthly Payment
Rate for a Collection Period is the percentage obtained by dividing Principal
Collections for such Collection Period by the daily average Pool Balance for
such Collection Period, is less than ____%.]
SERVICING COMPENSATION
Unless the Servicing Fee has been waived as described in the
Prospectus, the Monthly Servicing Fee shall be an amount equal to one-twelfth
of the product of (a) ____% and (b) the Pool Balance as of the last day of the
second preceding Collection Period. See "Series Provisions--Servicing
Compensation" and "--Payment of Expenses" in the Prospectus.
SERIES TERMINATION
The final payment of principal of and interest on the Certificates
will be due and payable no later than the _________ 199__ Distribution Date
(the "Termination Date"). In the event that the Invested Amount is greater
than zero on the Termination Date, the Trustee will sell or cause to be sold
(and apply the proceeds to the extent necessary to pay such remaining amounts
to all Certificateholders) an interest in the Receivables or certain
Receivables, as specified in the Pooling and Servicing Agreement, in an amount
equal to ____% of the Invested Amount (after giving effect to deposits and
distributions otherwise to be made on the Termination Date; provided, however,
that in no event shall such amount exceed the Allocation Percentage of
Receivables on such Termination Date). The net proceeds of such sale and any
collections on the Receivables will be paid pro rata to Certificateholders on
the Termination Date as the final payment of the Certificates.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Brown & Wood LLP, special tax counsel to the Transferor
and the Trust, for United States federal income tax purposes, (a) the
Certificates will constitute indebtedness and (b) the Trust will not be
classified as an association or publicly traded partnership taxable as a
corporation. Each Certificateholder, by its acceptance of a Certificate, will
agree to treat the Certificates as indebtedness for tax purposes. See "Certain
Federal Income Tax Considerations" and "Certain State and Local Tax
Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
dated ______, 199__ (the "Underwriting Agreements"), FCAR has agreed to cause
the Trust to sell to the underwriters named below (the "Underwriters"), for
which ________ is acting as representative (the "Representative"), and the
Underwriters have agreed to purchase the principal amount of Certificates set
forth below:
Principal Amount
Underwriters of Certificates
[Underwriter].................................... $
[Underwriter].................................... $
Total.................................... $
FCAR has been advised by the Underwriters that they propose
initially to offer the Certificates to the public at the public offering price
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of _____% of the
principal amount of the Certificates. The Underwriters may allow and such
dealers may reallow to other dealers a discount not in excess of _____% of
such principal amount. After the initial public offering, such public offering
price, concession and reallowance may be changed.
The Underwriting Agreement provides that FCAR will indemnify the
Underwriters against certain liabilities, including liabilities under
applicable securities laws, or contribute to payments the Underwriters may be
required to make in respect thereof. The Indemnification Agreement provides
that Ford Credit will indemnify the Underwriters against certain liabilities,
including liabilities under applicable securities laws, or contribute to
payments the Underwriters may be required to make in respect thereof.
In connection with the offering of the Certificates, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Certificates. Specifically, the Underwriters may
overallot the offering, creating a syndicate short position. The Underwriters
may bid for an purchase the Certificates in the open market to cover syndicate
short positions. In addition, the Underwriters may bid for and purchase the
Certificates in the open market to stabilize the price of the Certificates.
These activities may stabilize of maintain the market price of the
Certificates above independent market levels. The Underwriters are not
required to engage in these activities, and may end these activities at any
time.
LEGAL MATTERS
Certain legal matters with respect to the Certificates will be
passed upon for the Transferor by ___________ and for the Representative by
Brown & Wood LLP, New York, New York.
RATINGS
It is a condition to issuance that the Certificates be rated in the
highest long-term rating category by at least one nationally recognized rating
agency. A securities rating addresses the likelihood of the receipt by
Certificateholders of distributions on the Receivables generated from the
Accounts. The rating takes into consideration the structural, legal and tax
aspects associated with the Certificates. The ratings on the Certificates do
not, however, constitute statements regarding the possibility that
Certificateholders might realize a lower than anticipated yield. A securities
rating is not a recommendation to buy, sell or hold securities, and may be
subject to revision or withdrawal at any time by the assigning rating
organization. Each securities rating should be evaluated independently of
similar ratings on different securities.
- ------------------------------------- ---------------------------------------
No person has been authorized to give
any information or to make any
representation other than those
contained in this Prospectus
Supplement or the Prospectus and, if FORD CREDIT AUTO LOAN MASTER TRUST II
given or made, such information or
representation must not be relied
upon. This Prospectus Supplement and
the Prospectus do not constitute an
offer to sell or a solicitation of an
offer to buy any securities other [FIXED RATE] [FLOATING-RATE]
than the Certificates offered hereby, AUTO LOAN
nor an offer of the Certificates in ASSET BACKED CERTIFICATES,
any State or jurisdiction in which, SERIES 199__-__,
or to any person to whom, such offer
would be unlawful. The delivery of
this Prospectus Supplement or any
Prospectus at any time does not imply
that information herein or therein is
correct as of any time subsequent to
its date; however, if any material
change occurs while this Prospectus
Supplement or the Prospectus is
required by law to be delivered, this
Prospectus Supplement or the
Prospectus will be amended or
supplemented accordingly.
TABLE OF CONTENTS [LOGO]
PAGE
PROSPECTUS SUPPLEMENT
- ---------------------
Summary of Series Terms...........S-4
Risk Factors.....................S-11
The Dealer Floorplan Financing FORD CREDIT AUTO RECEIVABLES LLC
Business ......................S-11 TRANSFEROR
The Accounts.....................S-12
Maturity Considerations..........S-14
Series Provisions................S-15
Certain Federal Income Tax
Considerations ................S-19 FORD MOTOR CREDIT COMPANY
Underwriting.....................S-19 MASTER SERVICER
Legal Matters....................S-20
Ratings..........................S-20
PROSPECTUS
- ----------
Available Information...............3
Risk Factors.......................16
The Receivables....................20
Ford Motor Credit Company..........21
PRIMUS Automotive Financial
Services, Inc. ..................23
Use of Proceeds....................21
The Dealer Floorplan Financing
Business ........................21 PROSPECTUS SUPPLEMENT
The Accounts.......................25
Maturity and Principal Payment
Considerations ..................25 [UNDERWRITERS]
Series Provisions..................25
Description of the Receivables ________, 199__
Purchase Agreement..............58
Certain Legal Aspects of the
Receivables......................59
Certain Federal Income Tax
Considerations ..................62
Certain State and Local Tax
Considerations ..................69
ERISA Considerations...............69
Underwriting.......................71
Legal Matters......................72
Index of Principal Terms...........73
- ------------------------------------- ---------------------------------------
PROSPECTUS
- ----------
Ford Credit Auto Loan Master Trust II
Auto Loan Asset Backed Certificates
FORD CREDIT AUTO RECEIVABLES LLC
Transferor
FORD MOTOR CREDIT COMPANY
Master Servicer
The Auto Loan Asset Backed Certificates (the "Certificates") offered hereby
from time to time in one or more series (each, a "Series") evidence undivided
interests in certain assets of the Ford Credit Auto Loan Master Trust II (the
"Trust") created pursuant to a Pooling and Servicing Agreement among Ford Credit
Auto Receivables LLC, as transferor ("FCAR" or the "Transferor"), Ford Motor
Credit Company, as master servicer ("Ford Credit" or the "Master Servicer"), and
The Chase Manhattan Bank, as trustee. The Certificates of each Series will be
offered on terms determined at the time of sale and may have terms significantly
different from other Series of Certificates issued from time to time. The assets
of the Trust (the "Trust Assets") include wholesale receivables (the
"Receivables") generated from time to time in a portfolio of revolving financing
arrangements (the "Accounts") with automobile dealers to finance their
automobile and light duty truck inventory and collections on Receivables.
Certain assets of the Trust will be allocated to Certificateholders of each
Series, including the right to receive a varying percentage of each month's
collections with respect to the Receivables at the times and in the manner
described herein and the related Prospectus Supplement for such Series. The
Transferor will own the remaining interest in the Trust not represented by the
Certificates (the "Transferor's Interest"). While the specific terms of any
Series in respect of which this Prospectus is being delivered will be described
in an accompanying Prospectus Supplement, the terms of any additional Series
will not be subject to prior review by or consent of holders of the Certificates
of any previously issued Series.
Interest will accrue on the unpaid principal amount of the Certificates of
each Series at the per annum rate either specified in or determined in the
manner specified in the related Prospectus Supplement and will be payable on
each Payment Date specified therein, or, in certain circumstances, more
frequently. Principal payments on each Series of Certificates will be made on
the applicable Expected Final Payment Date specified in the related Prospectus
Supplement and on such other date or dates as may be specified in such
Prospectus Supplement or earlier or later in certain circumstances.
Unless otherwise specified in the related Prospectus Supplement, the
Transferor's Interest will be subordinated to the rights of the
Certificateholders of a Series to the limited extent of the Available
Subordinated Amount (or, if so specified in the related Prospectus Supplement,
the Aggregate Available Subordinated Amount) as described herein.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE RISK FACTORS SET FORTH HEREIN
UNDER "RISK FACTORS" BEGINNING ON PAGE 17.
-------------------------
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO
NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE TRANSFEROR, THE MASTER SERVICER
OR ANY AFFILIATE THEREOF. NEITHER THE CERTIFICATES NOR THE RECEIVABLES ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
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.
Certificates of a Series may be sold by the Transferor directly to
purchasers, through agents designated from time to time, through underwriting
syndicates led by one or more managing underwriters or through one or more
acting alone. If underwriters or agents are involved in the offering of
Certificates, the name of the managing underwriter or underwriters or agents
will be set forth in the related Prospectus Supplement. If an underwriter, agent
or dealer is involved in the offering of any Certificates, the underwriter's
discount, agent's commission or dealer's purchase price will be set forth in, or
may be calculated from, the related Prospectus Supplement, and the net proceeds
to the Transferor from such offering will be the public offering price of the
Certificates less such discount, in the case of an underwriter, the purchase
price of the Certificates less such commission, in the case of an agent, or the
purchase price of the Certificates, in the case of a dealer, and less, in each
case, the other expenses of the Transferor associated with the issuance and
distribution of the Certificates. See "Underwriting".
Until 90 days after the date of the related Prospectus Supplement, all
dealers effecting transactions in the Certificates, whether or not participating
in this distribution, may be required to deliver such Prospectus Supplement and
this Prospectus. This is in addition to the obligation of dealers to deliver a
Prospectus Supplement and Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
This Prospectus does not contain complete information about the offering of
the Certificates. Additional information is contained in the related Prospectus
Supplement, and investors are urged to read both this Prospectus and the related
Prospectus Supplement in full. Sales of the Certificates may not be consummated
unless the purchaser has received both this Prospectus and the related
Prospectus Supplement.
The Certificates offered by this Prospectus and the related Prospectus
Supplement are offered by ___________ and the other underwriters set forth in
the related Prospectus Supplement, if any, subject to prior sale, to withdrawal,
cancellation or modification of the offer without notice, to delivery to and
acceptance by ____________ and the other underwriters, if any, and certain
further conditions. Retain this Prospectus for future reference. This Prospectus
may not be used to consummate sales of the Certificates offered hereby unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is __________, 199__
AVAILABLE INFORMATION
Ford Credit Auto Receivables LLC, as originator of the Trust, has filed a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with the Securities and Exchange Commission (the
"Commission") with respect to the Certificates offered pursuant to this
Prospectus. This Prospectus, which forms a part of the Registration Statement,
and the Prospectus Supplement relating to each Series of Certificates contain
summaries of the material terms of the documents referred to herein and therein,
but do not contain all of the information contained in the Registration
Statement and the exhibits thereto. For further information, reference is made
to such Registration Statement and the exhibits thereto. Such Registration
Statement and exhibits can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at its Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its Regional
Offices located as follows: Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and Northeast Regional
Office, Seven World Trade Center, Suite 1300, New York, New York 10048. The
Commission also maintains a Web site at http://www.sec.gov from which such
Registration Statement and exhibits may be obtained.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports, containing information concerning the Trust and prepared by
the Master Servicer, will be sent on behalf of the Trust to Cede & Co. ("Cede"),
as nominee of The Depository Trust Company ("DTC") and registered holder of each
Series of Certificates, pursuant to the Pooling and Servicing Agreement and the
related Series Supplement (each as defined herein). See "Series
Provisions--Reports," "--Book-Entry Registration" and "--Evidence as to
Compliance". Such reports may be available to beneficial owners of Certificates
("Certificate Owners") in accordance with the regulations and procedures of DTC.
Copies of the Monthly Reports may be obtained free of charge upon request from
the Trustee. The Trust will file with the Commission such periodic reports with
respect to the Trust as are required under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and the rules and regulations of the Commission
thereunder.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and in any
accompanying Prospectus Supplement. Reference is made to the Index of Principal
Terms for the location herein of the definitions of certain capitalized terms
used herein.
Issuer.................................Ford Credit Auto Loan Master Trust II
(the "Trust").
Transferor ............................Ford Credit Auto Receivables LLC (the
"Transferor" or "FCAR"), an affiliate of
Ford Motor Credit Company.
Master Servicer .......................Ford Motor Credit Company ("Ford Credit"
or, together with, as applicable, a
successor Master Servicer, the "Master
Servicer"), a wholly-owned subsidiary of
Ford Motor Company ("Ford").
Trustee ...............................The Chase Manhattan Bank (the
"Trustee").
The Trust .............................The Trust was formed pursuant to a
Pooling and Servicing Agreement, dated
as of September 30, 1997, among FCAR, as
Transferor, Ford Credit, as Master
Servicer, and The Chase Manhattan Bank,
as Trustee, as supplemented from time to
time by a Supplement relating a Series
of Certificates (as supplemented or
amended from time to time, the "Pooling
and Servicing Agreement"). The assets of
the Trust (the "Trust Assets") include
(a) certain Receivables existing under
the Accounts at the close of business on
September 30, 1997 (the "Initial Cut-Off
Date"), certain Receivables generated
under the Accounts from time to time
thereafter during the term of the Trust
as well as certain Receivables generated
under any Accounts added to the Trust
from time to time (less Receivables paid
or charged off and excluding Receivables
generated in any Accounts removed from
the Trust from time to time after the
Initial Cut-Off Date), (b) all funds
collected in respect of such Receivables
after the Initial Cut-Off Date, (c) all
funds on deposit in certain accounts of
the Trust including funds on deposit in
one or more Excess Funding Accounts,
Principal Funding Accounts, Interest
Funding Accounts and the Reserve Fund,
(d) any Enhancement issued with respect
to a Series, and (e) a security interest
in certain motor vehicles (the
"Vehicles") and, in the case of certain
Accounts, a security interest junior to
that of Ford Credit or PRIMUS, as the
case may be, in certain parts,
inventory, equipment, fixtures, service
accounts, realty and/or a personal
guarantee (collectively, the "Related
Security") securing the Receivables. The
drawing on or payment of any Enhancement
for the benefit of a Series or Class of
Certificates will not be available to
the Certificateholders of any other
Series or Class. The term "Enhancement"
will mean, with respect to any Series or
class of Certificates, any letter of
credit, surety bond, cash collateral
account, spread account, guaranteed rate
agreement, maturity liquidity facility,
tax protection agreement, interest rate
swap agreement or other similar
arrangement. Enhancement shall also
include the subordination of any Series
or Class or of the Transferor's Interest
to any Series or Class. The Enhancement
applicable to a particular Series of
Certificates will be specified in the
related Prospectus Supplement.
The Accounts ..........................The accounts pursuant to which the
Receivables are generated (the
"Accounts") are established through
revolving credit agreements entered into
by or on behalf of motor vehicle dealers
most of which are franchised by Ford
and/or other motor vehicle manufacturers
(the "Dealers") to purchase or finance
automobile and light duty truck
inventory. The Accounts are selected
from all such credit agreements of Ford
Credit or PRIMUS that meet the criteria
provided in the Pooling and Servicing
Agreement (the "Eligible Accounts").
Initially, the Accounts were selected
from (i) the portfolio of accounts
originated directly by Ford Credit (or
by Ford and immediately thereafter
assigned to Ford Credit) for the
purchase of motor vehicles by
Ford-franchised Dealers and associated
non-Ford Dealers in the United States
(the "Ford Credit U.S. Wholesale
Portfolio") and (ii) the portfolio of
accounts originated by PRIMUS (and
immediately thereafter assigned to Ford
Credit) for the purchase of motor
vehicles by Dealers in the United States
franchised primarily by motor vehicle
manufacturers or distributors other than
Ford (the "PRIMUS U.S. Wholesale
Portfolio"). Under certain
circumstances, Accounts may be added to,
or removed from, the Trust. Upon the
satisfaction of certain conditions and
subject to the approval of the Rating
Agencies, accounts substantially similar
to the Accounts originated or acquired
by Ford Credit from one or more other
Ford affiliates may be sold by Ford
Credit to the Transferor for transfer to
the Trust. See "The Accounts", "Series
Provisions--Addition of Accounts" and
"--Removal of Accounts".
The Receivables .......................The Receivables arise in the Accounts
and consist of advances made directly or
indirectly by Ford Credit to Dealers.
Such advances are used by the Dealers to
purchase or finance the Vehicles, which
consist of primarily new and some used
automobiles, light duty trucks and
certain other vehicles manufactured or
distributed by Ford or other vehicle
manufacturers or distributors.
Generally, the principal amount of an
advance in respect of a new Vehicle is
equal to the wholesale purchase price of
the Vehicle and, subject to certain
exceptions, is due upon the retail sale
of the Vehicle. See "The Dealer
Floorplan Financing Business--Creation
of Receivables" and "--Payment Terms".
Collections of principal under the
Receivables are herein referred to as
"Principal Collections", and collections
of interest and other nonprincipal
charges (including insurance service
fees, amounts recovered with respect to
Defaulted Receivables and insurance
proceeds) are referred to herein as
"Interest Collections". The Receivables
bear interest at an adjustable rate
described herein. See "The Dealer
Floorplan Financing Business--Revenue
Experience".
FCAR has entered into a Receivables
Purchase Agreement, dated as of the date
of the Pooling and Servicing Agreement,
between FCAR, as purchaser, and Ford
Credit, as seller (the "Receivables
Purchase Agreement"). Pursuant to the
Receivables Purchase Agreement, Ford
Credit (a) sells to the Transferor all
of its right, title and interest in and
to all Receivables meeting certain
eligibility criteria contained in the
Receivables Purchase Agreement and the
Pooling and Servicing Agreement
("Eligible Receivables") and (b) assigns
its interests in the Vehicles and the
Related Security to the Transferor. The
Transferor in turn transfers such
Receivables and Related Security to the
Trust pursuant to the Pooling and
Servicing Agreement. The Transferor also
assigns to the Trust its rights with
respect to the Receivables under the
Receivables Purchase Agreement. See
"Description of the Receivables Purchase
Agreement".
All new Receivables arising under the
Accounts during the term of the Trust
will be sold by Ford Credit to the
Transferor and transferred by the
Transferor to the Trust. Accordingly,
the aggregate amount of Receivables in
the Trust will fluctuate from day to day
as new Receivables are generated and as
existing Receivables are collected,
charged off as uncollectable or
otherwise adjusted.
The Certificates.......................The Certificates of each Series will be
available for purchase in minimum
denominations of $1,000 and in integral
multiples thereof or such other minimum
denominations and integral multiples as
are set forth in the related Prospectus
Supplement. Unless otherwise specified
in the related Prospectus Supplement,
the Certificates of each Series will
only be available in book-entry form
except in certain limited circumstances
as described herein under "Series
Provisions--Definitive Certificates".
The Trust Assets will be allocated among
the interest of the Certificateholders
(each, a "Certificateholders' Interest")
of each Series, with the remainder
allocated to the Transferor (the
"Transferor's Interest"), as described
below. If the Certificates of a Series
include more than one class of
Certificates, the Trust Assets allocable
to the Certificateholders' Interest of
such Series will be further allocated
among the Certificateholders of each
class of such Series.
The Certificates of each Series will
evidence fractional undivided beneficial
interests in the Trust Assets allocated
to the Certificateholders' Interest of
that Series. With respect to each
Series, the Trust Assets allocable to
such Series shall be substantially
identical to the Trust Assets allocable
to the other Series, with the exception
of any Enhancement issued with respect
to such Series.
Unless otherwise provided in the related
Prospectus Supplement, a portion of the
Transferor's Interest will be
subordinated to the Certificateholders'
Interest of each Series as described
herein and the related Prospectus
Supplement.
Unless otherwise specified in the
related Prospectus Supplement, on the
date of the issuance of the Certificates
of a Series (each, a "Closing Date"),
the Invested Amount for such Series will
equal the related Initial Principal
Amount and represent the principal
amount of Certificates of such Series
invested in Receivables as of the
Closing Date (as to a Series, the
"Initial Invested Amount"). The Invested
Amount for a Series is subject to
reduction during, if applicable to such
Series as indicated in the related
Prospectus Supplement, the Accumulation
Period or the Amortization Period, the
Early Amortization Period and at such
other times as deposits are made to the
excess funding account (or similar
arrangement) for such Series (the
"Excess Funding Account") in connection
with the payment of Receivables as
described under "Series
Provisions--Excess Funding Account".
The principal amount of the Transferor's
Interest is expected to fluctuate as the
aggregate amount of the Receivables
balance changes from time to time and as
new Series are issued.
Registration of Certificates...........Unless otherwise specified in the
related Prospectus Supplement, the
Certificates of each Series will
initially be represented by one or more
Certificates registered in the name of
Cede, as the nominee of DTC. No person
acquiring an interest in such
Certificates will be entitled to receive
a definitive certificate representing
such person's interest except in the
event that Definitive Certificates are
issued under the limited circumstances
described herein. Certificateholders may
elect to hold their interests through
DTC, in the United States, or Cedel
Bank, societe anonyme ("Cedel") or the
Euroclear System ("Euroclear"), in
Europe. Transfers within DTC, Cedel or
Euroclear, as the case may be, will be
in accordance with the usual rules and
operating procedures of the relevant
system. Cross-market transfers between
persons holding directly or indirectly
through DTC, on the one hand, and
counterparties holding directly or
indirectly through Cedel or Euroclear,
on the other, will be effected in DTC
through Citibank, N.A. ("Citibank") or
Morgan Guaranty Trust Company of New
York ("Morgan"), the relevant
depositaries (collectively, the
"Depositaries") of Cedel or Euroclear,
respectively, and each a participating
member of DTC. See "Series
Provisions--Book-Entry Registration" and
"--Definitive Certificates".
Issuance of New Series ................The Pooling and Servicing Agreement
provides that, pursuant to any one or
more supplements thereto (each, a
"Supplement"), the Transferor may cause
the Trustee to issue one or more new
Series of Certificates (a "New
Issuance"). However, at all times, the
interest in the principal balances of
Receivables ("Principal Receivables")
represented by the Transferor's Interest
must equal or exceed a specified amount.
The issuance of the Certificates of a
Series pursuant to the Supplement
related thereto will constitute a New
Issuance. The Pooling and Servicing
Agreement also provides that the
Transferor may specify, with respect to
any Series, the Principal Terms of the
Series. The Transferor may offer any
Series to the public or other investors
under this Prospectus and accompanying
Prospectus Supplement, a prospectus or
other disclosure document in
transactions either registered under the
Securities Act or exempt from
registration thereunder, directly or
through the Underwriters or one or more
other underwriters or placement agents.
Under the Pooling and Servicing
Agreement and pursuant to a Supplement,
a New Issuance may only occur upon
delivery to the Trustee of the
following: (a) a Supplement specifying
the Principal Terms of such Series, (b)
an opinion of counsel to the effect
that, for federal income tax purposes,
(i) such issuance will not adversely
affect the characterization of the
Certificates of any outstanding Series
or class as debt of the Transferor, (ii)
such issuance will not cause a taxable
event to any Certificateholders and
(iii) such new Series will be
characterized as debt and (c) letters
from the Rating Agencies confirming that
the issuance of the new Series will not
result in the reduction or withdrawal of
the rating of the Certificates of any
Series then outstanding. See "Series
Provisions--New Issuances".
Allocations............................The Certificateholders' Interest of each
Series will include the right to receive
(but only to the extent needed to make
required payments under the Pooling and
Servicing Agreement) varying percentages
of Interest Collections and Principal
Collections collected during each
calendar month (each, a "Collection
Period"). Interest Collections,
Principal Collections and Defaulted
Receivables for any Collection Period
will be allocated to the
Certificateholders' Interest of a Series
as described below and as more fully
described in the related Prospectus
Supplement. Interest Collections,
Principal Collections and Defaulted
Receivables not allocated to the
Certificateholders' Interest of all
outstanding Series will be allocated to
the Transferor's Interest.
Interest Collections and Defaulted
Receivables will be allocated at all
times to the Certificateholders'
Interest of a Series based on the
Floating Allocation Percentage for such
Series applicable during the related
Collection Period. Unless otherwise
specified in the related Prospectus
Supplement, the Floating Allocation
Percentage for each Series for any
Collection Period is the percentage
obtained by dividing the related
Invested Amount on the last day of the
immediately preceding Collection Period
by the aggregate amount of the principal
balances of the Receivables (the "Pool
Balance") on the last day of the
immediately preceding Collection Period.
During the Revolving Period (as defined
herein) for a Series, subject to certain
limitations, Principal Collections
allocable to the related
Certificateholders' Interest will be
allocated and paid to the Transferor or
allocated to any other Series in
exchange for the allocation to such
Certificateholders' Interest of an equal
interest in Principal Receivables that
are new or that would otherwise be part
of the Transferor's Interest or the
Certificateholders' Interest of other
Series. During any Accumulation Period,
if applicable to such Series as
specified in the related Prospectus
Supplement, any Amortization Period and
any Early Amortization Period for a
Series, Principal Collections will be
allocated to the related
Certificateholders' Interest based on
the related Principal Allocation
Percentage. Unless otherwise specified
in the related Prospectus Supplement,
the Principal Allocation Percentage for
a Collection Period during any such
Accumulation Period, Amortization Period
and Early Amortization Period is the
percentage equivalent of a fraction, the
numerator of which is the Invested
Amount for such Series on the last day
of the related Revolving Period and the
denominator of which is the Pool Balance
on the last day of the immediately
preceding Collection Period. See "Series
Provisions--Allocation
Percentages--Principal Collections for
all Series".
Interest...............................Interest on the unpaid principal balance
of the Certificates of a Series will
accrue at the per annum rate (the
"Certificate Rate") either specified in
or determined in the manner specified in
the related Prospectus Supplement and
will be payable to Certificates of such
Series on the dates specified in the
related Prospectus Supplement (each, a
"Payment Date"). If so specified in the
related Prospectus Supplement for a
Series, upon the occurrence of an Early
Amortization Event or an Asset
Composition Event, interest may be
distributed to the Certificateholders
monthly, commencing on the first
Distribution Date following such Early
Amortization Event or Asset Composition
Event (but, in the case of an Asset
Composition Event, only to the extent
needed to cure such event) and, subject
to certain exceptions, on each
subsequent Distribution Date until the
Certificates are retired. If Payment
Dates for a Series occur less frequently
than monthly, Certificateholder Interest
Collections allocable to such Series
will be deposited each month into a
trust account (the "Interest Funding
Account") and used to make interest
payments to the Certificateholders on
each Payment Date. Unless otherwise
specified in the related Prospectus
Supplement, interest payable on the
Certificates of a Series with respect to
a Payment Date will accrue from and
including the preceding Payment Date
(or, in the case of the first Payment
Date, from and including the related
Closing Date) to but excluding such
Payment Date. Unless otherwise specified
in the related Prospectus Supplement,
interest for any Payment Date will be
calculated on the basis of a 360-day
year consisting of twelve 30-day months
(for fixed-rate Certificates) or the
actual number of days elapsed divided by
360 (for floating-rate Certificates).
Interest with respect to such Series for
any Payment Date due but not paid on
such Payment Date will be due on the
next succeeding Payment Date together
with additional interest on such amount
at the rate specified in the related
Prospectus Supplement. Interest payments
on a Series of Certificates will be
derived from Certificate Interest
Collections for the related Collection
Period allocable to such Series,
withdrawals, if any, from the related
Reserve Fund, Investment Proceeds, if
any, receipts, if any, under any related
Enhancement and, under certain
circumstances, Available Transferor's
Collections to the extent of the
Available Subordinated Amount for such
Series.
Principal .............................The final principal payment with respect
to each Series of Certificates will be
made on the applicable Payment Date
(each, an "Expected Final Payment Date")
specified in the related Prospectus
Supplement, provided that principal
payments on a Series of Certificates may
be made on such other date or dates as
shall be specified in such Prospectus
Supplement. If a Series has more than
one class of Certificates, a different
Expected Final Payment Date for the
payment of principal may be assigned to
each class. The final principal payment
with respect to any Series of
Certificates may be paid earlier than
the applicable Expected Final Payment
Date if an Early Amortization Event
occurs, or later under certain
circumstances described herein. If
applicable to a Series of Certificates,
upon the occurrence of an Asset
Composition Event, certain principal
amounts may be payable to the
Certificateholders.
Asset Composition Event ...............The Prospectus Supplement for a Series
will specify whether the Certificates
are subject to Asset Composition Events.
If so specified an "Asset Composition
Event" will occur during the Revolving
Period for such Series if the sum of all
Eligible Investments and amounts on
deposit in all of the deposit accounts
of all Series (the "Series Accounts")
represents more than a specified
percentage of the Trust Assets on each
of a specified number of consecutive
Determination Dates, after giving effect
to all payments made or to be made on
the Distribution Dates next succeeding
such respective Determination Dates. As
further specified in the related
Prospectus Supplement, upon the
occurrence of an Asset Composition Event
during the Revolving Period for the
related Series, distributions will be
made in respect of the Certificates of
such Series to the extent necessary to
result in compliance with the percentage
limitation the violation of which gave
rise to the Asset Composition Event.
Revolving Period ......................During the Revolving Period for a
Series, unless otherwise specified in
the related Prospectus Supplement,
Principal Collections otherwise
allocable to the related
Certificateholders' Interest generally
will be deposited to the related Excess
Funding Account, if any, or allocated to
another Series (in effect, in exchange
for the allocation to such
Certificateholders' Interest of an equal
interest in the Principal Receivables
that are new or that would otherwise be
part of the Transferor's Interest or the
Certificateholders' Interest of such
other Series) in order to maintain the
sum of the related Invested Amount and
the amount, if any, in the Excess
Funding Account at a constant level. The
"Revolving Period" for a Series will be
the period beginning on the dated
specified in the related Prospectus
Supplement (the "Series Cut-Off Date")
and ending on the earlier of (x) either
the Accumulation Period Commencement
Date, if applicable to such Series, or
such other date specified in the related
Prospectus Supplement and (y) the
business day immediately preceding the
day on which an Early Amortization Event
occurs. See "Series Provisions--Early
Amortization Events" for a discussion of
certain events which might lead to the
early termination of the Revolving
Period and, in certain limited
circumstances, the recommencement of the
Revolving Period.
Accumulation Period ...................If so specified in the related
Prospectus Supplement for a Series of
Certificates and unless an Early
Amortization Period commences with
respect thereto, the Certificates of
such Series will have an accumulation
period (each, an "Accumulation Period"),
which will commence at the close of
business on the date specified in the
related Prospectus Supplement (the
"Accumulation Period Commencement
Date"), and continue until the earlier
of (a) the commencement of the Early
Amortization Period with respect to such
Series and (b) the Expected Final
Payment Date for the Certificates of
such Series. Unless an Early
Amortization Event shall have occurred,
the length of the Accumulation Period
(the "Accumulation Period Length") will
be specified or calculated in the manner
described in the related Prospectus
Supplement. During any Accumulation
Period, Certificateholders' Principal
Collections and certain other amounts
allocable to the Certificateholders'
Interest of the related Series will be
deposited on each Distribution Date in a
trust account (the "Principal Funding
Account") and, together with any amounts
in the related Excess Funding Account,
used to make principal distributions to
Certificateholders of such Series when
due. The amount to be deposited in the
Principal Funding Account on any
Distribution Date for a Series of
Certificates will be limited to the
amount specified in the related
Prospectus Supplement.
Each Series issued by the Trust may have
either an Accumulation Period or an
Amortization Period. Such Accumulation
Periods or Amortization Periods may have
different lengths and begin on different
dates. Thus, certain Series may be in
their Revolving Period while others are
in periods during which Principal
Collections are distributed to, or
reserved for, such other Series. Under
certain circumstances, one or more
Series may be in their Accumulation
Periods, Amortization Periods or Early
Amortization Periods, while other Series
are not.
Amortization Period....................If so specified in the Prospectus
Supplement for a Series and unless an
Early Amortization Event shall have
earlier occurred, during the period
commencing on the date specified in the
related Prospectus Supplement and ending
when the principal amount of the
Certificate of such Series has been
reduced to zero or when the Trust
otherwise terminates (the "Amortization
Period"), Principal Collections
allocated to the Certificateholders'
Interest of such Series will no longer
be paid to the Transferor but instead
will be distributed monthly to such
Certificateholders as provided herein
under "Series Provisions--Distributions
from the Collection Account" on each
Distribution Date beginning with the
Distribution Date in the month following
the month in which the Amortization
Period commences. Any Series of
Certificates with an Amortization Period
will not have an Accumulation Period.
See "Series Provisions--Early
Amortization Events" for a discussion of
the events which might lead to the early
commence of the Amortization Period.
Allocations based upon the Investor
Percentage during the Amortization
Period may result in distributions of
principal with respect to any Collection
Period to Certificateholders in amounts
that are greater relative to the
declining balance of the Certificate
Principal Balance than would be the case
if no fixed Investor Percentage were
used to determine the percentage of
Principal Collections distributed in
respect of the Investor Interest. See
"Series Provisions--Payments on
Receivables; Deposits to Collection
Account."
Early Amortization Period..............With respect to each Series, during the
period beginning on the day on which an
Early Amortization Event is deemed to
have occurred and, except as described
below, ending on the earlier of the
payment in full of the outstanding
principal balance of the Certificates
for such Series and the related Series
Termination Date (an "Early Amortization
Period"), the Revolving Period or
Accumulation Period, as the case may be,
will terminate, and Principal
Collections and certain other amounts
allocable to the Certificateholders'
Interest of such Series and, if the
Early Amortization Event applies to
other Series, to the Certificateholders'
Interest of such other Series will be
distributed to such Certificateholders
monthly on each Distribution Date (each,
a "Special Payment Date") beginning with
the Distribution Date following the
Collection Period in which an Early
Amortization Period commences. See
"Series Provisions-Early Amortization
Events" for a description of events that
might result in the commencement of an
Early Amortization Period with respect
to a Series of Certificates. During an
Early Amortization Period, distributions
of principal on the Series of
Certificates will not be subject to any
Controlled Distribution Amount (as
defined herein). See "Series
Provisions--Distributions from the
Collection Account; Reserve
Fund--Principal Collections". In
addition, on the first Special Payment
Date for a Series (a) any amounts on
deposit in the related Interest Funding
Account will be paid to the
Certificateholders to pay accrued
interest on the Certificates and (b) any
amounts on deposit in the related Excess
Funding Account, the related Principal
Funding Account and the related Interest
Funding Account (after the payment of
accrued interest on such date) will be
paid to the Certificateholders of such
Series up to the outstanding principal
balance of the Certificates. See "Series
Provisions--Distributions".
Subordination of the
Transferor's Interest..................If the Interest Collections, Investment
Proceeds, Enhancement proceeds, if any,
certain amounts in the related Reserve
Fund and certain other amounts allocable
to the Certificateholders of a Series
for any Collection Period are not
sufficient to cover the interest payable
on such Series of Certificates on the
next Distribution Date (plus any overdue
interest and interest thereon), the
Monthly Servicing Fee for such
Distribution Date, any Investor Default
Amount allocable to such Series for such
Distribution Date, and certain other
amounts, a portion of the Transferor's
Interest will be applied to make up such
deficiency. Generally, the amount of the
Transferor's Interest subject to such
subordination for a Series of
Certificates is the Available
Subordinated Amount. The "Available
Subordinated Amount" for the first
Determination Date generally will be
equal to the Required Subordinated
Amount. Unless otherwise specified in
the related Prospectus Supplement, the
"Required Subordinated Amount" for a
Series of Certificates will mean, as of
any date of determination, the sum of
(i) the product of the Subordinated
Percentage and the Invested Amount and
(ii) the Incremental Subordinated Amount
for such Series. The "Subordinated
Percentage" for each Series will be
specified in the related Prospectus
Supplement. The "Available Subordinated
Amount" for subsequent Distribution
Dates will be determined pursuant to the
calculation specified in the related
Prospectus Supplement. In general the
Available Subordinated Amount for a
Series will fluctuate based on the
increase and decrease, if any, in the
related Invested Amount and the
corresponding decrease and increase in
the amount, if any, in the related
Excess Funding Account and the additions
and subtractions specified in the
calculation referred to above. The
Transferor may, but is not obligated to,
increase at any time the Available
Subordinated Amount so long as the
cumulative amount of such increases does
not exceed the amount specified in the
related Prospectus Supplement for such
Series. Any such increase may have the
effect of avoiding an Early Amortization
Event for such Series. Unless otherwise
specified in the related Prospectus
Supplement, the Available Subordinated
Amount, to the extent it was reduced
because of any application of the
Transferor's Interest to cover a
deficiency, will be reinstated by the
amount, if any, for each Distribution
Date of Excess Servicing allocated and
available to be paid to the Transferor
as described under "Series
Provisions--Distributions from the
Collection Account; Reserve Fund--Excess
Servicing".
Servicing .............................The Master Servicer (initially, Ford
Credit) is responsible for servicing,
managing and making collections on the
Receivables and will, except as provided
below and as otherwise specified in the
related Prospectus Supplement, deposit
such collections in the Collection
Account within two business days
following the receipt thereof, generally
up to the amount of such collections
required to be distributed to
Certificateholders of all Series with
respect to the related Collection
Period. In certain circumstances, the
Master Servicer will be permitted to use
for its own benefit and not segregate
collections on the Receivables received
by it during each Collection Period
until no later than the business day
prior to the related Distribution Date.
See "Series Provisions--Allocation of
Collections; Deposits in Collection
Account; Limited Subordination of
Transferor's Interest".
On the second business day preceding
each Distribution Date (each, a
"Determination Date"), the Master
Servicer will calculate the amounts to
be allocated as described herein in
respect of collections on Receivables
received with respect to the related
Collection Period to the
Certificateholders of all outstanding
Series or to the Transferor as described
herein. See "Series
Provisions--Allocation of Collections;
Deposits in Collection Account; Limited
Subordination of Transferor's Interest"
and "Risk Factors--Certain Legal
Aspects".
In certain limited circumstances Ford
Credit may resign or be removed as
Master Servicer, in which event either
the Trustee, or, so long as it meets
certain eligibility standards set forth
in the Pooling and Servicing Agreement,
a third-party servicer may be appointed
as successor servicer. Ford Credit is
permitted to delegate any of its duties
as Master Servicer to any of its
affiliates, but any such delegation will
not relieve the Master Servicer of its
obligations under the Pooling and
Servicing Agreement. The Master Servicer
will receive a monthly servicing fee and
certain other amounts as described
herein as servicing compensation from
the Trust. See "Series
Provisions--Servicing Compensation and
Payment of Expenses".
Mandatory Reassignment and
Transfer of Certain
Receivables............................The Transferor has made certain
representations and warranties in the
Pooling and Servicing Agreement with
respect to the Receivables in its
capacity as Transferor and Ford Credit
has made certain representations and
warranties in the Pooling and Servicing
Agreement in its capacity as Master
Servicer. If the Transferor breaches
certain of its representations and
warranties with respect to any
Receivables and such breach remains
uncured for a specified period and has a
materially adverse effect on the
Certificateholders' Interest of any
outstanding Series, the
Certificateholders' Interest of each
such Series in such Receivables will,
subject to certain conditions specified
herein, be reassigned to the Transferor.
If Ford Credit, as Master Servicer,
fails to comply in any material respect
with certain covenants or warranties
with respect to any Receivables and such
noncompliance is not cured within a
specified period after Ford Credit
becomes aware or receives notice thereof
from the Trustee and such noncompliance
has a materially adverse effect on the
Certificateholders' Interest of any
outstanding Series, all Receivables
affected will be purchased by Ford
Credit. In the event of a transfer of
servicing obligations to a successor
Master Servicer, such successor Master
Servicer, rather than Ford Credit, would
be responsible for any failure to comply
with the Master Servicer's covenants and
warranties arising thereafter.
Tax Status ............................In the opinion of special tax counsel
for the Transferor and the Trust, the
Certificates of each Series will be
characterized as debt for federal income
tax purposes. Each Certificateholder, by
the acceptance of a Certificate, will
agree to treat the Certificates as debt
for tax purposes. See "Certain Federal
Income Tax Considerations" and "Certain
State and Local Tax Considerations" for
additional information concerning the
application of federal and Michigan tax
laws.
ERISA Considerations ..................An employee benefit plan subject to the
requirements of the fiduciary
responsibility provisions of the
Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or the
provisions of Section 4975 of the Code,
contemplating the purchase of
Certificates should consult its counsel
before making a purchase and the
fiduciary and such legal advisors should
consider whether the Certificates will
satisfy all of the requirements of the
"publicly offered security" exemption
described herein or the possible
application of other ERISA prohibited
transaction exemptions described herein.
See "ERISA Considerations".
RISK FACTORS
Limited Liquidity. It is anticipated that, to the extent permitted, the
underwriters of any Series of Certificates offered hereby will make a market in
such Certificates, but will not be under any obligation to do so. There can be
no assurance that a secondary market will develop with respect to the
Certificates of any Series offered hereby or, if such a secondary market does
develop, that it will continue for the life of such Certificates.
Certain Legal Aspects. There are certain limited circumstances under the
Uniform Commercial Code (the "UCC") and applicable federal law in which prior or
subsequent transferees of Receivables could have an interest in such Receivables
with priority over the Trust's interest. See "Certain Legal Aspects of the
Receivables--Transfer of Receivables". Under the Receivables Purchase Agreement,
Ford Credit has warranted to the Transferor and, under the Pooling and Servicing
Agreement, the Transferor has warranted to the Trust, that the Receivables have
been and will be transferred free and clear of the lien of any third party. Each
of Ford Credit and the Transferor also has covenanted that, except for the
conveyances under the Receivables Purchase Agreement and the Pooling and
Servicing Agreement, it will not sell, pledge, assign, transfer or grant any
lien on any Receivable (except as described under "Series Provisions--The
Transferor's Certificate") other than to the Trust.
Ford Credit has warranted to the Transferor in the Receivables Purchase
Agreement that the sale of the Receivables by it to the Transferor is a valid
sale of the Receivables. In addition, Ford Credit and the Transferor will treat
the transactions described in the Receivables Purchase Agreement as a sale of
the Receivables to the Transferor, and Ford Credit will take all actions
required under applicable law to perfect the Transferor's ownership interest in
the Receivables. See "Certain Legal Aspects of the Receivables--Transfer of
Receivables". Notwithstanding the foregoing, if Ford Credit were to become a
debtor in a bankruptcy case and a creditor or trustee-in-bankruptcy of such
debtor or such debtor itself were to assert that the sale of the Receivables to
the Transferor should be recharacterized as a pledge to secure a borrowing, then
delays in payments on the Receivables to the Transferor (and, thus, to the Trust
and the Certificateholders) could occur. Moreover, were a court to rule in favor
of any such trustee, debtor or creditor, reductions in the amount of such
payments could result. If the sale of Receivables to the Transferor were to be
recharacterized as a pledge, a tax or government lien on the property of Ford
Credit arising before the creation of a given Receivable may have priority over
the Transferor's interest in such Receivable. See "Certain Legal Aspects of the
Receivables--Certain Matters Relating to Bankruptcy".
If the transactions contemplated in the Receivables Purchase Agreement were
to be treated as sales, the assets of the Transferor generally would not be part
of Ford Credit's estate in bankruptcy and, thus, would not be available to
satisfy Ford Credit's creditors. In a case decided in 1993, however, the United
States Court of Appeals for the Tenth Circuit concluded that accounts receivable
sold by a debtor prior to a filing for bankruptcy remain property of the
debtor's bankruptcy estate. If the principles underlying the conclusion in that
case were to be applied in a Ford Credit bankruptcy, the Receivables would be
subject to claims of certain creditors and, accordingly, would be subject to the
potential delays and payment reductions described in the preceding paragraph.
Furthermore, in the event Ford Credit were to become a debtor in a bankruptcy
case and a creditor or trustee-in-bankruptcy of such debtor or such debtor
itself were to request a bankruptcy court to order that Ford Credit be
substantively consolidated with the Transferor, delays in and reductions in the
amount of distributions on the Certificates could occur.
The Transferor has warranted in the Pooling and Servicing Agreement that
the transfer of the Receivables to the Trust is either a sale of the Receivables
to the Trust or a grant of a first priority perfected "security interest" (as
defined in the UCC) in such property to the Trust. The Transferor will take all
actions required under applicable law to perfect the Trust's interest in the
Receivables. In addition, the Transferor has warranted that, if the transfer by
the Transferor to the Trust is a grant to the Trust of a security interest in
the Receivables, the Trust will at all times have a first priority perfected
security interest therein and, with certain exceptions, in the proceeds thereof.
Nevertheless, if the transfer of the Receivables to the Trust were deemed to
create a security interest therein under the UCC as in effect in Michigan, a tax
or statutory lien on property of Ford Credit or the Transferor arising before a
Receivable is transferred to the Trust may have priority over the Trust's
interest in such Receivable. If the Transferor were to become a debtor in a
bankruptcy case and a bankruptcy trustee or a creditor of the Transferor were to
take the position that the transfer of the Receivables from the Transferor to
the Trust should be recharacterized as a pledge of such Receivables, then delays
in distributions on the Certificates could result and, should the bankruptcy
court rule in favor of any such trustee or creditor, reductions in such
distributions could occur.
If certain events relating to the bankruptcy of Ford, Ford Credit or the
Transferor were to occur, then an Early Amortization Event would occur and,
under the terms of the Pooling and Servicing Agreement, additional Receivables
would not be transferred to the Trust and distributions of principal on the
Certificates of a Series would not be subject to any applicable Controlled
Distribution Amount. See "Certain Legal Aspects of the Receivables--Transfer of
Receivables" and "--Certain Matters Relating to Bankruptcy."
Payments made in respect of repurchases of Receivables by Ford Credit or
the Transferor under the Pooling and Servicing Agreement may be recoverable by
Ford Credit or the Transferor as debtor in possession or by a creditor or a
trustee-in-bankruptcy of Ford Credit or the Transferor as a preferential
transfer from Ford Credit or the Transferor, as the case may be, if such
payments are made within one year prior to the filing of a bankruptcy case in
respect of Ford Credit or the Transferor, as the case may be.
Application of federal and state bankruptcy and debtor relief laws could
affect the interests of the Certificateholders in the Receivables if such laws
result in any Receivables being charged off as uncollectable or result in delays
in payments due on such Receivables. See "Certain Legal Aspects of the
Receivables--Certain Matters Relating to Bankruptcy".
The Transferor has represented and warranted in the Pooling and Servicing
Agreement that each Receivable is at the time of creation secured by a first
priority perfected security interest in the related Vehicle. Generally, under
applicable state laws, a security interest in an automobile or light duty truck
which secures wholesale financing obligations may be perfected by the filing of
UCC financing statements. Ford Credit takes all actions necessary under
applicable state laws to perfect Ford Credit's security interest in the
Vehicles. However, at the time a Vehicle is sold, Ford Credit's security
interest in the Vehicle will terminate. Therefore, if a Dealer fails to remit to
Ford Credit amounts owed with respect to Vehicles that have been sold, the
related Receivables will no longer be secured by Vehicles.
The Trust's interest in Related Security other than a Vehicle (referred to
herein as "Non-Vehicle Related Security"), if any, securing a Receivable will be
subordinate to the interest of Ford Credit therein. See "The Dealer Floorplan
Financing Business--Intercreditor Agreement in respect of Security Interests in
Vehicles and Non-Vehicle Related Security".
Payments. Receivables created in respect of new Vehicles generally are
payable by Dealers upon the retail sale of the underlying Vehicle. However, the
timing of such sales is uncertain. Historically, receivables created in respect
of used Vehicles generally have been paid within 60 days. There is no assurance
that additional Receivables will be created under the Accounts or that any
particular pattern of Dealer repayments will occur. The payment of principal of
the Certificates is dependent on Dealer repayments and the Certificates of a
Series may not be fully amortized on the applicable Expected Final Payment Date
specified in the related Prospectus Supplement. In addition, a significant
decline in the amount of Receivables generated could cause an Asset Composition
Event or Early Amortization Event to occur. However, in the case of a Series for
which an Excess Funding Account has been established, a decline in the amount of
Receivables generated would be absorbed initially by an increase in the related
Excess Funding Account. The Receivables Purchase Agreement provides that in the
event that the Pool Balance is not maintained at a specified minimum level, Ford
Credit is required to designate additional Accounts, the Receivables of which
will be sold to the Transferor, and the Pooling and Servicing Agreement provides
that the Transferor is required to transfer such Receivables to the Trust. If
additional Accounts are not so designated by Ford Credit as required, an Early
Amortization Event with respect to one or more Series will occur, resulting in
the commencement of an Early Amortization Period for such Series (although in
certain circumstances the resulting Early Amortization Period may terminate and
the Revolving Period recommence). See "The Dealer Floorplan Financing Business"
and "Maturity and Principal Payment Considerations."
Social, Economic and Other Factors. Payment of the Receivables is largely
dependent upon the retail sale of the related Vehicles. The level of retail
sales of cars and light duty trucks may change as the result of a variety of
social and economic factors. Economic factors include interest rates,
unemployment levels, the rate of inflation and consumer perception of economic
conditions generally. The use of incentive programs (e.g., manufacturers' rebate
programs) also may affect retail sales. However, the Transferor is unable to
determine and has no basis to predict, whether or to what extent economic or
social factors will affect the level of Vehicle sales.
Trust's Relationship to Ford and Ford Credit. Neither Ford Credit nor Ford
is obligated to make any payments in respect of any Series of Certificates or
the Receivables (other than the obligation of Ford Credit to purchase certain
Receivables from the Trust under certain limited circumstances, as described
under "Series Provisions--Master Servicer Covenants"). However, the Trust is
dependent upon Ford Credit and PRIMUS for the generation of new Receivables. The
ability of Ford Credit and PRIMUS to generate Receivables is in turn dependent
to a large extent on the sales of automobiles and light duty trucks
(manufactured or distributed primarily by Ford, in the case of the Ford Credit,
and by certain other automobile manufacturers or distributors, in the case of
the PRIMUS). Thus, no assurance can be given that Ford Credit or PRIMUS will
continue to generate Receivables at the same rate as in prior years. In
addition, if Ford Credit were to cease acting as Master Servicer, delays in
processing payments on the Receivables and information in respect thereof could
occur and result in delays in payments to the Certificateholders.
In connection with the transfer of Receivables by Ford Credit to the
Transferor and the transfer of such Receivables by the Transferor to the Trust,
each of Ford Credit and the Transferor makes representations and warranties with
respect to the characteristics of such Receivables. Ford Credit and the
Transferor are required to purchase Receivables with respect to which such
representations and warranties have been breached, have not been cured and have
a materially adverse effect on the interest of the Certificateholders. See
"Series Provisions-- Representations and Warranties". In addition, subject to
certain limitations, Ford Credit or PRIMUS, as the case may be, has the ability
to change the terms on the Accounts, including the sale and the credit line as
well as underwriting procedures.
From time to time in certain instances, Ford has provided certain financial
assistance to Ford-franchised dealers, including the purchase of vehicles upon
voluntary dealership termination; however, Ford has no obligation to provide
such assistance. If Ford elects not to provide any such financial assistance to
Dealers or is unable to do so, losses with respect to the Receivables may
increase. See "The Dealer Floorplan Financing Business--Relationship with Ford"
herein. In addition, because a substantial number of the Vehicles to be sold by
the Dealers are manufactured or distributed by Ford, if Ford were temporarily or
permanently no longer in such business, the rate of sales of Ford-manufactured
Vehicles owned by the Dealers would decrease, adversely affecting payment rates
with respect to the Receivables. Moreover, if Ford were temporarily or
permanently no longer manufacturing or distributing vehicles, the loss
experience with respect to the Receivables will be adversely affected. See "The
Dealer Floorplan Financing Business".
Ford and Ford Credit are subject to the informational requirements of the
Exchange Act and in accordance therewith file reports and other information with
the Commission. For further information regarding Ford and Ford Credit,
reference is made to such reports and other information that are publicly
available at such government offices as described under "Available Information".
Credit Enhancement. Credit enhancement of the Certificates will be provided
by the subordination of the Transferor's Interest to the extent of the Available
Subordinated Amount, as described herein, and amounts in the Reserve Fund. The
amount of such credit enhancement is limited and may be reduced from time to
time as described herein. See "Series Provisions--Allocation of Collections;
Deposits in Collection Account; Limited Subordination of Transferor's Interest".
Control. Under certain circumstances, the consent or approval of the
holders of a specified percentage of the aggregate unpaid principal amount of
all outstanding Certificates of all outstanding Series will be required to
direct certain actions, including amending the Pooling and Servicing Agreement
in certain circumstances and directing a reassignment of the entire portfolio of
Receivables. In addition, following the occurrence of an insolvency event with
respect to the Transferor, the holders of Certificates evidencing more than 50%
of the aggregate unpaid principal amount of each Series or each Class of each
Series (and any holder of a Supplemental Certificate) will be required to direct
the Trustee not to sell or otherwise liquidate the Receivables.
Additional Series. The Trust, as a master trust, may issue from time to
time additional Series (which may be represented by different Classes within a
Series). A Supplement delivered in connection with the issuance of other Series
will specify certain Principal Terms applicable to such Series. Such Principal
Terms, which will be set forth in the related Prospectus Supplement for such
Series, may include methods for determining applicable allocation percentages
and allocating collections, provisions creating different or additional security
or other credit enhancement, different classes of certificates (including
subordinated classes of certificates) and any other amendment or supplement to
the Pooling and Servicing Agreement which is made applicable only to such
Series. No Supplement, however, may change the terms of the Certificates or the
terms of the Pooling and Servicing Agreement as applied to the Certificates. See
"Series Provisions--New Issuances". As a condition to the execution of any
Supplement, the Rating Agencies shall have advised the Trustee that the issuance
of such Series will not result in the reduction or withdrawal of their ratings
of the Series of Certificates then outstanding. There can be no assurance,
however, that the terms of a Series might not have an impact on the timing or
amount of payments received by a Certificateholder of another Series. The
issuance of an additional Series does not require the consent of the
Certificateholders of any Series then outstanding.
Ratings of Certificates. Unless otherwise specified in the related
Prospectus Supplement, it is a condition to issuance of the Certificates of each
Series that they have a credit rating in one of the top four generic rating
categories by at least one nationally recognized rating agency (each as
designated in the related Prospectus Supplement in respect of the Certificates
of the related Series, a "Rating Agency"). The rating of the Certificates of any
Series is based primarily on the value of the Receivables, the Available
Subordinated Amount of Receivables required with respect to such Certificates,
the circumstances in which funds may be drawn under the Enhancement, if any, for
the benefit of the Certificateholders of such Series, the terms of any
applicable Enhancement described in the related Prospectus Supplement and the
credit rating of the Master Servicer.
The ratings of the Certificates of any Series are not a recommendation to
purchase, hold or sell such Certificates, inasmuch as such ratings do not
comment as to market price or suitability for a particular investor. There is no
assurance that the ratings of the Certificates of any Series will remain for any
given period of time or that such ratings will not be lowered or withdrawn
entirely by a Rating Agency if in its judgment circumstances in the future so
warrant. Although the ratings of the Certificates of any Series address the
respective likelihood of the ultimate payment of principal and interest on such
Certificates, such ratings do not address the likelihood that the outstanding
principal amount of a class of Certificates of such Series will be paid in full
on the applicable Expected Final Payment Date or on any other date specified in
the related Prospectus Supplement for the payment of such principal. The ratings
also do not address the possibility of the occurrence of any Early Amortization
Event (which could result in the payment of the outstanding principal amount of
a Series of Certificates prior to its Expected Final Payment Date).
Book-Entry Registration. Unless the Prospectus Supplement for a Series of
Certificates specifies that Certificates will be in definitive form, the
Certificates of each Series initially will be represented by one or more
Certificates registered in the name of Cede, the nominee of DTC, and will not be
registered in the names of the Certificateholders or their nominees.
Consequently, unless and until Definitive Certificates are issued,
Certificateholders will not be recognized by the Trustee as "Certificateholders"
(as such term is used in the Pooling and Servicing Agreement and the applicable
Supplement). Hence, until such time, Certificateholders will only be able to
exercise the rights of Certificateholders indirectly through DTC and its
participating organizations. See "Series Provisions--Book-Entry Registration"
and "--Definitive Certificates".
THE RECEIVABLES
FORD CREDIT AUTO RECEIVABLES LLC AND THE TRUST
The Transferor, a limited liability company wholly owned by Ford Credit,
was formed in the State of Delaware on August 18, 1997. The Transferor was
organized for limited purposes, which include purchasing receivables and
transferring such receivables to third parties as well as any activities
incidental to and necessary or convenient for the accomplishment of such
purposes. The principal executive offices of the Transferor are located at The
American Road, Dearborn, Michigan 48121. The telephone number of such offices is
(313) 594-7765.
The Transferor has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief by Ford Credit under the United States Bankruptcy Code or similar
applicable laws ("Insolvency Laws") will not result in consolidation of the
assets and liabilities of the Transferor with those of Ford Credit. These steps
include the creation of the Transferor as a separate, limited-purpose limited
liability company pursuant to a Certificate of Formation containing certain
limitations (including restrictions on the nature of the Transferor's business
and a restriction on the Transferor's ability to commence a voluntary case or
proceeding under any Insolvency Law without the unanimous affirmative vote of
all of its members, including an independent member thereof). No assurance can
be given, however, that such a consolidation will not occur under certain
circumstances. See "Risk Factors--Certain Legal Aspects".
On the Initial Closing Date, Ford Credit transferred Receivables to the
Transferor as a capital contribution in an amount equal to the excess of the
purchase price of such Receivables over the proceeds of the sale of certificates
issued simultaneously therewith (the "Series 1997-A Certificates"). If
Additional Accounts are added to the Trust, Ford Credit may make additional
contributions of capital to the Transferor to fund a portion of the purchase
price of the Receivables arising in Additional Accounts.
In addition to purchasing the Receivables in connection with the offering
of any Series of Certificates, the Transferor may purchase other receivables
from Ford Credit in connection with other funding transactions.
THE TRUST
The Trust was formed in accordance with the laws of the State of New York
pursuant to the Pooling and Servicing Agreement. The Transferor has conveyed and
will convey to the Trust, without recourse, the Receivables arising under the
Accounts from time to time. The property of the Trust consists of the
Receivables existing in the Accounts on the Initial Cut-Off Date, all
Receivables generated in the Accounts from time to time thereafter during the
term of the Trust as well as Receivables generated in any Accounts added to the
Trust from time to time (less Receivables paid or charged off and excluding
Receivables in any Accounts that are removed from the Trust from time to time
after the Initial Cut-Off Date), an assignment of all the Transferor's rights
and remedies under the Receivables Purchase Agreement, all funds collected or to
be collected in respect of the Receivables, all funds on deposit in certain
accounts of the Trust including funds on deposit in the Excess Funding Account,
the Principal Funding Accounts, the Interest Funding Accounts and the Reserve
Fund), any Enhancement issued with respect to any other Series, and a security
interest in the Vehicles and any other Related Security described in the related
Prospectus Supplement. See "Description of the Receivables Purchase Agreement"
for a summary of certain terms of the Receivables Purchase Agreement.
The property of the Trust may include Enhancements for the benefit of
Certificateholders of certain Series; however, the Certificateholders of a given
Series will not have any interest in any Enhancements provided for the benefit
of the Certificateholders of other Series. Pursuant to the Pooling and Servicing
Agreement, the Transferor will be allowed (subject to certain limitations and
conditions), and in some circumstances will be obligated, to designate from time
to time Additional Accounts to be included as Accounts and to convey to the
Trust the Receivables of such Additional Accounts, and to designate from time to
time certain Accounts to be removed and to require the Trustee to convey
receivables in such accounts (the "Removal Accounts") to the Transferor. See
"Series Provisions--Addition of Accounts" and "--Removal of Accounts" herein.
The Trust has been formed pursuant to the Pooling and Servicing Agreement
and prior to formation had no assets or obligations. The Trust will not engage
in any business activity other than acquiring and holding the Receivables and
the other assets of the Trust and proceeds therefrom, issuing the Certificates
in Series and the Transferor's Certificate (and any Supplemental Certificates)
and making payments thereon, and related activities. As a consequence, the Trust
is not expected to have any need for, or source of, capital resources other than
the assets of the Trust.
Monthly and annual unaudited reports, containing information concerning the
Trust and prepared by the Master Servicer, will be sent on behalf of the Trust
to the Trustee and each Rating Agency pursuant to the Pooling and Servicing
Agreement. Such reports will be available to Certificateholders upon request to
the Trustee.
FORD MOTOR CREDIT COMPANY
Ford Credit was incorporated in Delaware in 1959 and is a wholly-owned
indirect subsidiary of Ford Motor Company ("Ford"). 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.
Ford Credit and its subsidiaries provide wholesale financing and capital
loans to Ford Motor Company retail dealerships and associated non-Ford
dealerships throughout the world, most of which are privately owned and
financed, and purchase 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 dealerships. In addition, subsidiaries of Ford
Credit provide these financing services in the United States, Europe, Canada and
Australia to non-Ford dealerships. A substantial majority of all New Vehicles
financed by Ford Credit and its subsidiaries are manufactured by Ford and its
affiliates. Ford Credit and its subsidiaries also provide retail financing for
Used Vehicles manufactured 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.
PRIMUS AUTOMOTIVE FINANCIAL SERVICES, INC.
PRIMUS was formed as a wholly-owned subsidiary of Ford Credit in December
1990. It provides wholesale financing and capital loans primarily to non-Ford
affiliated automotive vehicle dealerships and purchases retail installment sale
contracts or leases from them. Its U.S. operations are conducted from 20
regional offices throughout the United States. The address of its principal
executive office is 9009 Carothers Parkway, Franklin, Tennessee 37068.
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be paid to the
Transferor. The Transferor will use such proceeds for general corporate purposes
(including the transfer thereof to Ford Credit) and, if required, to pay any
payments then required with respect to any Enhancement described in the related
Prospectus Supplement for a Series. Ford Credit will use such proceeds for
general corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS
GENERAL
The receivables sold to the Trust from time to time are selected from
extensions of credit made either directly by Ford Credit or through its wholly
owned subsidiary, PRIMUS, to Dealers. The receivables are secured by the
vehicles and, in some cases, may be secured by certain parts inventory,
equipment, fixtures, service accounts, realty and/or personal guarantees.
Ford Credit is the primary source of financing for Ford-franchised dealers
in the United States. Pursuant to an Assignment, Brokerage and Service
Agreement, PRIMUS acts as the agent of Ford Credit for the purpose of
originating accounts primarily with non-Ford associated dealers that conform to
the applicable credit criteria agreed to from time to time between Ford Credit
and PRIMUS. Motor vehicles sold by such dealers include but are not limited to
those manufactured and distributed by Jaguar, Mazda, Subaru and Suzuki.
Simultaneous with the origination of such accounts, PRIMUS assigns to Ford
Credit the accounts, the related financing documents and the security interest
in the related vehicles and any other property of the dealers securing such
accounts. Pursuant to the Assignment Brokerage and Service Agreement, PRIMUS
continues to service such accounts for Ford Credit in accordance with general
industry standards and servicing guidelines established from time to time by
Ford Credit. See "The Dealer Floorplan Financing Business" in the related
Prospectus Supplement.
Vehicles related to the Receivables to be transferred to the Trust are
categorized by Ford Credit and PRIMUS under their respective policies and
procedures, as New or Used Vehicles. "New Vehicles" means those vehicles which
are presently (i) untitled vehicles or (ii) previously titled vehicles purchased
by a qualified dealer at closed auction conducted by Ford and (iii) vehicles
previously subject to retail leases under Ford Credit's Red Carpet Lease or
PRIMUS's retail lease programs that have been acquired by the related dealer at
such dealer's purchase option price. "Used Vehicles" means all other previously
titled vehicles. The categorization of New Vehicles and Used Vehicles may change
in the future based on the practices and policies of Ford Credit or PRIMUS.
CREATION OF RECEIVABLES
Both Ford Credit and PRIMUS finance 100% of the wholesale invoice price of
New Vehicles, including destination charges and a dealer holdback (currently in
the amount of approximately 3% of the balance of the invoice price), which
holdback amount is later returned to the dealer. Receivables related to
approximately two-thirds of Ford-manufactured or distributed New Vehicles are
originated by Ford concurrently with the shipment of such Vehicles to the
financed dealer. Such receivables are sold by Ford to Ford Credit on a daily
basis. In the case of receivables relating to the remaining New Vehicles
manufactured or distributed by Ford, Ford Credit advances funds directly to
Ford. In the case of receivables relating to all New Vehicles not manufactured
or distributed by Ford, funds are advanced directly to the related manufacturer
or the distributor, as applicable, on behalf of the dealer.
Once a dealer has commenced the floor planning of a manufacturer's or
distributor's vehicles, Ford Credit or PRIMUS generally will finance all
purchases of vehicles by such dealer from such manufacturer or distributor, as
the case may be. Either Ford Credit or PRIMUS may limit or cancel this
arrangement if, in its judgment, a dealer's inventory is significantly
overstocked or if a dealer is experiencing financial difficulties. In these
circumstances (referred to as a "suspended" condition), the branch or regional
office may approve additional financing on a vehicle-by-vehicle basis.
CREDIT UNDERWRITING PROCESS
Wholesale financing is extended pursuant to established credit lines. Lines
of credit may be established for dealers to finance purchases of New and Used
Vehicles. Dealers that have a credit line in place also may be eligible for a
Used Vehicle credit line. In some instances, dealers having no New Vehicle lines
in place are still eligible to receive Used Vehicle credit lines.
A new dealer requesting the establishment of a New Vehicle credit line with
Ford Credit or through PRIMUS must submit a request for financing to the
appropriate Ford Credit branch office or PRIMUS regional office. After receipt
of such request, the appropriate office will investigate the prospective dealer
by reviewing that dealer's credit reports, financial statements and bank
references and by evaluating the dealer's marketing capabilities, startup
financing resources and credit requirements. When an existing dealer requests
the establishment of a wholesale New Vehicle credit line, the Ford Credit local
branch office or PRIMUS regional office, as applicable, reviews the dealer's
credit reports (including the experience of the dealer's present financing
source), financial statements and bank references. It also investigates the
dealer's present state of operations and management (including an evaluation of
a factory reference) and marketing capabilities.
The Ford Credit local branch office or PRIMUS regional office, as
applicable, prepares a written recommendation either approving or disapproving
the request for financing and, depending on the amount of the requested credit
line, transmits such recommendation with the requisite documentation to the
central office. The Ford Credit branch manager or PRIMUS regional manager, as
applicable, can approve new wholesale financing requests for amounts up to $10
million in some cases. For greater amounts, the documentation is forwarded to a
regional office or the central office, as the case may be, for approval. Ford
Credit generally applies the same underwriting standards for dealers franchised
by other manufacturers as it applies to Ford-franchised dealers. PRIMUS applies
substantially the same underwriting standards as those applied by Ford Credit.
Upon credit approval, dealers execute a series of financing agreements with
Ford Credit or PRIMUS, as the case may be. Such agreements provide for a first
priority security interest in favor of Ford Credit or PRIMUS, as applicable, in
the vehicles and any applicable additional security. Together with the
assignment of the account by PRIMUS to Ford Credit, PRIMUS assigns such
financing agreements and related security interest in the vehicle and additional
security to Ford Credit.
The size of a credit line offered by either Ford Credit or PRIMUS to a
dealer is based upon the dealer's sales rate (or, in the case of a prospective
dealer, expected sales rate). The amount of a dealer's credit line for New
Vehicles is reviewed periodically for adjustment. Currently, such a credit line
is generally an amount sufficient to finance a 60-day supply of vehicles.
The amount advanced for New Vehicles is equal to (i) the amount invoiced,
in the case of untitled vehicles, (ii) the auction purchase price (including
auction fees), in the case of vehicles purchased at closed auction by a
qualified dealer, and (iii) the dealer's purchase option price in the case of
vehicles previously leased under Ford Credit's Red Carpet Lease program or
PRIMUS's retail lease program. The aggregate amount advanced for each Used
Vehicle is generally equal to the National Automotive Dealers Association's
("NADA") Official Wholesale Used Car Trade-in Guide wholesale book value for
such vehicle.
As more fully described below, the credit lines are guidelines, not limits,
which dealers may be permitted to exceed for business reasons. See "The Dealer
Floorplan Financing Business-Dealer Monitoring".
INTERCREDITOR AGREEMENT IN RESPECT OF SECURITY INTERESTS IN VEHICLES AND NON-
VEHICLE RELATED SECURITY
As stated above, the agreements constituting the credit lines, including
the Accounts, provide for a security interest in the related Vehicles and any
applicable additional security in favor of Ford Credit, and Ford Credit will
represent to the Transferor and the Trust that such security interest is a first
priority security interest. In the case of credit lines originated by PRIMUS,
the credit agreements also provide, in addition to a first priority security
interest in the related Vehicles, a security interest in all personal property
of the Dealer. Such security interests in the related Vehicles and any other
Related Security are, in turn, assigned by Ford Credit to the Transferor
pursuant to the Receivables Purchase Agreement and then by the Transferor to the
Trust pursuant to the Pooling and Servicing Agreement. In its other lending
activities, Ford Credit and PRIMUS may have made or originated capital loans,
real estate loans or other advances to Dealers that are also secured by a
security interest in the Vehicles. Ford Credit agrees in the Receivables
Purchase Agreement not to assert its security interest in any Vehicle until the
Trust shall have been paid in full in respect of the Receivables secured by the
Trust's security interest in such Vehicle. In addition, in connection with such
other loans or advances made by Ford Credit to a Dealer, Ford Credit also may
have a security interest in the Non-Vehicle Related Security, if any, securing
the Receivables of such Dealer. In such cases, Ford Credit, in its sole
discretion, may realize on the Non-Vehicle Related Security for its own benefit
in respect of such loans or advances before the Trust is permitted to realize
upon such Non-Vehicle Related Security. Because of the subordinate position of
the Trust in respect of Non-Vehicle Related Security, there is no assurance that
the Trust will realize any proceeds in respect of any Non-Vehicle Related
Security.
PAYMENT TERMS
Upon the retail sale or lease of a vehicle for which it has provided
floorplan financing, Ford Credit generally is entitled to receive payment in
full of the related advance plus any unpaid interest. Notwithstanding the
foregoing, an installment financing plan for New Vehicles manufactured or
distributed by Ford is available to eligible Ford-franchised dealers through
Ford Credit. These dealers may remit 90% of the amount of the related advance to
Ford Credit upon retail sale or lease of a New Vehicle. Payment of the remaining
10% balance (the " Installment Balance") is due on the first day of the second
month following the sale or lease of such related vehicles. The security
interest in the vehicle is terminated at the time of its sale. A dealer has the
option to pay an amount equal to the Installment Balance to Ford Credit at the
time of the sale or lease of the related vehicle. In such case, Ford Credit
credits such amount to the dealer's total wholesale outstandings. On the date
the Installment Balance is due, the credit is directed by the dealer to be
applied to the Installment Balance for the related Vehicle. PRIMUS does not
offer its Ford and non-Ford franchise dealers an installment financing plan
similar to that offered by Ford Credit to Ford-franchised dealers.
BILLING AND COLLECTION PROCEDURES
A statement setting forth billing and related account information is
prepared and distributed on a monthly basis to each dealer. Generally, each
dealer's bills are generated and mailed by the fourth calendar day of the month.
Interest and other non-principal charges are billed in arrears and are required
to be paid by the end of the month in which they are billed. Dealers remit
payment directly to Ford Credit's local branch offices or PRIMUS's regional
offices (or in some cases, lockboxes maintained by PRIMUS).
REVENUE EXPERIENCE
Currently, dealers are charged interest at a rate determined weekly, which
rate currently is based primarily on the "prime rate" designated from time to
time by certain selected financial institutions plus a spread of either 1% (the
"New Vehicle Base Rate") or 1.75% (the "Used Vehicle Base Rate"), less certain
promotional discounts offered from time to time, plus certain other applicable
charges.
Dealers participating in the installment payment plan who pay the
Installment Balance at the time of the sale of the vehicle are currently charged
a rate of 0.5% above the prime rate on the Installment Balance from the time of
sale to the time it is applied to the balance outstanding.
RELATIONSHIP WITH FORD
On all financing provided by Ford Credit for Ford-manufactured or
distributed New Vehicles, Ford reimburses dealers directly for the finance costs
for a specific period from the date of shipment.
Under an agreement between Ford and each Ford-franchised dealer, Ford
commits to repurchase unsold New Vehicles in inventory upon voluntary franchise
termination, at such vehicles' wholesale prices less a specified margin. Ford
only repurchases current year models that are new, undamaged and unused. Ford
also agrees to repurchase from dealers, at the time of voluntary franchise
termination, parts inventory at specified percentages of the invoice price. All
of such assistance, however, is provided by Ford for the benefit of its dealers
and does not relieve such dealers of any of their obligations to Ford Credit.
Much of such assistance is provided at the option of Ford, which may
terminate any such optional program in whole or in part at any time. If Ford is
unable or elects not to provide such assistance, the loss experience of Ford
Credit in respect of the Ford Credit U.S. Wholesale Portfolio may be adversely
affected. In addition, because a substantial number of the vehicles sold by such
dealers are manufactured or distributed by Ford, if Ford were temporarily or
permanently no longer in such business, the rate of sales of Ford-manufactured
and distributed vehicles would decrease, adversely affecting payment rates and
the loss experience of the Ford Credit U.S. Wholesale Portfolio. See "--Payment
Terms" for a discussion of an installment payment plan made available to
dealers. See also "Risk Factors--Trust's Relationship to Ford and Ford Credit;
Financial Condition of Ford".
Under the terms of agreements entered into by PRIMUS with certain
manufacturers and distributors other than Ford, PRIMUS provides private-label
automotive financing services to certain dealers similar to those offered to
Ford-franchised dealers by Ford Credit. In connection with such agreements and
other agreements entered into with other non-Ford manufacturers or distributors,
some of the manufacturers or distributors provide repurchase agreements which
commit such manufacturers or distributors to repurchase from certain dealers
unsold vehicles in inventory upon franchise termination, voluntary or otherwise.
Such agreements vary, but typically provide for repurchase of unused, current
models that are new, undamaged, and untitled. The repurchase price is the net of
wholesale cost less holdback, transportation and advertising fees. Assistance is
provided for the benefit of the dealer in the event of a voluntary termination
and for the benefit of PRIMUS in the event of an involuntary termination. If
certain of such manufacturers or distributors supplying vehicles to such dealer
were temporarily or permanently no longer in business, the rate of sale of
vehicles owned by such dealers would decrease and the payment rates and loss
experience of the PRIMUS U.S. Wholesale Portfolio might be adversely affected.
In connection with Ford Credit's wholesale financing to non-Ford franchised
dealers, Ford Credit enters into agreements similar to those of PRIMUS with
non-Ford manufacturers or distributors.
DEALER MONITORING
The level of each wholesale credit line is monitored on a periodic basis.
Because the wholesale lines are viewed as guidelines and not absolute limits
with respect to New Vehicles, dealers may be permitted to exceed such lines for
business reasons. For example, prior to a seasonal peak, a dealer may purchase
more vehicles than its existing credit lines would otherwise indicate. Because
of slow inventory turnover, a dealer's credit lines may be reduced until a
sufficient portion of its vehicle inventory is liquidated. Exception reports of
dealers that have exceeded their credit lines by a certain percentage are
reviewed on a weekly basis. Ford Credit or PRIMUS may evaluate a dealer's
financial position and may place the dealer in the suspended category. See
"--Credit Underwriting Process".
Audits of vehicle inventories are conducted on a regular basis by Ford
Credit and PRIMUS personnel. The timing of each visit varies and no advance
notice is given. Auditors review some dealer financial records and conduct a
physical inventory of the financed vehicles. Through the audit process, Ford
Credit and PRIMUS reconcile physical vehicle inventories with its records of
financed vehicles. Audits are intended to identify instances where vehicles are
sold by a dealer without immediately repaying the related wholesale advances.
DEALER "STATUS" AND FORD CREDIT'S WRITE-OFF POLICY
Under certain circumstances, Ford Credit or PRIMUS, will classify a dealer
as "Status". Such circumstances may include failure to remit any principal or
interest payment when due, any notifications of liens, levied, or attachments or
a general deterioration of its financial condition. Ford Credit and PRIMUS work
with dealers to resolve the circumstances for the dealer Status. If, however, a
dealer remains on Status, one of the following events usually occurs: (a) an
orderly liquidation in which the dealer voluntarily liquidates its inventory
through normal sales to retail customers, (b) a forced liquidation in which the
dealer s inventory is repossessed, or (c) a voluntary surrender of the dealer's
inventory. Generally, Ford attempts to locate third parties to purchase a
troubled dealership. Once liquidation has commenced, Ford Credit or PRIMUS, as
applicable, performs an analysis of its position, writes off any amounts
identified at such time as uncollectable and attempts to liquidate all remaining
collateral. During the course of a liquidation, Ford Credit or PRIMUS, as
applicable, may recognize additional losses or recoveries.
THE ACCOUNTS
The Receivables arise in the Accounts. The Accounts initially were selected
from wholesale accounts in the Ford Credit U.S. Wholesale Portfolio and PRIMUS
U.S. Wholesale Portfolio that were Eligible Accounts (the "Eligible Portfolio")
at the time of such selection. In order to be included in the Eligible
Portfolio, each Account must be an account established or acquired by Ford
Credit or PRIMUS in the ordinary course of business and meet certain other
criteria provided in the Pooling and Servicing Agreement. See "Series
Provisions--Representations and Warranties."
Pursuant to the Pooling and Servicing Agreement, the Transferor, and
pursuant to the Receivables Purchase Agreement, Ford Credit, each has the right
(subject to certain limitations and conditions), and in some circumstances is
obligated, to designate from time to time additional qualifying wholesale
Accounts to be included as Accounts and to convey to the Trust the Receivables
of such Additional Accounts, including Receivables thereafter created. These
accounts must meet the eligibility criteria set forth above as of the date such
accounts are designated as Additional Accounts. Ford Credit will convey the
Receivables then existing, with certain exceptions, or thereafter created under
such Additional Accounts to the Transferor, which will in turn convey them to
the Trust. See "Series Provisions--Addition of Accounts". In addition, as of any
Additional Cut-Off Date in respect of Additional Accounts and the date any new
Receivables are generated, Ford Credit will represent and warrant to the
Transferor, and the Transferor will represent and warrant to the Trust, that the
Receivables meet the eligibility requirements set forth in the Pooling and
Servicing Agreement. See "Series Provisions--Conveyance of Receivables". Under
certain circumstances specified in the Pooling and Servicing Agreement, the
Transferor has the right to remove Accounts, and the Receivables arising
therefrom, from the Trust. See "Series Provisions--Removal of Accounts".
Throughout the term of the Trust, the Accounts from which the Receivables arise
will be the same Accounts designated by the Transferor on the Initial Cut-Off
Date plus any Additional Accounts, minus any Accounts removed from the Trust.
For additional information regarding the Accounts, including loss
experience, aging experience and geographic distribution, see "The Accounts" in
the related Prospectus Supplement.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
Unless otherwise specified in the related Prospectus Supplement for a
Series, principal with respect to the Certificates of a Series will not be
payable until the related Expected Final Payment Date, unless an Early
Amortization Event or an Asset Composition Event shall have occurred. Full
amortization of the Certificates on or prior to the Expected Final Payment Date
depends on, among other things, repayment by Dealers of the Receivables and may
not occur if Dealer payments are insufficient therefor. Because the Receivables
generally are paid upon retail sale of the underlying Vehicle, the timing of
such payments is uncertain. In addition, there is no assurance that Ford Credit
will generate additional Receivables under the Accounts or that any particular
pattern of Dealer payments will occur. See "Series Provisions-Interest and
Principal" and "The Dealer Floorplan Financing Business".
The amount of new Receivables generated in any month and monthly payment
rates on the Receivables may vary because of seasonal variations in Vehicle
sales and inventory levels, retail incentive programs provided by Vehicle
manufacturers and various economic factors affecting Vehicle sales generally.
SERIES PROVISIONS
GENERAL
The Certificates of each Series will be issued pursuant to a Pooling and
Servicing Agreement and a Supplement thereto relating to such Series of
Certificates (as so supplemented and as further supplemented or amended from
time to time in connection with the issuance of additional Series, the "Pooling
and Servicing Agreement"), among FCAR, as Transferor of the Receivables, Ford
Credit, as Master Servicer of the Receivables, and the Trustee, substantially in
the form filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The Trustee will make available for inspection a copy of
the Pooling and Servicing Agreement (without exhibits or schedules) to
Certificateholders on written request. The following summary describes certain
terms of the Pooling and Servicing Agreement, does not purport to be complete
and is qualified in its entirety by reference to the Pooling and Servicing
Agreement.
The Certificates of each Series will evidence undivided beneficial
interests in the assets of the Trust allocated to the Certificateholders'
Interest of that Series representing the right to receive from such Trust assets
funds up to (but not in excess of) the amounts required to make payments of
interest on and principal of the related Series of Certificates pursuant to the
Pooling and Servicing Agreement.
Unless the Prospectus Supplement with respect to a Series specifies that
Certificates will be issued in definitive form, the Certificates of each Series
will initially be represented by one or more certificates registered in the name
of the nominee of DTC (together with any successor depository selected by the
Transferor, the "Depository"), except as set forth below. The Certificates of
each Series will be available for purchase in minimum denominations of $1,000
and integral multiples thereof in book-entry form or in such other denomination
and form as is specified in the related Prospectus Supplement. The Transferor
has been informed by DTC that DTC's nominee will be Cede. See "--Book-Entry
Registration" and "--Definitive Certificates".
INTEREST
Interest on the principal balance of the Certificates of each Series will
accrue at the rate per annum specified in, or determined as provided in, the
related Prospectus Supplement (with respect to any Series of Certificates, the
"Certificate Rate") and, except as otherwise provided herein, will be
distributed to the Certificateholders of such Series on the date specified
therefor in the related Prospectus Supplement (each, a "Payment Date"); provided
that (a) if an Early Amortization Event shall have occurred with respect to such
Series, interest may thereafter be distributed to the Certificateholders of such
Series monthly as specified in the related Prospectus Supplement (each, a
"Distribution Date") or (b) if an Asset Composition Event shall have occurred
with respect to such Series, interest (to the extent described in the related
Prospectus Supplement) will be distributed to the Certificateholders of such
Series on the first Distribution Date following such Asset Composition Event.
Certificateholder Interest Collections allocable to a Series will be deposited
into the related Interest Funding Account and used to make interest payments to
the Certificateholders of such Series on each Payment Date. Unless otherwise
specified in the related Prospectus Supplement, interest due with respect to the
Certificates of any Series on a Payment Date or Distribution Date will accrue
during the related Interest Period. Interest due for any Payment Date or
Distribution Date will be calculated on the basis of a 360-day year consisting
of twelve 30-day months (for fixed-rate Certificates) or on the basis of the
actual number of days elapsed during the related Interest Period divided by 360
(for floating-rate Certificates), unless otherwise provided in the related
Prospectus Supplement. Interest with respect to such Certificate due but not
paid on any Payment Date or Distribution Date will be due on the next
Distribution Date together with, to the extent lawfully payable, interest on
such amount at the rate specified in the related Prospectus Supplement. Interest
payments on the Certificates of a Series will be derived from
Certificateholders' Interest Collections allocable to such Series for a
Collection Period, the amount, if any, in the related Reserve Fund, Investment
Proceeds, proceeds from any related Enhancements and, under certain
circumstances, Available Transferor's Collections to the extent of the related
Available Subordinated Amount (or, in some cases, the Aggregate Available
Subordinated Amount).
Unless otherwise specified in the related Prospectus Supplement, "Interest
Period" shall mean (a) with respect to any Payment Date, the period from and
including the Payment Date immediately preceding such Payment Date (or, in the
case of the first Payment Date, from and including the Closing Date) to but
excluding such Payment Date and (b) with respect to any Distribution Date, the
period from and including the Distribution Date immediately preceding such
Distribution Date to but excluding such Distribution Date.
INDICES APPLICABLE TO FLOATING-RATE CERTIFICATES
Three-Month LIBOR. Unless otherwise specified in the related Prospectus
Supplement, two business days preceding the Payment Date, or two business days
prior to the Closing Date, in the case of the first Payment Date, (each, an
"Interest Determination Date"), The Chase Manhattan Bank (the "Reference
Agent"), as agent for the Trust, will ascertain the Three-Month LIBOR Rate for
the Certificates of any Series as to which Certificate Rate is based upon the
Three-Month LIBOR Rate. Unless otherwise specified in the related Prospectus
Supplement, the Three-Month LIBOR Rate shall be the rate for deposits in United
States dollars having a three-month maturity which appears on the Telerate Page
3750 as of 11:00 A.M., London time, on such Interest Determination Date.
"Telerate Page 3750" means the display page so designated on the Dow Jones
Markets Limited (or such other page as may replace that page on that service or
such other service or services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates for
United States dollar deposits).
With respect to an Interest Determination Date for which the Three-Month
LIBOR Rate does not appear on the Telerate Page 3750, the Three-Month LIBOR Rate
will be determined on the basis of the rates at which deposits in United States
dollars are offered by four major banks in the London interbank market selected
by the Reference Agent (the "Reference Banks") at approximately 11:00 A.M.,
London time, on such Interest Determination Date to prime banks in the London
interbank market having a three-month maturity and in a principal amount equal
to an amount of not less than U.S. $1,000,000 that is representative for a
single transaction in such market at such time. The Reference Agent will request
the principal London office of each such Reference Bank to provide a quotation
of its rate. If at least two such quotations are provided, the Three-Month LIBOR
Rate on such Interest Determination Date will be the arithmetic mean (rounded,
if necessary, to the nearest one hundred-thousandth of a percentage point, with
5 one-millionths of a percentage point rounded upwards) of such quotations. If
fewer than two quotations are provided, the Three-Month LIBOR Rate on such
Interest Determination Date will be the arithmetic mean (rounded, if necessary,
to the nearest one hundred-thousandth of a percentage point, with 5
one-millionths of a percentage point rounded upwards) of the rates quoted by
three major banks in New York City selected by the Reference Agent at
approximately 11:00 A.M., New York City time, on such Interest Determination
Date for loans in United States dollars to leading European banks, having a
three-month maturity and in a principal amount equal to an amount of not less
than U.S. $1,000,000 that is representative for a single transaction in such
market at such time; provided, however, that if the banks in New York City
selected as aforesaid by the Reference Agent are not quoting as mentioned in
this sentence, the Certificate Rate will be the Certificate Rate in effect on
the day immediately preceding such Interest Determination Date.
Prime Rate. Unless otherwise specified in the related Prospectus
Supplement, on the Interest Determination Date for the Certificates of a Series
as to which Certificate Rate is based on the Prime Rate, the Reference Agent as
agent for the Trust will ascertain the Prime Rate for the related Interest
Period. Unless otherwise specified in the related Prospectus Supplement, Prime
Rate for an Interest Period shall be the prime rate or base lending rate for
such Interest Determination Date as published by the Federal Reserve Board in
its Statistical Release in H.15 (519) ("H.15 (519)") under the heading "Bank
Prime Loan". In the event that such rate is not so published for such Interest
Determination Date, then the Prime Rate shall be calculated by the Reference
Agent and shall be the arithmetic mean of the rates of interest publicly
announced by each bank that appeared on the Reuters Screen NYMF Page as such
bank's prime rate or base lending rate as in effect for such Interest
Determination Date as quoted on the Reuters Screen NYMF Page. If fewer than four
such rates appear on the Reuters Screen NYMF Page on such date, then the Prime
Rate shall be the arithmetic mean of the prime rates or base lending rates
(quoted on the basis of the actual number of days in the year divided by a
360-day year) as of the close of business on such Interest Determination Date by
three major banks in The City of New York selected by the Reference Agent;
provided, however, that if fewer than three such selected banks were quoted as
described in this sentence, the Certificate Rate shall be the Certificate Rate
in effect on the day prior to such Interest Determination Date. "Reuters Screen
NYMF Page" means the display page designated as page "NYMF" on the Reuters
Monitor Money Rates Service (or such other page as may replace the NYMF page on
that service for the purpose of displaying prime rates or base lending rates of
major United States banks).
The foregoing descriptions are for illustrative purposes only, and a
floating-rate transaction may be based upon any floating rate index set forth in
the applicable Prospectus Supplement.
The Certificate Rate and amount of interest to be paid on the Certificates
for each Interest Period will be determined by the Reference Agent. All
calculations made by the Reference Agent shall in the absence of manifest error
be final and binding.
PRINCIPAL
Except to the extent that the related Prospectus Supplement specifies
earlier principal payment dates, no principal payments will be made to the
Certificateholders of any Series of Certificates until the Expected Final
Payment Date for such Series or, upon the occurrence of an Early Amortization
Event as described herein, until the first Distribution Date following such
event. On each Distribution Date with respect to the Revolving Period for any
Series of Certificates, collections of Principal Receivables allocable to the
Certificateholders' Interest of such Series, subject to certain limitations,
will be (a) allocated to the related Excess Funding Account as described herein,
(b) allocated to one or more Series which are in amortization, early
amortization or accumulation periods to cover principal payments due to the
certificateholders of any such Series or which provide for excess funding
accounts or similar arrangements or (c) if no such Series is then amortizing or
accumulating principal or provides for excess funding accounts or similar
arrangements, paid to the Transferor to maintain the Certificateholders'
Interest or, under certain circumstances, held as Unallocated Principal
Collections. See "--Allocation Percentages--Principal Collections for all
Series" and "--Distributions from the Collection Account; Reserve
Fund--Principal Collections".
Unless and until an Early Amortization Event with respect to a Series of
Certificates shall have occurred and until the outstanding principal balance of
the Certificates of such Series is paid in full, on each Distribution Date with
respect to the Accumulation Period for such Series or, if the related Prospectus
Supplement specifies such Series will have an Amortization Period, on each
Distribution Date with respect to the Amortization Period for such Series,
collections of Principal Receivables allocable to the Certificateholders'
Interest of such Series plus certain other amounts comprising Monthly Principal
will no longer be paid for the benefit of another Series or to the Transferor as
described above but instead will be deposited in the Principal Funding Account
in an amount up to the Controlled Distribution Amount, if applicable to such
Series, or the Invested Amount of such Series. The funds on deposit in the
Principal Funding Account (including any amounts deposited therein from the
related Excess Funding Account) will be used to pay the outstanding principal
balance of the Certificates of such Series on the related Expected Final Payment
Date or such other date or dates as shall be specified in such Prospectus
Supplement. If on such date the amount in the Principal Funding Account is less
than the outstanding principal balance of the Certificates of such Series, the
amounts in such account will nevertheless be distributed to such
Certificateholders on such date, an Early Amortization Period will commence and
on each Special Payment Date thereafter the Certificateholders of such Series
will receive distributions of Monthly Principal and Monthly Interest until the
outstanding principal balance of such Certificates has been paid in full or the
Series Termination Date has occurred.
It is expected that the final principal payment with respect to the
Certificates of each Series will be made on the Expected Final Payment Date, but
the principal of the Certificates of any Series may be paid earlier or,
depending on the actual payment rate on the Receivables, later, as described
under "Risk Factors-- Payments". If the Receivables are sold or repurchased as
described below, principal payments on the Certificates of the affected Series
will be made on the Distribution Date following such sale or repurchase. See
"--Allocation Percentages--Principal Collections for all Series" and
"--Distributions from the Collection Account; Reserve Fund--Principal
Collections".
Distributions on the Certificates of each Series will be made on each
Payment Date or Distribution Date, as applicable, to the holders of Certificates
in whose names such Certificates were registered (expected to be Cede, as
nominee of DTC) at the close of business on the day preceding such Payment Date
or Distribution Date (or, if Definitive Certificates are issued, on the last day
of the preceding calendar month) (each, a "Record Date"). However, the final
distribution on the Certificates of each Series will be made only upon
presentation and surrender of such Certificates. Distributions will be made to
DTC in immediately available funds.
ASSET COMPOSITION EVENT; ASSET COMPOSITION PREMIUM
The Prospectus Supplement for a Series will specify whether the
Certificates are subject to Asset Composition Events. If so specified, an "Asset
Composition Event" will occur if during the Revolving Period for such Series the
sum of all Eligible Investments and amounts on deposit in all Series Accounts
represents more than a specified percentage (as indicated in the related
Prospectus Supplement) of the total assets of the Trust on each of a specified
number of consecutive Determination Dates, after giving effect to all payments
made or to be made on the respective Distribution Dates next succeeding such
Determination Dates. No Asset Composition Event will arise for a Series, and any
preexisting Asset Composition Event will be of no further effect, following the
occurrence of an Early Amortization Event with respect to such Series.
As further specified in the related Prospectus Supplement, upon the
occurrence of an Asset Composition Event during the Revolving Period for a
Series of Certificates, distributions will be made in respect of such
Certificates to the extent necessary to result in compliance with the percentage
limitation, the violation of which gave rise to the Asset Composition Event (the
"Asset Correction Amount"). If so specified in the related Prospectus
Supplement, an additional amount may be payable as an "Asset Composition
Premium."
BOOK-ENTRY REGISTRATION
Unless the Prospectus Supplement for any Series specifies that Certificates
of such Series shall be in definitive rather than book-entry form,
Certificateholders of such Series may hold their Certificates through DTC if
they are participants of such system, or indirectly through organizations which
are participants in such system.
Cede, as nominee for DTC, will be the registered holder of the global
Certificates. No Certificateholder will be entitled to receive a certificate
representing such person's interest in the Certificates. Unless and until
Definitive Certificates are issued under the limited circumstances described
below, all references herein to action by Certificateholders will refer to
actions taken by DTC upon instructions from its Participants, and all references
herein to distribution, notices, reports and statements by Certificateholders
shall refer to distributions, notices, reports and statements to Cede, as the
registered holder of the Certificates, for distribution to Certificateholders in
accordance with DTC procedures.
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 and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participating organizations ("Participants") and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in their accounts, thereby
eliminating the need for physical movement of certificates. Participants include
the Underwriters specified in the related Prospectus Supplement, securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations. Indirect access to the DTC system also is
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants").
Certificateholders that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, Certificates may do so only through Participants and Indirect Participants.
In addition, Certificateholders will receive all distributions of principal of
and interest on the Certificates from the Trustee through DTC and its
Participants. Under a book-entry format, Certificateholders will receive
payments after the related Distribution Date because, while payments are
required to be forwarded to Cede, as nominee for DTC, on each such date, DTC
will forward such payments to its Participants which thereafter will be required
to forward them to Indirect Participants or Certificateholders. It is
anticipated that the only Certificateholder (as such term is used in the Pooling
and Servicing Agreement) will be Cede, as nominee of DTC, and that Certificate
Owners will not be recognized by the Trustee as Certificateholders under the
Pooling and Servicing Agreement. Certificate Owners will only be permitted to
exercise the rights of Certificateholders under the Pooling and Servicing
Agreement indirectly through DTC and its Participants who in turn will exercise
their rights through DTC.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among Participants
on whose behalf it acts with respect to the Certificates and is required to
receive and transmit distributions of principal of and interest on the
Certificates. Participants and Indirect Participants with which Certificate
Owners have accounts with respect to the Certificates similarly are required to
make book-entry transfers and receive and transmit such payments on behalf of
their respective Certificate Owners.
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 Certificate
Owner to pledge Certificates to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of such Certificates, may
be limited due to the lack of a physical certificate for such Certificates.
DTC has advised the Transferor that it will take any action permitted to be
taken by a Certificateholder under the Pooling and Servicing Agreement only at
the direction of one or more Participants to whose account with DTC the
Certificates are credited.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
counties. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 27 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several counties
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear Operator"), under contract
with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries. Indirect access to Euroclear is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to the Certificates held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations. See "Certain Federal Income Tax Considerations". Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a Certificateholder under the Pooling and Servicing Agreement on
behalf of a Cedel Participant or Euroclear Participant only in accordance with
its relevant rules and procedures and subject to its Depositary's ability to
effect such actions on its behalf through DTC.
Holders of Certificates may hold their Certificates through DTC (in the
United States) or Cedel or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations which are participants in such
systems.
The Certificates held in book-entry form will initially be registered in
the name of Cede, the nominee of DTC. Cedel and Euroclear will hold omnibus
positions on behalf of their participants through customers' securities accounts
in Cedel's and Euroclear's names on the books of their respective depositaries
which in turn will hold such positions in customers' securities accounts in the
depositaries' names on the books of DTC. Citibank, N.A. ("Citibank") will act as
depositary for Cedel and Morgan Guaranty Trust Company of New York ("Morgan")
will act as depositary for Euroclear (in such capacities, individually the
"Depositary" and collectively the "Depositaries").
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date. Such credits or any transactions in such securities
settled during such processing will be reported to the relevant Euroclear or
Cedel Participants on such business day. Cash received in Cedel or Euroclear as
a result of sales of securities by or through a Cedel Participant or Euroclear
Participant to a Participant will be received with value on the DTC settlement
date but will be available in the relevant Cedel or Euroclear cash account only
as of the business day following settlement in DTC. For information with respect
to tax documentation procedures relating to the Certificates, see "Certain
Federal Income Tax Considerations--Foreign Investors".
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Certificates among participants of DTC,
Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
DEFINITIVE CERTIFICATES
Unless otherwise specified in the Prospectus Supplement for any Series, the
Certificates of such Series will be issued in fully registered, certificated
form to Certificate Owners or their nominees ("Definitive Certificates"), rather
than to DTC or its nominee, only if (i) the Transferor advises the Trustee in
writing that DTC is no longer willing or able to properly discharge its
responsibilities as Depository with respect to such Series and the Transferor is
unable to locate a qualified successor, (ii) the Transferor, at its option,
elects to terminate the book-entry system with respect to such Series through
DTC or (iii) after the occurrence of a Master Servicer Default,
Certificateholders of such Series representing not less than 50% of the
aggregate unpaid principal amount of the Certificates of such Series advise the
Trustee and DTC through Participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the best
interests of such Certificateholders of such Series.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Certificates for the Certificates of such
Series. Upon surrender by DTC of the certificate or certificates representing
such Certificates of such Series and instructions for re-registration, the
Trustee will issue such Certificates in the form of Definitive Certificates, and
thereafter the Trustee will recognize the holders of such Definitive
Certificates as Certificateholders under the Pooling and Servicing Agreement
("Holders"). In the event that Definitive Certificates are issued or DTC ceases
to be the clearing agency for the Certificates, the Pooling and Servicing
Agreement provides that the Certificateholders will be notified of such event.
Distributions of principal of and interest on the Certificates will be made
by the Trustee directly to Holders in accordance with the procedures set forth
herein and in the Pooling and Servicing Agreement. Distributions on each
Distribution Date will be made to Holders in whose names the Definitive
Certificates were registered at the close of business on the related Record
Date. Distributions will be made by check mailed to the address of such Holder
as it appears on the register maintained by the Trustee. The final distribution
on any Certificate (whether Definitive Certificates or the certificate or
certificates registered in the name of Cede representing the Certificates),
however, will be made only upon presentation and surrender of such Certificate
on the final payment date at such office or agency as is specified in the notice
of final distribution to Certificateholders. The Trustee will provide such
notice to registered Certificateholders not later than the first day of the
month of the final distribution.
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee, which shall initially be The Chase Manhattan Bank. No
service charge will be imposed for any registration of transfer or exchange, but
the Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
SUPPLEMENTAL CERTIFICATES
The Pooling and Servicing Agreement provides that the Transferor may
exchange a portion of the certificate evidencing the Transferor's Interest (the
"Transferor's Certificate") for another certificate (a "Supplemental
Certificate") for transfer or assignment to a person designated by the
Transferor upon the execution and delivery of a supplement to the Pooling and
Servicing Agreement (which supplement shall be subject to the amendment section
of the Pooling and Servicing Agreement to the extent that it amends any of the
terms of the Pooling and Servicing Agreement); provided that (a) the Transferor
shall after giving effect thereto have an interest in the Pool Balance of not
less than 2% of the Pool Balance, (b) the Transferor shall have delivered to the
Trustee, each applicable Rating Agency and any Enhancement Provider a Tax
Opinion (as defined below) with respect to such exchange and (c) the Transferor
shall have delivered to the Trustee written confirmation from the applicable
Rating Agencies that such exchange will not result in a reduction or withdrawal
of the rating of the Certificates of any outstanding Series. Any subsequent
transfer or assignment of a Supplemental Certificate is also subject to the
conditions described in clauses (b) and (c) in the preceding sentence.
NEW ISSUANCES
The Pooling and Servicing Agreement provides that the Trust will issue two
types of certificates: (i) one or more Series of Certificates which are
transferable and have the characteristics described below and (ii) the
Transferor's Certificate (and any Supplemental Certificate) which will evidence
the Transferor's Interest and will be transferable only upon the satisfaction of
certain conditions described under "Supplemental Certificates". The Pooling and
Servicing Agreement provides that, pursuant to one or more Supplements, the
Transferor may cause the Trustee to issue one or more new Series. Under the
Pooling and Servicing Agreement, the Transferor will specify, among other
things, with respect to each Series: (a) its name or designation, (b) its
initial principal amount, (c) its Certificate Rate (or the method for
determining its Certificate Rate), (d) a date on which it will begin its
Accumulation Period, Amortization Period or Controlled Amortization Period, if
any, (e) the method for allocating principal and interest to Certificateholders
of such Series, (f) the percentage used to calculate monthly servicing fees, (g)
the issuer and terms of any Enhancement with respect thereto or the level of
subordination provided by the Transferor's Interest, (h) the terms on which the
certificates of such Series may be exchanged for certificates of another Series,
be subject to repurchase, optional redemption or mandatory redemption by the
Transferor or be remarketed by any remarketing agent, (i) the Series Termination
Date and (j) any other terms permitted by the Pooling and Servicing Agreement
(all such terms, the "Principal Terms" of such Series). The Transferor may offer
any Series under the Prospectus and an accompanying Prospectus Supplement or
other disclosure document in transactions either registered under the Securities
Act or exempt from registration thereunder, directly or through the Underwriters
specified in the accompanying Prospectus Supplement or one or more other
underwriters or placement agents. There is no limit to the number of Series that
may be issued under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that the Transferor may
specify Principal Terms of a new Series such that each Series has an
Amortization Period or Accumulation Period which may have a different length and
begin on a different date than the Amortization Period or Accumulation Period
for any other Series. Further, one or more Series may be in their Amortization
Periods, Accumulation Periods or Early Amortization Periods while other Series
are not. Thus, certain Series may be amortizing or accumulating principal, while
other Series are not amortizing or accumulating principal. Moreover, different
Series may have the benefits of different forms of Enhancement issued by
different entities. Under the Pooling and Servicing Agreement, the Trustee will
hold each form of Enhancement only on behalf of the Series (or a particular
class within a Series) to which it relates. The Pooling and Servicing Agreement
also provides that the Transferor may specify different Certificate Rates and
Monthly Servicing Fees with respect to each Series (or a particular class within
a Series). In addition, the Transferor has the option under the Pooling and
Servicing Agreement to vary between Series (or classes within a Series) the
terms upon which a Series (or classes within a Series) may be repurchased by the
Transferor.
Under the Pooling and Servicing Agreement and pursuant to a Supplement, a
new Series may be issued only upon the satisfaction of certain specified
conditions. The Transferor may cause the issuance of a new Series by notifying
the Trustee at least five business days in advance of the applicable Series
Issuance Date. The notice shall state the designation of any Series (and classes
within a Series, if any) and with respect to such Series: (a) its initial
principal amount, (b) its Certificate Rate and (c) the issuer of any Enhancement
with respect to such Series (or classes within a Series). The Pooling and
Servicing Agreement provides that the Trustee will issue any such Series only
upon delivery to it of the following: (i) a Supplement in form satisfactory to
the Trustee signed by the Transferor and the Master Servicer and specifying the
Principal Terms of such Series, (ii) the form of any Enhancement and any related
agreement, (iii) an opinion of counsel to the effect that under federal income
tax laws (x) such issuance will not cause a taxable event to any
certificateholders (including the Certificateholders) and (y) such new Series of
certificates will be characterized as debt or an interest in a tax partnership
(which partnership will not be treated as a result of issuance of such
Certificates as a "publicly traded partnership" within the meaning of Section
7704 of the Code and applicable Treasury regulations) (such opinion, a "Tax
Opinion") and (iv) written confirmation from the applicable Rating Agencies that
such issuance will not result in a reduction or withdrawal of the rating of the
Certificates of any outstanding Series. Such issuance is also subject to the
conditions that (a) the Transferor shall have represented and warranted that
such issuance shall not, in the reasonable belief of the Transferor, cause an
Early Amortization Event to occur and (b) after giving effect to such issuance,
the Transferor's Interest in the Pool Balance shall not be less than 2% of the
Pool Balance. Upon satisfaction of all such conditions, the Trustee will issue
such Series.
CONVEYANCE OF RECEIVABLES AND RELATED SECURITY
Pursuant to the Pooling and Servicing Agreement, FCAR has sold and assigned
to the Trust all of its right, title and interest in and to the Receivables and
the Related Security as of the date the Series 1997-A Certificates were issued
(the "Initial Closing Date"), all receivables thereafter created in the Accounts
and its interests in the Related Security and the Receivables Purchase
Agreement, and the proceeds of all of the foregoing. See "--Ford Credit Auto
Receivables LLC and the Trust".
In connection with the sale of the Receivables to the Transferor by Ford
Credit and the transfer of the Receivables by the Transferor to the Trust, Ford
Credit indicated in its computer records that the Receivables in the Accounts
and the Related Security have been conveyed to the Trust. In addition, the
Transferor provided to the Trustee a computer file or microfiche or written list
containing a true and complete list showing for each Account, as of the Initial
Cut-Off Date, (i) its account number, (ii) the outstanding principal balance of
the Receivables in such Account and (iii) the outstanding balance of the
Receivables in such Account. Ford Credit will retain and will not deliver to the
Trustee any other records or agreements relating to the Receivables. Except as
set forth above, the records and agreements relating to the Receivables will not
be segregated from those relating to other accounts of Ford Credit, and the
physical documentation relating to the Receivables will not be stamped or marked
to reflect the transfer of the Receivables to the Trust. The Transferor filed
one or more financing statements in accordance with applicable state law to
perfect the Trust's interest in the Receivables, the Related Security, the
Receivables Purchase Agreement and the proceeds thereof. See "Risk
Factors--Certain Legal Aspects" and "Certain Legal Aspects of the Receivables".
The Trust's interest in the Non-Vehicle Related Security will, in the sole
discretion of Ford Credit, be subordinate to the interest of Ford Credit in such
Non-Vehicle Related Security. See "The Dealer Floorplan Financing
Business--Intercreditor Agreement in Respect of Security Interest in Vehicles
and Non-Vehicle Related Security".
As described below under "Addition of Accounts", the Transferor has the
right (subject to certain limitations and conditions), and in some circumstances
is obligated, to designate from time to time additional accounts to be included
as Additional Accounts, to purchase from Ford Credit the Receivables then
existing or thereafter created in such Additional Accounts and to convey such
Receivables to the Trust. Each such Additional Account must be an Eligible
Account. In respect of any conveyance of Receivables in Additional Accounts, the
Transferor will follow the procedures set forth in the preceding paragraph,
except that the list will show information for such Additional Accounts as of
the date such Additional Accounts are identified and selected (each, an
"Additional Cut-Off Date").
REPRESENTATIONS AND WARRANTIES
The Transferor has made representations and warranties to the Trust
relating to the Accounts, the Receivables and the Related Security to the
effect, among other things, that (a) as of each Series Cut-Off Date and Closing
Date (or, in the case of an Additional Account, as of the Additional Cut-Off
Date and the date the related Receivables are transferred to the Trust (an
"Addition Date")), each Account or Additional Account was or is an Eligible
Account or, if it was or is an Ineligible Account on such date, such Account is
being removed from the Trust in accordance with the requirements of the Pooling
and Servicing Agreement, (b) as of the Initial Cut-Off Date (or as of the
Additional Cut-Off Date, in the case of any Additional Accounts) or as of the
date any future Receivable is generated (each, a "Transfer Date"), each
Receivable is an Eligible Receivable or, if such Receivable is not an Eligible
Receivable, such Receivable is conveyed to the Trust as described below under
"--Ineligible Receivables, the Installment Balance Amount and the
Overconcentration Amount", (c) each Receivable and all Related Security conveyed
to the Trust on the Closing Date for the Series 1997-A Certificates and on each
Transfer Date or, in the case of Additional Accounts, on the Addition Date, and
all of the Transferor's right, title and interest in the Receivables Purchase
Agreement, have been conveyed to the Trust free and clear of any liens, and (d)
all appropriate consents and governmental authorizations required to be obtained
by the Transferor in connection with the conveyance of each such Receivable or
Related Security have been duly obtained. If the Transferor breaches any
representation and warranty described in this paragraph and such breach remains
uncured for 30 days or such longer period as may be agreed to by the Trustee,
after the earlier to occur of the discovery of such breach by the Transferor or
the Master Servicer or receipt of written notice of such breach by the
Transferor or the Master Servicer, and such breach has a materially adverse
effect on the Certificateholders' Interest of any outstanding Series in any
Receivable or Account, such Certificateholders' Interests in such Receivable or,
in the case of a breach relating to an Account, all Receivables in the related
Account ("Ineligible Receivables") will be reassigned to the Transferor on the
terms and conditions set forth below and such Account shall no longer be
included as an Account.
Each such Receivable shall be reassigned to the Transferor on or before the
end of the Collection Period in which such reassignment obligation arises by the
Transferor directing the Master Servicer to deduct the principal balance of such
Receivable from the Pool Balance. In the event that such deduction would cause
the Transferor's Participation Amount to be less than the Trust Available
Subordinated Amount on the preceding Determination Date (after giving effect to
the allocations, distributions, withdrawals and deposits to be made on such
Distribution Date), on the date on which such reassignment is to occur the
Transferor will be obligated to make a deposit into the Collection Account in
immediately available funds in an amount equal to the amount by which the
Transferor's Participation Amount would be less than the Trust Available
Subordinated Amount (the amount of any such deposit being referred to herein as
a "Transfer Deposit Amount"), provided that if the Transfer Deposit Amount is
not so deposited, the principal balance of the related Receivables will be
deducted from the Pool Balance only to the extent the Transferor's Participation
Amount is not reduced below the Trust Available Subordinated Amount and any
principal balance not so deducted will not be reassigned and will remain part of
the Trust. The reassignment of any such Receivable to the Transferor and the
payment of any related Transfer Deposit Amount will be the sole remedy
respecting any breach of the representations and warranties described in the
preceding paragraph with respect to such Receivable available to
Certificateholders or the Trustee on behalf of Certificateholders.
The Transferor also has made representations and warranties to the Trust to
the effect, among other things, that as of each Closing Date (a) it is duly
incorporated and in good standing, it has the authority to consummate the
transactions contemplated by the Pooling and Servicing Agreement, and the
Pooling and Servicing Agreement constitutes a valid, binding and enforceable
agreement of the Transferor and (b) the Pooling and Servicing Agreement
constitutes a valid sale, transfer and assignment to the Trust of all right,
title and interest of the Transferor in the Receivables and the Related
Security, whether then existing or thereafter created, the Receivables Purchase
Agreement, and the proceeds thereof (including proceeds in any of the accounts
established for the benefit of the Certificateholders), under the UCC as then in
effect in the State of Michigan, which is effective as to each Receivable
existing on each Closing Date (or as of the Addition Date, if applicable) or, as
to each Receivable arising thereafter, upon the creation thereof and until
termination of the Trust. In the event that the breach of any of the
representations and warranties described in this paragraph has a materially
adverse effect on the Certificateholders' Interest of any outstanding Series in
the Receivables, either the Trustee or the holders of Certificates of all
outstanding Series evidencing not less than 51% of the aggregate unpaid
principal amount of all outstanding Series, by written notice to the Transferor
and the Master Servicer (and to the Trustee and the issuer or provider of any
Enhancement (an "Enhancement Provider") if given by Certificateholders), may
direct the Transferor to accept the reassignment of the Certificateholders'
Interest of all outstanding Series within 60 days of such notice, or within such
longer period specified in such notice. The Transferor will be obligated to
accept the reassignment of such Certificateholders' Interests on a Distribution
Date occurring within such 60-day period. Such reassignment will not be required
to be made, however, if at the end of such applicable period, the
representations and warranties shall then be true and correct in all material
respects and any materially adverse effect caused by such breach shall have been
cured. The portion of the price for such reassignment in respect of the
Certificates will be equal to the sum of (i) the Invested Amount of the
Certificates of each Series then outstanding on the Determination Date preceding
the Distribution Date on which the purchase is scheduled to be made and (ii)
accrued and unpaid interest on the unpaid principal amount of the Certificates
of each Series then outstanding at the applicable Certificate Rate (together
with interest on overdue interest, to the extent lawfully payable). The payment
of the reassignment price for all outstanding Series, in immediately available
funds, will be considered a payment in full of the Certificateholders' Interest
of each outstanding Series. The portion of such funds allocable to the
Certificateholders' Interest of a Series will be distributed upon presentation
and surrender of the Certificates of such Series. If the Trustee or the
Certificateholders give a notice as provided above, the obligation of the
Transferor to make any such deposit will constitute the sole remedy respecting a
breach of the representations and warranties available to certificateholders or
the Trustee on behalf of the certificateholders.
ELIGIBLE ACCOUNTS AND ELIGIBLE RECEIVABLES
An "Eligible Account" is defined to mean each wholesale financing line of
credit extended by Ford Credit to a Dealer, which line of credit, as of the date
of determination thereof (a) is established by Ford Credit in the ordinary
course of business pursuant to a floorplan financing agreement, (b) is in favor
of a Dealer which is an eligible dealer (which excludes dealers subject to
voluntary or involuntary bankruptcy proceedings or voluntary or involuntary
liquidation and dealers otherwise classified as being under dealer Status or in
which Ford has an equity interest), (c) is in existence and maintained and
serviced by Ford Credit and (d) in respect of which no amounts have been charged
off as uncollectable.
An "Eligible Receivable" is defined to mean each Receivable: (a) which was
originated or acquired by Ford Credit in the ordinary course of business, (b)
which arose under an Account that at such time was an Eligible Account, (c)
which is owned by Ford Credit at the time of sale by Ford Credit to the
Transferor, (d) which represents the obligation of a Dealer to repay an advance
made to or on behalf of such Dealer to finance Vehicles or to return an
Installment Balance to the related Dealer, (e) which at the time of creation and
at the time of transfer to the Trust is secured by a perfected first priority
interest in the Vehicle relating thereto (exclusive of Receivables for which an
Installment Balance is outstanding), (f) which was created in compliance in all
respects with all requirements of law applicable thereto and pursuant to a
floorplan financing agreement which complies in all respects with all
requirements of law applicable to any party thereto, (g) with respect to which
all consents and governmental authorizations required to be obtained by Ford
Credit or the Transferor in connection with the creation of such Receivable or
the transfer thereof to the Trust or the performance by Ford Credit of the
floorplan financing agreement pursuant to which such Receivable was created,
have been duly obtained, (h) as to which at all times following the transfer of
such Receivable to the Trust, the Trust will have good and marketable title
thereto free and clear of all liens arising prior to the transfer or arising at
any time, other than liens permitted pursuant to the Pooling and Servicing
Agreement, (i) which has been the subject of a valid transfer and assignment
from the Transferor to the Trust of all the Transferor's interest therein
(including any proceeds thereof), (j) which will at all times be the legal and
assignable payment obligation of the Dealer relating thereto, enforceable
against such Dealer in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy or other similar laws, (k) which at the
time of transfer to the Trust is not subject to any right of rescission, setoff,
or any other defense (including defenses arising out of violations of usury
laws) of the Dealer, (l) as to which, at the time of transfer of such Receivable
to the Trust, Ford, Ford Credit and the Transferor have satisfied all their
respective obligations with respect to such Receivable required to be satisfied
at such time, (m) as to which, at the time of transfer of such Receivable to the
Trust, neither Ford, Ford Credit nor the Transferor has taken or failed to take
any action which would impair the rights of the Trust or the Certificateholders
therein, (n) which constitutes "chattel paper" as defined in Article 9 of the
UCC as then in effect the State of Michigan, (o) which was transferred to the
Trust with all applicable governmental authorization and (p) which was acquired
by Ford Credit from PRIMUS and as to which at the time of the transfer of such
Receivable to the Trust and at all times following such transfer, the related
vehicle manufacturer or distributor (if other than Ford) is not subject to
voluntary or involuntary bankruptcy proceedings or voluntary or involuntary
liquidation.
It is not required or anticipated that the Trustee will make any initial or
periodic general examination of the Receivables or any records relating to the
Receivables for the purpose of establishing the presence or absence of defects,
compliance with representations and warranties of the Transferor or for any
other purpose. In addition, it is not anticipated or required that the Trustee
will make any initial or periodic general examination of the Master Servicer for
the purpose of establishing the compliance by the Master Servicer with its
representations or warranties, the observation of its obligations under the
Pooling and Servicing Agreement or for any other purpose. The Master Servicer,
however, will deliver to the Trustee on or before April 30 of each calendar
year, an opinion of counsel with respect to the validity of the interest of the
Trust in and to the Receivables and certain other components of the Trust.
INELIGIBLE RECEIVABLES, THE INSTALLMENT BALANCE AMOUNT AND THE OVERCONCENTRATION
AMOUNT
For the purpose of facilitating the administration and reporting
requirements of the Master Servicer under the Pooling and Servicing Agreement,
all Ineligible Receivables arising in an Eligible Account shall be transferred
to the Trust, provided that the Incremental Subordinated Amount for each Series
is adjusted by the portion of the aggregate principal amount of Receivables
included therein allocable to the Certificateholders' Interest of each such
Series. In addition, unless otherwise specified in the related Prospectus
Supplement, the Incremental Subordinated Amount for each Series shall be
adjusted to reflect, on each Distribution Date, the aggregate principal amount
of Receivables in the Trust on such Distribution Date which are either Dealer
Overconcentrations, Manufacturer Overconcentrations or PRIMUS Overconcentrations
(collectively, the "Overconcentration Amount") allocable to the
Certificateholders' Interest of each such Series and the portion of the
aggregate amount of Installment Balances in respect of which the Trust has not
received an offsetting payment from the related Dealer on such Distribution Date
(the "Installment Balance Amount") allocable to the Certificateholders'
Interest. As used herein, "Dealer Overconcentrations" on any Determination Date
means, with respect to any Dealer or group of affiliated Dealers (as determined
in accordance with the Master Servicer's standard procedures for identifying and
tracking Accounts of affiliated Dealers), the excess of (x) the aggregate of all
Principal Receivables included in all Accounts of such Dealer or group of
affiliated Dealers over (y) 2% (or such higher percentage, in no event to exceed
4%, as may be approved in writing from time to time by each Rating Agency,
subject to such conditions and limitations as each such Rating Agency may
require) of the Pool Balance on the last day of such immediately preceding
Collection Period. "Manufacturer Overconcentration" on any Determination Date
means the excess, if any, of (x) the aggregate Principal Receivables in the
Trust on the last day of the Collection Period immediately preceding such
Determination Date that were acquired by Ford Credit from all other Originators
and that relate to a particular vehicle manufacturer (other than Ford) over (y)
30% of the aggregate Principal Receivables on the last day of such Collection
Period that were acquired by Ford Credit from all other Originators. "PRIMUS
Overconcentration" on any Determination Date means the excess, it any, of (x)
the aggregate Principal Receivables included in the Trust on the last day of the
Collection Period immediately preceding such Determination Date that were
acquired by the Seller from PRIMUS over (y) 30% of the aggregate Principal
Receivables in the Trust on the last day of such Collection Period.
Notwithstanding the foregoing, the tests specified above with respect to the
Dealer Overconcentration, Manufacturer Overconcentration and PRIMUS
Overconcentration may be modified, provided that each Rating Agency shall have
indicated in writing that the applicable rating or ratings will not be adversely
affected by any such modification. See "--Allocation of Collections; Deposits in
Collection Account; Limited Subordination of Transferor's Interest--Available
Subordinated Amount".
ADDITION OF ACCOUNTS
Subject to the conditions described below, the Transferor has the right to
designate from time to time additional accounts to be included as Accounts (the
"Additional Accounts"). In addition, the Transferor is required to add the
Receivables of Additional Accounts if either (i) the Pool Balance on the last
day of any Collection Period is less than the Required Pool Balance or (ii) the
portion of the Transferor's Interest represented by the Transferor's Certificate
is less than 2% of the Pool Balance on such last day. In either case, unless
certain insolvency events have occurred with respect to the Transferor, Ford
Credit or Ford, Ford Credit under the Receivables Purchase Agreement will be
required to sell to the Transferor, and the Transferor under the Pooling and
Servicing Agreement will be required to transfer and assign to the Trust, within
10 business days after the end of such Collection Period, interests in all
Receivables arising in such Additional Accounts, whether such Receivables are
then existing or thereafter created. Any designation of Additional Accounts is
subject to the following conditions, among others: (i) each such Additional
Account must be an Eligible Account; (ii) the Transferor will represent and
warrant that the addition of such Additional Accounts will not, in the
reasonable belief of the Transferor, cause an Early Amortization Event to occur;
(iii) the Transferor will not select such Additional Accounts in a manner that
it believes is adverse to the interests of the Certificateholders of any Series
or any Enhancement Provider; (iv) the Transferor will deliver a Tax Opinion,
other than in the case of a required addition, and certain other opinions of
counsel with respect to the addition of such Additional Accounts to the Trustee,
the Rating Agencies and any Enhancement Provider; and (v) the applicable Rating
Agencies shall have provided written confirmation that such addition will not
result in a reduction or withdrawal of the rating of the Certificates of any
outstanding Series.
Each Additional Account must be an Eligible Account at the time of its
addition. However, since Additional Accounts may not have been a part of the
initial portfolio of Ford Credit, they may not be of the same credit quality as
the initial Accounts. Additional Accounts may have been originated by Ford
Credit at a later date using credit criteria different from those which were
applied to the initial Accounts.
"Required Participation Amount" for any date will mean an amount equal to
the sum of (a) the sum of the product for each Series of (i) the Required
Participation Percentage for such Series times (ii) the Invested Amount for such
Series at its Closing Date minus the amount of any deposits into any Excess
Funding Account for such Series in connection with a reduction in the Pool
Balance plus the amount of any withdrawals from any such Excess Funding Account
in connection with an increase in the Pool Balance plus (b) the Trust Available
Subordinated Amount on the immediately preceding Determination Date (after
giving effect to the allocations, distributions, withdrawals and deposits to be
made on the Distribution Date following such Determination Date).
"Required Participation Percentage" will mean, the percentage applicable to
such Series specified in the related Prospectus Supplement; provided, however,
that the Transferor may, upon ten days' prior notice to the Trustee, the Rating
Agencies and any Enhancement Provider reduce the Required Participation
Percentage for any Series to not less than 100%, so long as each Rating Agency
shall have notified the Transferor or the Master Servicer that any such
reduction will not result in a reduction or withdrawal of the rating of the
Certificates of any other Series rated by it at the request of the Transferor.
Notwithstanding the foregoing, the Transferor may from time to time, at its
discretion, and subject only to the limitations specified in this paragraph and
the conditions specified in clauses (i), (ii) and (iii) for Additional Accounts
in the second preceding paragraph, designate Additional Accounts (any Additional
Accounts designated in accordance with the provisions described in this
paragraph being referred to herein as "Automatic Additional Accounts"). Unless
the Rating Agencies otherwise consent, neither the number of Automatic
Additional Accounts nor the aggregate amount of Principal Receivables included
in such Automatic Additional Accounts as of the related Additional Cut-Off Date
that are designated during any calendar quarter shall exceed 10% of the number
of Accounts or 10% of the Pool Balance, as the case may be, as of the first day
of such calendar quarter and neither the number of Automatic Additional Accounts
nor the aggregate amount of Principal Receivables included in such Automatic
Additional Accounts as of the related Additional Cut-Off Dates that are
designated during any twelve month period commencing in October of any year
shall exceed 20% of the number of Accounts or 20% of the Pool Balance, as the
case may be, as of the first day of such twelve-month period. On or before 31
January, 30 April, 31 July and 31 October of each calendar year, the Trustee
shall have to the extent applicable, delivered notice to each applicable Rating
Agency with respect to the addition of all Automatic Additional Accounts
included as Accounts during the three consecutive Collection Periods ending in
the calendar month prior to such date. On or before 31 January and 31 July of
each calendar year (or quarterly or on or before the last day of each month in
certain circumstances), the Transferor shall have delivered to the Trustee, each
Rating Agency and any Enhancement Provider an opinion of counsel with respect to
the Automatic Additional Accounts included as Accounts during the preceding six
month period (or the preceding three month period or the preceding month in
certain circumstances) confirming the validity and perfection of each transfer
of such Automatic Additional Accounts. If such opinion of counsel with respect
to any Automatic Additional Accounts is not so received, such Automatic
Additional Accounts will be removed from the Trust.
REMOVAL OF ACCOUNTS
The Transferor shall have the right at any time to require the removal from
the Trust of Eligible Accounts, including all amounts then held by the Trust or
thereafter received by the Trust in respect of the Eligible Accounts to be
removed. To remove any Eligible Account and such amounts, the Transferor (or the
Master Servicer on its behalf) will, among other things, (a) on or before the
fifth business day prior to the date of removal (the "Removal Commencement
Date"), furnish to the Trustee, any Enhancement Provider and the Rating Agencies
a written notice (the "Removal Notice") specifying the Removal Commencement
Date; (b) on or before the fifth business day after the Removal Commencement
Date, the Transferor shall have furnished to the Trustee a computer file,
microfiche list or other list of the Removal Accounts that were removed on the
Removal Commencement Date, specifying for each Removed Account as of the date of
the Removal Notice its number, the aggregate amount outstanding in such Removed
Account and the aggregate amount of Principal Receivables therein; (c);
represent and warrant that the removal of any such Eligible Account on the
Removal Commencement Date will not, in the reasonable belief of the Transferor,
cause an Early Amortization Event to occur or cause the Pool Balance to be less
than the Required Participation Amount; (d) represent and warrant that no
selection procedures believed by the Transferor to be adverse to the interest of
the Certificateholders were utilized in selecting the Removal Accounts; (e)
represent and warrant that the Rating Agencies shall not have notified the
Transferor or the Master Servicer that such removal will result in a reduction
or withdrawal of the rating of the Certificates of any outstanding Series and
(f) on or before the related Removal Commencement Date, deliver to the Trustee
and any Enhancement Provider an officers' certificate confirming the items set
forth in clauses (c), (d) and (e) above and a Tax Opinion with respect to such
removal.
Upon satisfaction of the above conditions, the Trustee will execute and
deliver to the Transferor a written reassignment and will be deemed to sell,
transfer, assign, set over and otherwise convey to the Transferor or its
designee, without recourse, representation or warranty, all the right, title and
interest of the Trust in and to the Receivables arising in the Removal Accounts,
all amounts received or to be received with respect thereto and all proceeds
thereof. Collections in respect of Receivables in any such Removal Account will
be allocated as follows: (i) Principal Collections will be allocated first to
the oldest outstanding principal balance of such Receivables and (ii) Defaulted
Receivables and Interest Collections will be allocated to the Trust on the basis
of the ratio of Principal Receivables owned by the Trust in such Removal Account
on the Removal Commencement Date to the total amount of Principal Receivables in
such Removal Account on such date. The remainder of any Principal Collections,
Defaulted Receivables and Interest Collections shall be allocated to the
Transferor.
COLLECTION ACCOUNT
The Master Servicer has established and is required to maintain, or cause
to be established and maintained, an Eligible Deposit Account for the benefit of
certificateholders in the name of the Trustee, on behalf of the Trust (the
"Collection Account"). "Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution or trust company
organized under the laws of the United States or any state thereof (or any
domestic branch of a foreign bank), having corporate trust powers and acting as
trustee for funds deposited in such account, so long as any of the securities of
such depository institution or trust company has a credit rating from each
Rating Agency in one of its generic rating categories which signifies investment
grade. "Eligible Institution" means (a) the corporate trust department of the
Trustee or (b) a depository institution or trust company organized under the
laws of the United States or any one of the states thereof (or a domestic branch
of a foreign bank) which at all times (i) has either (x) a long-term unsecured
debt rating acceptable to each Rating Agency or (y) a certificate of deposit
rating acceptable to each Rating Agency and (ii) is a member of the FDIC. Funds
in the Collection Account generally will be invested in (i) obligations fully
guaranteed by the United States, (ii) demand deposits, time deposits or
certificates of deposit of depository institutions or trust companies, the
commercial paper of which has the highest rating from the applicable Rating
Agency, (iii) commercial paper having at the time of the Trust's investment, a
rating in the highest rating category from the applicable Rating Agency, (iv)
demand deposits, time deposits and certificates of deposit which are fully
insured by the FDIC, (v) bankers' acceptances issued by any depository
institution or trust company described in (ii) above, (vi) investments in money
market funds which have the highest rating from, or have otherwise been approved
in writing by, each Rating Agency and (vii) other investments acceptable to the
Rating Agency as being consistent with the then-current rating of the
Certificates (collectively, "Eligible Investments"). Any earnings (net of losses
and investment expenses) on funds in the Collection Account will be credited to
the Collection Account. The Master Servicer will have the revocable power to
instruct the Trustee to make withdrawals and payments from the Collection
Account for the purpose of carrying out its duties under the Pooling and
Servicing Agreement.
EXCESS FUNDING ACCOUNT
During the Revolving Period for each Series, as to which an Excess Funding
Account has been established, unless otherwise specified in the related
Prospectus Supplement, funds (to the extent available therefor as described
herein) will be deposited in the Excess Funding Account for such Series on a
Distribution Date in an amount equal to the excess, if any, of (i) the related
Invested Amount immediately prior to such Distribution Date over (ii) the
Certificateholders' Interest for such Series in Principal Receivables at the end
of the preceding Collection Period. In addition, if so specified in the related
Prospectus Supplement, a deposit will be made in the related Excess Funding
Account on or prior to the Closing Date for such Series in an amount equal to
the excess of the Initial Principal Amount of the Certificates of such Series
over the Initial Invested Amount allocable thereto. Funds on deposit in the
Excess Funding Account for a Series will be withdrawn and paid to the Transferor
or allocated to one or more other Series that are in their amortization,
accumulation or early amortization periods to the extent of any increases in the
Certificateholders' Interests of all outstanding Series in the Pool Balance as a
result of the addition of Receivables to the Trust. Under certain circumstances,
such deposits in and withdrawals from the Excess Funding Accounts may be made on
a daily basis. The allocation of additional Receivables to increase the Invested
Amount of each outstanding Series will be pro rata based on the proportion that
the amount on deposit in an Excess Funding Account bears to the aggregate
amounts in all of the Trust's Excess Funding Accounts and similar arrangements
for accommodating the fluctuation in the principal balances of the Receivables.
The deposit of amounts into the Excess Funding Account of the outstanding Series
will be based on the proportion that the Invested Amount of a Series bears to
the aggregate of the Invested Amounts for all Series.
Any funds on deposit in an Excess Funding Account at the beginning of the
Accumulation Period, Amortization Period or Early Amortization Period, as
applicable, for the related Series will be deposited in the Principal Funding
Account for such Series. In addition, no funds will be deposited in an Excess
Funding Account during the Accumulation Period, Amortization Period or Early
Amortization Period, as applicable, for the related Series.
Unless otherwise specified in the related Prospectus Supplement for a
Series, funds on deposit in the Excess Funding Account for such Series will be
invested by the Trustee at the direction of the Master Servicer in investments
rated in the highest short-term category of each Rating Agency or in such other
investments that are acceptable to each Rating Agency and any Enhancement
Provider. Such investments are required to mature by the next Distribution Date.
On each Distribution Date, all net investment income earned on amounts in an
Excess Funding Account since the preceding Distribution Date will be withdrawn
from such Excess Funding Account and applied as described herein.
ALLOCATION PERCENTAGES
Allocation to the Certificateholders' Interest. Unless otherwise specified
in the Prospectus Supplement for any Series, the Master Servicer will allocate
amounts to the Certificateholders' Interest of each Series for each Collection
Period as follows:
(a) Interest Collections and the Defaulted Amount will be allocated to
Certificateholders of each Series based on the applicable Floating Allocation
Percentage;
(b) during the Revolving Period for a Series, Principal Collections will
be allocated to Certificateholders of such Series based on the applicable
Floating Allocation Percentage (subject to the following sentence);
(c) during the Accumulation Period or Amortization Period, as applicable,
and any Early Amortization Period for a Series, Principal Collections will be
allocated to Certificateholders of such Series based on the applicable Principal
Allocation Percentage (subject to the following sentence); and
(d) Miscellaneous Payments will at all times be allocated to
Certificateholders of each Series on the basis of the applicable Series
Allocation Percentage.
With respect to Principal Collections among Series for any Collection
Period, if the sum of (i) the sum of the Floating Allocation Percentages for
each Series in its Revolving Period and (ii) the Principal Allocation Percentage
for each Series in its Amortization, Accumulation or Early Amortization period
exceeds 100%, then Principal Collections for such Collection Period will be
allocated among the Series pro rata on the basis of such Floating Allocation
Percentages and Principal Allocation Percentages. Amounts not allocated to the
Certificateholders of outstanding Series as described above will be allocated to
the Transferor.
Unless otherwise specified in the accompanying Prospectus Supplement, the
following terms shall have the meanings specified below.
"Floating Allocation Percentage" for any Collection Period and Series means
the percentage equivalent (which shall never exceed 100%) of a fraction, the
numerator of which is the related Invested Amount as of the last day of the
immediately preceding Collection Period and the denominator of which is the Pool
Balance as of such last day; provided, however, that, with respect to the first
Collection Period for a Series, the Floating Allocation Percentage shall mean
the percentage equivalent of a fraction, the numerator of which is the Initial
Invested Amount of the Certificates of such Series and the denominator of which
is the Pool Balance on the Series Cut-Off Date.
"Principal Allocation Percentage" for any Collection Period and Series
means the percentage equivalent (which shall never exceed 100%) of a fraction,
the numerator of which is the related Invested Amount as of the last day of the
Revolving Period for such Series and the denominator of which is the Pool
Balance as of the last day of the immediately preceding Collection Period.
"Invested Amount" means for any date and Series, an amount equal to the
Initial Invested Amount of the Certificates of such Series, minus the amount,
without duplication, of principal payments (except principal payments made from
the related Excess Funding Account, if any, and any transfers from such Excess
Funding Account to the Principal Funding Account for such Series) made to
Certificateholders of such Series or deposited to the related Principal Funding
Account prior to such date from and after the applicable Closing Date minus the
excess, if any, of the aggregate amount of Investor Charge-Offs for such Series
for all Distribution Dates preceding such date, over the aggregate amount of any
reimbursements of Investor Charge-Offs for such Series for all Distribution
Dates preceding such dates.
"Initial Invested Amount" means the Initial Principal Amount of the
Certificates of a Series plus (a) the amount of any withdrawals from the related
Excess Funding Account, if any, in connection with an increase in Receivables in
the Trust since the Closing Date, minus (b) the amount of any additions to the
related Excess Funding Account in connection with a reduction in the Receivables
in the Trust since the Closing Date.
"Miscellaneous Payments" for any Collection Period means the sum of (a)
Adjustment Payments and Transfer Deposit Amounts received with respect to such
Collection Period and (b) Unallocated Principal Collections on such Distribution
Date available to be treated as Miscellaneous Payments as described below under
"Principal Collections for all Series".
"Series Allocation Percentage" means, for any Collection Period and Series,
the percentage equivalent of a fraction, the numerator of which is the related
Invested Amount as of the last day of the immediately preceding Collection
Period and the denominator of which is the Trust Invested Amount as of such last
day.
"Aggregate Available Subordinated Amount" means for a Series the sum of the
Available Subordinated Amount and any additional subordination specified for
such Series in the related Prospectus Supplement.
"Trust Invested Amount" means, with respect to any Collection Period, the
sum of the Invested Amounts for all outstanding Series.
"Trust Available Subordinated Amount" means the sum of the Aggregate
Available Subordinated Amounts for all outstanding Series.
The Floating Allocation Percentages and the Principal Allocation Percentages
will be adjusted for any Collection Period with respect to which Additional
Accounts are designated to reflect the additional Receivables added to the
Trust.
Principal Collections for all Series. Principal Collections allocated to
the Certificateholders' Interest of a Series, for any Collection Period with
respect to the Accumulation Period or Amortization Period, as applicable, or any
Early Amortization Period for such Series, will be allocated first to make
required payments of principal to the related Principal Funding Account during
the Accumulation Period, if applicable, and to the Certificateholders of such
Series during the Amortization Period or the Early Amortization Period. See
"--Distributions from the Collection Account; Reserve Fund--Principal
Collections" and "--Distributions". The Master Servicer will determine the
amount of related Available Certificateholder Principal Collections for any
Collection Period remaining after such required payments and the Available
Certificateholder Principal Collections for any other Series (collectively, the
"Excess Principal Collections"). The Master Servicer will allocate Excess
Principal Collections to cover any principal distributions to Certificateholders
for any Series that are either scheduled or permitted and that have not been
covered out of Principal Collections and certain other amounts allocated to such
Series (collectively, the "Principal Shortfalls"). Excess Principal Collections
generally will not be used to cover Investor Charge-Offs for any Series. If
Principal Shortfalls exceed Excess Principal Collections for any Collection
Period, Excess Principal Collections will be allocated pro rata among the
applicable Series based on the relative amounts of Principal Shortfalls. To the
extent that Excess Principal Collections exceed Principal Shortfalls, the
balance will be paid to the Transferor if the Transferor's Participation Amount
(determined after giving effect to any Receivables transferred to the Trust on
such date) exceeds the Trust Available Subordinated Amount for the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution Date
immediately following such Determination Date). Any amount not allocated to the
Transferor because the Transferor's Participation Amount does not exceed the
Trust Available Subordinated Amount will be held unallocated ("Unallocated
Principal Collections") until the Transferor's Participation Amount exceeds the
Trust Available Subordinated Amount, at which time such amount will be allocated
to the Transferor, or until an Early Amortization Event occurs or an
Amortization Period commences for any Series, after which such amount will be
treated as a Miscellaneous Payment.
ALLOCATION OF COLLECTIONS; DEPOSITS IN COLLECTION ACCOUNT; LIMITED SUBORDINATION
OF TRANSFEROR'S INTEREST
The Master Servicer, no later than two business days after the processing
date, will deposit all collections received with respect to the Receivables
(excluding, with certain exceptions, certain portions thereof allocable to the
Transferor) in each Collection Period into the Collection Account.
Notwithstanding the foregoing requirement for daily deposits, for so long as (a)
Ford Credit remains the Master Servicer under the Pooling and Servicing
Agreement, (b) no Master Servicer Default has occurred and is continuing and (c)
(i) Ford Credit is a wholly-owned subsidiary of Ford and Ford Credit has and
maintains a short-term debt rating of at least A-1 by Standard & Poor's and P-1
by Moody's, (ii) Ford Credit arranges for and maintains a letter of credit or
other form of Enhancement in respect of the Master Servicer's obligation to make
deposits of collections on the Receivables in the Collection Account that is
acceptable in form and substance to each Rating Agency or (iii) Ford Credit
otherwise obtains the Rating Agency confirmations described below, then, subject
to any limitations in the confirmations referred to below, Ford Credit need not
deposit collections into the Collection Account on the day indicated in the
preceding sentence but may use for its own benefit all such collections until
the business day immediately preceding the related Distribution Date, at which
time Ford Credit will make such deposits in an amount equal to the net amount of
such deposits and withdrawals which would have been made had the conditions of
this sentence not applied; provided, however, that prior to ceasing daily
deposits as described above the Transferor shall have delivered to the Trustee
written confirmation from the applicable Rating Agencies that the failure by
Ford Credit to make daily deposits will not result in a reduction or withdrawal
of the rating of the Certificates of any outstanding Series or class of
certificates. In addition, during any Collection Period, the Master Servicer
will generally be required to deposit Interest Collections and Principal
Collections into the Collection Account only to the extent of the distributions
required to be made to Certificateholders of all Series, the amounts required to
be deposited into any deposit, trust, reserve or similar account maintained for
the benefit of Certificateholders and the amounts required to be paid to any
Enhancement Provider on the Distribution Date relating to such Collection Period
and if, at any time prior to such Distribution Date, the amount of collections
deposited in the Collection Account exceeds the amount required to be deposited,
the Master Servicer will be permitted to withdraw such excess from the
Collection Account.
On any date on which collections are deposited in the Collection Account,
the Master Servicer will distribute directly to the Transferor an amount equal
to (a) the Excess Transferor's Percentage for the related Collection Period of
Interest Collections for such date and (b) the Excess Transferor's Percentage
for the related Collection Period of Principal Collections for such date, if the
Transferor's Participation Amount (determined after giving effect to any
Receivables transferred to the Trust on such date) exceeds the Trust Available
Subordinated Amount for the immediately preceding Determination Date (after
giving effect to the allocations, distributions, withdrawals and deposits to be
made on the Distribution Date immediately following such Determination Date). In
addition, during the Revolving Period, subject to certain limitations, the
Master Servicer will distribute directly to the Transferor on each such date of
deposit an amount equal to the Available Transferor's Principal Collections for
such date, if the Transferor's Participation Amount (determined after giving
effect to any Receivables transferred to the Trust on such date) exceeds the
Trust Available Subordinated Amount for the immediately preceding Determination
Date (after giving effect to the allocations, distributions, withdrawals and
deposits to be made on the Distribution Date immediately following such
Determination Date).
Unless otherwise specified in the accompanying Prospectus Supplement, the
following terms shall have the meanings specified below.
"Available Transferor's Collections" for any date means the sum of (a) the
Available Transferor's Interest Collections for such date and (b) the Available
Transferor's Principal Collections for such date; provided, however, that the
Available Transferor's Collections will be zero for any Collection Period with
respect to which the Available Subordinated Amount is zero on the Determination
Date immediately following the end of such Collection Period.
"Available Transferor's Interest Collections" for any date means an amount
equal to the result obtained by multiplying (a) the excess of (i) the
Transferor's Percentage for the related Collection Period over (ii) the Excess
Transferor's Percentage for such Collection Period by (b) Interest Collections
for such date.
"Available Transferor's Principal Collections" for any date means an amount
equal to the product of (a) the excess of (i) the Transferor's Percentage for
the related Collection Period over (ii) the Excess Transferor's Percentage for
such Collection Period and (b) Principal Collections for such date.
"Transferor's Percentage" means 100% minus (a) when used with respect to
Interest Collections, the aggregate of the Floating Allocation Percentages for
each outstanding Series, and (b) when used with respect to Principal
Collections, the sum of (i) the aggregate of the Floating Allocation Percentages
for each outstanding Series in its Revolving Period and (ii) the aggregate of
the Principal Allocation Percentages for each outstanding Series in its
Accumulation, Amortization or Early Amortization Period, but in each case shall
not be less than 0%.
"Excess Transferor's Percentage" for any Collection Period means a
percentage (which percentage shall never be less than 0% nor more than 100%)
equal to (a) 100% minus, when used with respect to Interest Collections, the sum
of (i) the aggregate of the Floating Allocation Percentages for each outstanding
Series with respect to such Collection Period and (ii) the percentage equivalent
of a fraction, the numerator of which is the Trust Available Subordinated Amount
as of the Determination Date occurring in the immediately preceding Collection
Period (after giving effect to the allocations, distributions, withdrawals and
deposits to be made on the Distribution Date immediately following such
Determination Date), and the denominator of which is the Pool Balance as of the
last day of such immediately preceding Collection Period and (b) 100% minus,
when used with respect to Principal Collections the sum of (i) the sum of the
aggregate of the Principal Allocation Percentages for each outstanding Series in
its Accumulation, Amortization or Early Amortization Period with respect to such
Collection Period and the aggregate of the Floating Allocation Percentages for
each outstanding Series in its Revolving Period with respect to such Collection
Period and (ii) the percentage described in clause (a)(ii) above for such
Collection Period.
"Transferor's Participation Amount" for any date means an amount equal to
the Pool Balance on such date minus the aggregate of Invested Amounts for all
outstanding Series on such date.
Deficiency Amount. Unless otherwise specified in the related Prospectus
Supplement for a Series, on each such Determination Date, the Master Servicer
will determine for the Certificates of such Series the amount (the "Deficiency
Amount"), if any, by which (a) the sum of (i) Monthly Interest for such Series
for the following Distribution Date, (ii) Monthly Interest for such Series
accrued but not paid with respect to prior Distribution Dates (and interest
thereon), (iii) the Monthly Servicing Fee allocable to such Series for such
Distribution Date, (iv) the Investor Default Amount for such Series for such
Distribution Date, (v) the amount of any Adjustment Payment allocated to the
Certificates of such Series for such Distribution Date that has not been
deposited in the Collection Account as required under the Pooling and Servicing
Agreement and (vi) any other amounts required to be paid to an Enhancement
Provider for such Series exceeds (b) the sum of (i) related Certificateholder
Interest Collections, Investment Proceeds and proceeds of Enhancement for such
Distribution Date and (ii) the amount of funds in the related Reserve Fund on
such Distribution Date available to fund the amount by which the amount in
clause (a) exceeds the amount in clause (b)(i) as described under "Interest
Collections". The lesser of the Deficiency Amount and the Available Subordinated
Amount is the "Draw Amount".
"Monthly Interest" for any Distribution Date and Series shall mean an
amount equal to the product of (a) the Certificate Rate and (b) the outstanding
principal balance of the Certificates of such Series as of the close of business
on the preceding Distribution Date (or, in the case of the first Distribution
Date of such Series, on the Closing Date) after giving effect to all repayments
of principal made to the Certificateholders on such preceding Distribution Date,
multiplied by (i) in the case of fixed-rate Certificates, one-twelfth and (ii)
in the case of floating-rate Certificates, a fraction the numerator of which is
the actual number of days elapsed in the related Interest Period and the
denominator of which is 360.
Required Subordinated Amount. Unless otherwise specified in the related
Prospectus Supplement, the "Required Subordinated Amount" shall mean, as of any
date of determination and Series, the sum of (a) the product of the related
Subordinated Percentage and the Invested Amount for such Series and (b) the
Incremental Subordinated Amount for such Series.
Available Subordinated Amount. The Available Subordinated Amount with
respect to any Series and Determination Date will be calculated as specified in
the related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, the Available Subordinated Amount for the first
Determination Date is equal to the Required Subordinated Amount. The
"Incremental Subordinated Amount" for any Determination Date will be calculated
as specified in the related Prospectus Supplement.
The "Subordinated Percentage" for any Series will initially equal the
percentage specified therefore in the related Prospectus Supplement. The
Transferor may, in its sole discretion, at any time increase the Available
Subordinated Amount for so long as the cumulative amount of such increases does
not exceed the amount specified therefore in the related Prospectus Supplement.
The Transferor is not under any obligation to increase the Available
Subordinated Amount for any Series at any time. If for any Series the Available
Subordinated Amount were reduced to less than the Required Subordinated Amount,
an Early Amortization Event would occur. The Transferor could elect to increase
the Available Subordinated Amount for any Series at the time such an Early
Amortization Event would otherwise occur for such Series, thus preventing or
delaying the occurrence of the Early Amortization Event.
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT; RESERVE FUND
Interest Collections. Unless otherwise specified in the related Prospectus
Supplement for any Series, on each Distribution Date, the Trustee will apply
Certificateholders' Interest Collections, Investment Proceeds and proceeds of
any Enhancement, if any, in respect of any Series of Certificates and the
preceding Collection Period to make the following distributions in the following
order of priority:
(a) an amount equal to Monthly Interest for such Series and Distribution
Date, plus any payments in respect of Net Trust Swap Receipts (as specified in
the related Prospectus Supplement), plus the amount of any Monthly Interest with
respect to such Series previously due but not distributed on a prior
Distribution Date (plus, but only to the extent permitted under applicable law,
interest at the applicable rate specified in the related Prospectus Supplement
on Monthly Interest previously due but not distributed), will be deposited to
the Interest Funding Account; then any required payments will be paid to an
Enhancement Provider with respect to such Series;
(b) an amount equal to the Monthly Servicing Fee for such Series and such
Distribution Date shall be distributed to the Master Servicer (unless such
amount has been netted against deposits to the Collection Account as described
above or waived as described below);
(c) an amount equal to the Reserve Fund Deposit Amount allocable to such
Series, if any, for such Distribution Date shall be deposited in the Reserve
Fund;
(d) an amount equal to the Investor Default Amount, if any, for such
Distribution Date shall be treated as a portion of Available Certificateholder
Principal Collections for such Distribution Date; and
(e) the balance shall constitute Excess Servicing.
If such Certificateholder Interest Collections, Investment Proceeds and
Enhancement proceeds, if any, are not sufficient to make the entire
distributions required by clauses (a) and (b) and (d) above, the Trustee shall
withdraw funds from the related Reserve Fund and apply such funds to complete,
to the extent available, the distributions pursuant to such clauses in the
numerical order thereof; provided that during an Early Amortization Period,
unless otherwise provided in the Prospectus Supplement for any Series, the
application of funds in the related Reserve Fund to cover the amount in clause
(d) will be reduced or eliminated to the extent necessary to maintain the amount
in the related Reserve Fund at least equal to the amount specified therefore in
such Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement for a
Series, if there is a Draw Amount for such Distribution Date, the Trustee shall
apply the amount of Available Transferor's Collections for the related
Collection Period on deposit in the Collection Account on such Distribution
Date, but only up to the Draw Amount, to make the distributions required by
clauses (a), (b) and (d) above that have not been made through the application
of funds from the related Reserve Fund as described in the preceding paragraph.
If the sum of the Draw Amounts for all Series in respect of a Distribution Date
exceeds such Available Transferor's Collections for the related Collection
Period, then such Available Transferor's Collections will be allocated among
those Series with Draw Amounts pro rata on the basis of such Draw Amounts. The
Available Subordinated Amount for any Series will be reduced by the amount of
Available Transferor's Collections so applied in respect of the Certificates of
such Series. If the Draw Amount exceeds such Available Transferor's Collections,
the Available Subordinated Amount for such Series will be reduced by the amount
of such excess, but not by more than the sum of the Investor Default Amount
allocated to such Series of Certificate for such Distribution Date and the
amount of any Adjustment Payments allocable to the Certificates and not paid by
the Transferor.
"Certificateholder Interest Collections" for any Series and Distribution
Date means the portion of Interest Collections for the related Collection Period
allocated to the Certificateholders' Interest for such Series as described under
"Allocation Percentages--Allocation to the Certificateholders' Interest".
"Investment Proceeds" for any Series and Distribution Date means an amount
equal to the sum of (a) the net investment earnings credited to the Collection
Account on the related Determination Date with respect to funds held in the
Reserve Fund, (b) the Series Allocation Percentage of net investment earnings
credited to the Collection Account on the related Determination Date with
respect to funds held in the Collection Account and (c) all net investment
income earned on amounts in any Excess Funding Account, the Principal Funding
Account and the Interest Funding Account for such Series since the preceding
Distribution Date.
"Excess Servicing" for any Distribution Date means the amount described in
clause (e) of the fifth preceding paragraph.
Reserve Fund. Unless otherwise specified in the related Prospectus
Supplement, an Eligible Deposit Account for each Series will be established and
maintained in the name of the Trustee for the benefit of the Certificateholders
of such Series (the "Reserve Fund"). No deposit will be made into the Reserve
Fund prior to the first Distribution Date for such Series. The "Reserve Fund
Required Amount" means for each Series an amount which upon any Distribution
Date will equal a percentage (specified in the related Prospectus Supplement) of
the outstanding principal balance of the Certificates of such Series for such
Distribution Date (after giving effect to any change therein on such
Distribution Date). If, after giving effect to the allocations, distributions
and deposits in the Reserve Fund described above under "Interest Collections",
the amount in the Reserve Fund is less than the Reserve Fund Required Amount for
such Series for the following Distribution Date, the Trustee shall deposit any
remaining Available Transferor's Collections for the related Collection Period
into the Reserve Fund until the amount in the Reserve Fund is equal to such
Reserve Fund Required Amount. The "Reserve Fund Deposit Amount" for any Series
is the amount, if any, by which the related Reserve Fund Required Amount exceeds
the amount on deposit in the Reserve Fund. Funds in the Reserve Fund will be
invested in the same manner in which funds in the Collection Account may be
invested. On each Determination Date, the Master Servicer will credit to the
Collection Account for the benefit of the Certificateholders of the related
Series any investment earnings (net of losses and investment expenses) with
respect to the Reserve Fund. After the earlier of the payment in full of the
outstanding principal balance of the Certificates of such Series and the Series
Termination Date, any funds remaining on deposit in the related Reserve Fund
will be paid to the Transferor.
If, for any Distribution Date with respect to an Accumulation Period,
Amortization Period or Early Amortization Period, after giving effect to the
allocations, distributions and deposits described in the preceding paragraph,
the amount in the Reserve Fund for a Series is less than the Excess Reserve Fund
Required Amount for such Series and Distribution Date, the Trustee shall deposit
the remaining Available Transferor's Collections for the related Collection
Period into the Reserve Fund until the amount in the Reserve Fund is equal to
such Excess Reserve Fund Required Amount. The "Excess Reserve Fund Required
Amount" for any Series and Distribution Date, if applicable, will be specified
in the related Prospectus Supplement.
In connection with the allocations to Reserve Funds referred to in the two
preceding paragraphs, if the remaining Available Transferor's Collections are
not sufficient to fund the Reserve Funds for all outstanding Series, then,
unless otherwise specified in the related Prospectus Supplement, such remaining
Available Transferor's Collections will be allocated to such Reserve Funds pro
rata on the basis of the respective amounts required to be deposited in such
Reserve Funds.
Excess Servicing. Unless otherwise specified in the related Prospectus
Supplement for any Series, on each Distribution Date, the Master Servicer will
allocate Excess Servicing for such Series with respect to the Collection Period
immediately preceding such Distribution Date, in the following order of
priority:
(a) an amount equal to the aggregate amount of Investor Charge-Offs
allocable to such Series which have not been previously reimbursed (after giving
effect to the allocation on such Distribution Date of Series Allocation
Percentage of Miscellaneous Payments with respect to such Distribution Date)
will be allocated in the same manner as Available Certificateholder Principal
Collections for such Distribution Date;
(b) an amount equal to the aggregate outstanding amounts of the Monthly
Servicing Fee for such Series which have been previously waived as described
under "Servicing Compensation and Payment of Expenses" will be distributed to
the Master Servicer; and
(c) the balance, if any, shall be distributed to the Transferor and will
increase the Available Subordinated Amounts for such Series, to the extent
provided in the related Prospectus Supplement.
Principal Collections. Unless otherwise specified in the related Prospectus
Supplement for a Series, on each Distribution Date, the Master Servicer will
allocate Available Certificateholder Principal Collections with respect to such
Series as follows:
(a) for each Distribution Date with respect to the Revolving Period for
such Series, all Available Certificateholder Principal Collections will be
allocated, first, to make a deposit to the related Excess Funding Account, if
any, if the sum of (i) the Certificateholders' Interest of such Series in
Receivables and (ii) the amount on deposit in such Excess Funding Account prior
to the allocation on such Distribution Date is less than the outstanding
principal balance of the Certificates of such Series and, second, to Excess
Principal Collections as described under "Allocation Percentages--Principal
Collections for all Series"; and
(b) for each Distribution Date with respect to the Accumulation Period,
Amortization Period or any Early Amortization Period for such Series:
(i) an amount equal to Monthly Principal for such Series and
Distribution Date will be deposited to the related Principal Funding
Account; and
(ii) the balance, if any, will be allocated to Excess
Principal Collections.
In the event that the aggregate Invested Amount for a Series is greater
than zero on the Series Termination Date, any funds remaining in the related
Reserve Fund (after the application of funds in the Reserve Fund as described
above under "Interest Collections") will be treated as a portion of Available
Certificateholder Principal Collections for the Distribution Date occurring on
the Series Termination Date.
Unless otherwise specified in the related Prospectus Supplement, the
following terms will have the meanings described below.
"Available Certificateholder Principal Collections" for any Series and
Distribution Date means the sum of (a) the product of (i) the Floating
Allocation Percentage, with respect to the Revolving Period, or the Principal
Allocation Percentage, with respect to the Accumulation Period, Amortization
Period or any Early Amortization Period, for the related Collection Period and
(ii) Principal Collections deposited in the Collection Account for the related
Collection Period, (b) the amount, if any, of Interest Collections, funds in the
Reserve Fund and Available Transferor's Collections allocated to cover the
Investor Default Amount or reimburse Investor Charge-Offs allocated to such
Series, (c) the Series Allocation Percentage of Miscellaneous Payments on
deposit in the Collection Account for such Distribution Date and (d) Excess
Principal Collections, if any, from other Series allocated to such Series.
"Monthly Principal" with respect to any Series and Distribution Date
relating to the Accumulation Period, Amortization Period or any Early
Amortization Period will equal Available Certificateholder Principal Collections
for such Series and Distribution Date; provided, however, that for each
Distribution Date with respect to the Accumulation Period, Monthly Principal may
not exceed the Controlled Distribution Amount, if any, for such Distribution
Date; and provided, further, that Monthly Principal will not exceed the Invested
Amount for such Series.
"Controlled Distribution Amount" for a Series and Distribution Date means
the excess, if any, of (i) the product of the Controlled Amortization Amount and
the number of Distribution Dates with respect to the Accumulation Period through
and including such Distribution Date over (ii) the amount on deposit in the
Principal Funding Account (including any amounts deposited therein from the
Excess Funding Account, if any), before giving effect to any withdrawals from or
deposits to such account on such Distribution Date.
"Controlled Amortization Amount" means for a Series an amount equal to the
Invested Amount as of the date specified in the related Prospectus Supplement
(after giving effect to any changes therein on such date) divided by the number
of months comprising the Accumulation Period Length.
INTEREST FUNDING ACCOUNTS
Unless otherwise specified in the related Prospectus Supplement the Master
Servicer will establish and maintain in the name of the Trustee, on behalf of
the Trust, an Eligible Deposit Account for the benefit of the Certificateholders
of each Series (each, an "Interest Funding Account"). On each Distribution Date,
Monthly Interest for a Series will be deposited in the related Interest Funding
Account as provided above under "Distributions from the Collection Account;
Reserve Fund"; provided that if an Early Amortization Event occurs (unless, in
limited circumstances with respect to the required addition of Accounts, such
Early Amortization Event shall have been cured), or, if applicable, an Asset
Composition Event shall have occurred, interest will be distributed to the
Certificateholders of such Series on the first Distribution Date following such
Early Amortization Event or Asset Composition Event (but, in the case of an
Asset Composition Event, only to the extent needed to cure such event) and, to
the extent provided herein in respect of an Early Amortization Event, on
subsequent Special Payment Dates.
All amounts on deposit in the Interest Funding Accounts on any Distribution
Date (after giving effect to distributions to be made on such Distribution Date)
will be invested from the date of their deposit to a date on or prior to the
next succeeding Distribution Date (or the next succeeding Special Payment Date,
if applicable) by the Trustee at the direction of the Master Servicer in
Eligible Investments. On each Distribution Date, the interest and other
investment income on the Interest Funding Accounts will be paid to the
Collection Account and distributed on such Distribution Date.
PRINCIPAL FUNDING ACCOUNTS
The Master Servicer will establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account for the benefit of the
Certificateholders of each Series (each, a "Principal Funding Account"). On each
Distribution Date with respect to the Accumulation Period, or, if the related
Prospectus Supplement so specifies, the Amortization Period with respect to a
Series of Certificates, Monthly Principal will be deposited in the Principal
Funding Account for such Series as provided above under "Distributions from the
Collection Account; Reserve Fund"; provided that if an Early Amortization Event
occurs during the Accumulation Period with respect to a Series (unless, in
limited circumstances with respect to the required addition of Accounts, such
Early Amortization Event shall have been cured), the amount on deposit in the
Principal Funding Account (as defined below) shall be paid to the
Certificateholders of such Series on the first Special Payment Date.
All amounts on deposit in the Principal Funding Accounts on any
Distribution Date (after giving effect to distributions to be made on such
Distribution Date) will be invested from the date of their deposit to a date on
or prior to the succeeding Distribution Date (or the next succeeding Special
Payment Date, if applicable) by the Trustee at the direction of the Master
Servicer in Eligible Investments. On each Distribution Date, the interest and
other investment income on the Principal Funding Accounts will be applied as
provided above under "Distributions from the Collection Account; Reserve Fund".
DISTRIBUTIONS
Payments to Certificateholders of each Series will be made from the
Interest Funding Account, the Principal Funding Account and, if applicable, the
Excess Funding Account for such Series. Unless otherwise specified in the
related Prospectus Supplement, the Master Servicer shall instruct the Trustee to
apply the funds on deposit in the Interest Funding Account, the Principal
Funding Account and, if applicable, the Excess Funding Account for any Series
and shall instruct the Trustee or the Paying Agent to make, without duplication,
the following distributions:
(a) On each Payment Date, on each Special Payment Date and on each
Distribution Date following an Asset Composition Event with respect to such
Series, all amounts on deposit in the Interest Funding Account for such Series
to the extent required to pay accrued interest on the Certificates (or, in the
case of an Asset Composition Event, to the extent described above under "Asset
Composition Event, Asset Composition Premium") will be distributed to
Certificateholders;
(b) On each Special Payment Date and on the Expected Final Payment Date
with respect to such Series, the amount on deposit in the Principal Funding
Account for such Series, the amount on deposit in any related Excess Funding
Account and any amounts in the related Interest Funding Account after the
payment of accrued interest on the Certificates shall be distributed to
Certificateholders of such Series up to a maximum amount on any such date equal
to the excess of the outstanding principal amount of the Certificates over
unreimbursed Investor Charge-Offs allocated to such Certificates, each on such
date; and
(c) On any Distribution Date following an Asset Composition Event, the
Asset Correction Amount will be distributed to the Certificateholders of any
Series subject to Asset Composition Events, first, from amounts on deposit in
the Interest Funding Account for such Series and, second, from amounts on
deposit in the Excess Funding Account, if any, for such Series.
DISCOUNT OPTION
The Pooling and Servicing Agreement provides that the Transferor may at any
time designate a fixed percentage of the amount of collections in respect of the
Receivables arising in the Accounts (to the extent that such Receivables are
included in the Pool on and after the date of such designation) that otherwise
would be treated as Principal Collections to be treated as Interest Collections
with respect to one or more Series of Certificates, as specified in the related
Prospectus Supplement for such Series. The Transferor must provide 30 days'
prior written notice to the Master Servicer, the Trustee and each Rating Agency
of any such designation, and such designation will become effective on the date
specified therein only if (a) an officer's certificate is delivered to the
Trustee to the effect that in the reasonable belief of the Transferor such
designation would not result in an Early Amortization Event or have a materially
adverse effect on the Certificateholders of such Series and (b) each Rating
Agency shall have notified the Transferor, the Master Servicer and the Trustee
that such action will not result in a reduction or withdrawal of the then
existing rating of any outstanding Series or Class.
DEFAULTED RECEIVABLES AND RECOVERIES
"Defaulted Receivables" on any Determination Date are (a) all Receivables
which were charged off as uncollectable in respect of the immediately preceding
Collection Period and (b) all Receivables which were Eligible Receivables when
transferred to the Trust, which arose in an Account which became an Ineligible
Account after the date of transfer of such Receivables to the Trust and which
were not Eligible Receivables for any six consecutive Determination Dates
thereafter. The "Defaulted Amount" for any Collection Period will be an amount
(which shall not be less than zero) equal to (i) the principal amount of
Receivables that became Defaulted Receivables during the preceding Collection
Period less (ii) the full amount of any Defaulted Receivables subject to
reassignment to the Transferor or purchase by the Master Servicer for such
Collection Period unless certain events of bankruptcy, insolvency, or
receivership have occurred with respect to either of the Transferor or the
Master Servicer, in which event the Defaulted Amount will not be reduced for
those Defaulted Receivables. Receivables will be charged off as uncollectable in
accordance with the Master Servicer's customary and usual policies and
procedures for servicing its own comparable revolving dealer wholesale loan
accounts. Unless otherwise specified in the accompanying Prospectus Supplement,
a portion of the Defaulted Amount equal to the product of (i) the Defaulted
Amount for such Collection Period and (ii) the Floating Allocation Percentage
applicable to a Series for such Collection Period will be allocated to the
Certificateholders of such Series. The portion of the Defaulted Amount allocated
to the Certificateholders of a Series is referred to as the "Investor Default
Amount".
If the Master Servicer adjusts the amount of any Receivable because of a
rebate, billing error or certain other noncash items to a Dealer, or because
such Receivable was created in respect of inventory which was refused or
returned by a Dealer, the principal amount of the Transferor's Interest will be
reduced by the amount of the adjustment or charge-off. After any such reduction
in the amount of the Transferor's Interest occurs, the amount of such Receivable
described above will be deducted from the Pool Balance. Furthermore, to the
extent that the reduction in the Transferor's Interest would reduce the
Transferor's Participation Amount below the Trust Available Subordinated Amount
for the immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date), the Transferor
will be required to deposit a cash amount equal to such deficiency into the
Collection Account in immediately available funds (an "Adjustment Payment") on
the day on which such adjustment occurs.
INVESTOR CHARGE-OFFS
Unless otherwise specified in the related Prospectus Supplement, if the
Available Subordinated Amount for a Series is reduced to zero, and on any
Distribution Date the Deficiency Amount with respect to such Series is greater
than zero, the Invested Amount for such Series will be reduced by such
Deficiency Amount, but not by more than the related Investor Default Amount for
such Distribution Date (an "Investor Charge-Off"). Any reduction in the Invested
Amount for a Series will have the effect of slowing or reducing the return of
principal to the Certificateholders of such Series. Unless otherwise specified
in the related Prospectus Supplement, if the Invested Amount for a Series has
been reduced by any Investor Charge-Offs allocable to such Series it will
thereafter be increased on any Distribution Date (but not by an amount in excess
of the aggregate Investor Charge-Offs) by the sum of (a) the Series Allocation
Percentage of Miscellaneous Payments for such Distribution Date and (b) the
amount of Excess Servicing allocated and available for such purpose as described
above.
OPTIONAL REPURCHASE
On any Distribution Date occurring after the Invested Amount of any Series
of the Certificates is reduced to 10% (or such other percentage as may be
specified in the related Prospectus Supplement) or less of the initial
outstanding principal amount of the Certificates of that Series, the Transferor
will have the option, subject to certain conditions, to repurchase the
Certificateholders' Interest of that Series. Unless a different price is
specified in the Prospectus Supplement for any Series of Certificates, the
purchase price will be equal to the sum of the Invested Amount of such Series
plus accrued and unpaid interest on the unpaid principal amount of the
Certificates of such Series (and accrued and unpaid interest with respect to
interest amounts that were due but not paid on a prior Payment Date,
Distribution Date or Special Payment Date) through the day preceding such
Distribution Date at the Certificate Rate for such Series. The purchase price
will be deposited in the Collection Account in immediately available funds on
the Distribution Date on which the Transferor exercises such option. Following
any such purchase, the Certificateholders will have no further rights with
respect to the Certificateholders' Interest, other than the right to receive the
final distribution on such Certificates. In the event that the Transferor fails
for any reason to deposit such purchase price, payments will continue to be made
to the Certificateholders of such Series as described under "Distributions from
the Collection Account; Reserve Fund".
EARLY AMORTIZATION EVENTS
Commencing on the first Distribution Date following the Collection Period
in which an Early Amortization Event has occurred with respect to any Series,
Principal Collections allocable to the Certificateholders' Interest of such
Series will no longer be paid to the Transferor or allocated to any other Series
but instead will be distributed to Certificateholders of such Series, monthly on
each Distribution Date, except as described below, and the Controlled
Distribution Amount, if applicable to such Series, will no longer apply to
distributions of principal on the Certificates of such Series. Unless otherwise
specified in the related Prospectus Supplement, an "Early Amortization Event"
refers to any of the following events:
(a) failure on the part of the Transferor, the Master Servicer or Ford
Credit, as applicable, (i) to make any payment or deposit required by the
Pooling and Servicing Agreement or the Receivables Purchase Agreement, including
but not limited to any Transfer Deposit Amount or Adjustment Payment, on or
before the date occurring two business days after the date such payment or
deposit is required to be made therein; or (ii) to deliver a Distribution Date
Statement on the date required under the Pooling and Servicing Agreement (or
within the applicable grace period which will not exceed five business days);
(iii) to comply with its covenant not to create any lien on a Receivable; or
(iv) to observe or perform any other covenants or agreements set forth in the
Pooling and Servicing Agreement or the Receivables Purchase Agreement, which
failure has a materially adverse effect on the Certificateholders and which
continues unremedied for a period of 45 days after written notice of such
failure;
(b) any representation or warranty made by Ford Credit in the Receivables
Purchase Agreement or by the Transferor in the Pooling and Servicing Agreement
or any information required to be given by the Transferor to the Trustee to
identify the Accounts proves to have been incorrect in any material respect when
made and continues to be incorrect in any material respect for a period of 60
days after written notice and as a result the interests of the
Certificateholders of any Series are materially and adversely affected;
provided, however, that an Early Amortization Event shall not be deemed to occur
thereunder if the Transferor has repurchased the related Receivables or all such
Receivables, if applicable, during such period in accordance with the provisions
of the Pooling and Servicing Agreement;
(c) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to any of Ford Credit, the Transferor or Ford;
(d) the Trust or the Transferor becomes an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(e) a failure by the Transferor to convey Receivables in Additional
Accounts to the Trust within five business days after the day on which it is
required to convey such Receivables pursuant to the Pooling and Servicing
Agreement;
(f) on any Determination Date, the Available Subordinated Amount for the
next Distribution Date will be reduced to an amount less than the Required
Subordinated Amount on such Determination Date after giving effect to the
distributions to be made on the next Distribution Date;
(g) any Master Servicer Default with respect to the Certificates occurs;
(h) the failure to pay the outstanding principal amount of the Certificates
by the Expected Final Payment Date; and
(i) with respect to any Series, any other Early Amortization Event
specified in the Prospectus Supplement related thereto.
Upon the occurrence of any event described above, an Early Amortization
Event will be deemed to have occurred without any notice or other action on the
part of any other party immediately upon the occurrence of such event. The Early
Amortization Period will commence as of the day on which the Early Amortization
Event occurs. Monthly distributions of principal to the Certificateholders of
each affected Series will begin on the first Distribution Date following the
Collection Period in which an Early Amortization Period has commenced and will
continue, to the extent described under "Distributions" above, on subsequent
Distribution Dates (each, a "Special Payment Date").
Under certain limited circumstances, an Early Amortization Period which
commences prior to the scheduled end of the Revolving Period for a Series may
terminate and the Revolving Period recommence. Unless otherwise specified in the
related Prospectus Supplement, if an Early Amortization Period results from the
failure by the Transferor to convey Receivables in Additional Accounts to the
Trust as described in clause 5 above during the Revolving Period for such Series
and no other Early Amortization Event has occurred, the Early Amortization
Period resulting from such failure will terminate and the Revolving Period for
such Series will recommence (unless the scheduled termination date of the
Revolving Period for such Series has occurred) as of the end of the first
Collection Period during which the Transferor would no longer be required to
convey Receivables to the Trust. The Transferor may no longer be required to
convey Receivables as described above as a result of a reduction in the Invested
Amounts for the Series occurring due to principal payments made on the
Certificates of the outstanding Series during the Early Amortization Period or
as a result of the subsequent addition of Receivables to the Trust.
In addition to the consequences of an Early Amortization Event discussed
above, if an insolvency event occurs with respect to FCAR, or FCAR violates its
covenant not to create any lien on any Receivable, in each case as provided in
the Pooling and Servicing Agreement, on the day of such insolvency event or such
violation, as applicable, FCAR will (subject to the actions of the
Certificateholders) immediately cease to transfer Receivables to the Trust and
promptly give notice to the Trustee of such insolvency event or violation, as
applicable. Under the terms of the Pooling and Servicing Agreement, within 15
days the Trustee will publish a notice of such insolvency event or violation
stating that the Trustee intends to sell, liquidate or otherwise dispose of the
Receivables in a commercially reasonable manner and on commercially reasonable
terms, unless within a specified period of time holders of Certificates of each
outstanding Series representing more than 50% of the aggregate outstanding
principal amount of the Certificates of each such Series (or, in the case of any
Series with two or more classes, the certificates of each such class) and each
person holding a Supplemental Certificate, instruct the Trustee not to sell,
liquidate or dispose of the Receivables and to continue transferring Receivables
as before such insolvency event or violation, as applicable. If the portion of
such proceeds allocated to the Certificateholders' Interest of a Series and the
proceeds of any collections on the Receivables in the Collection Account
allocable to the Certificateholders' Interest of a Series are not sufficient to
pay the aggregate unpaid principal balance of the Certificates of such Series in
full plus accrued and unpaid interest thereon, Certificateholders of such Series
will incur a loss. Notwithstanding the above, in the case of the violation of
the covenant not to create a lien on any Receivable, the Trust will not sell the
Receivables unless the proceeds allocable to the Certificateholders' Interest of
all outstanding Series is sufficient to pay the aggregate unpaid principal
balance of such Series of Certificates in full plus accrued and unpaid interest
thereon.
TERMINATION
The Trust will terminate on the earlier to occur of (a) the day following
the Distribution Date on which the aggregate Invested Amounts for all Series is
zero, if the Transferor elects to terminate the Trust at such time, and (b)
September 30, 2018. Upon termination of the Trust, all right, title and interest
in the Receivables and other funds of the Trust (other than amounts in the
Collection Account for the final distribution of principal and interest to
Certificateholders) will be conveyed and transferred to FCAR.
In any event, the last payment of principal and interest on the
Certificates of a Series will be due and payable no later than the date
specified for such Series in the related Prospectus Supplement (the "Series
Termination Date"). In the event that the Invested Amount of such Series is
greater than zero on the Series Termination Date, the Trustee will sell or cause
to be sold (and apply the proceeds to the extent necessary to pay such remaining
amounts to all Certificateholders) an interest in the Receivables or certain
Receivables, as specified in the Pooling and Servicing Agreement, in an amount
equal to, unless otherwise specified in the Prospectus Supplement for such
Series, 110% of the Invested Amount of such Series (after giving effect to
deposits and distributions otherwise to be made on the Series Termination Date;
provided, however, that in no event shall such amount exceed the applicable
Series Allocation Percentage of Receivables on such Series Termination Date).
The net proceeds of such sale and any collections on the Receivables will be
paid pro rata to Certificateholders on the Series Termination Date as the final
payment of the Certificates.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that the Master Servicer will
indemnify the Trust and the Trustee from and against any loss, liability,
expense, damage or injury suffered or sustained arising out of any acts or
omissions arising out of activities of the Trust or the Trustee or the Master
Servicer pursuant to the Pooling and Servicing Agreement; provided that the
Trust or the Trustee will not be so indemnified if such acts or omissions
constitute fraud, gross negligence, breach of fiduciary duty or willful
misconduct by the Trustee. In addition, the Master Servicer will not indemnify
the Trust, the Trustee or the Certificateholders for any act taken by the
Trustee at the request of the Certificateholders or for any tax required to be
paid by the Trust or the Certificateholders.
The Pooling and Servicing Agreement provides that, except as described
above and with certain other exceptions, neither the Transferor, the Master
Servicer nor any of their directors (or, in the case of the Transferor,
managers), officers, employees or agents will be under any liability to the
Trust, the Trustee, the Certificateholders or any other person for taking any
action, or for refraining from taking any action, pursuant to the Pooling and
Servicing Agreement. However, neither the Transferor, the Master Servicer nor
any of their directors (or, in the case of the Transferor, managers), officers,
employees or agents will be protected against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence of any such person in the performance of their duties or by reason of
reckless disregard of their obligations and duties thereunder.
In addition, the Pooling and Servicing Agreement provides that the Master
Servicer is not under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its servicing responsibilities under the
Pooling and Servicing Agreement. The Master Servicer may, in its sole
discretion, undertake any such legal action which it may deem necessary or
desirable for the benefit of Certificateholders with respect to the Pooling and
Servicing Agreement and the rights and duties of the parties thereto and the
interest of the Certificateholders thereunder.
COLLECTION AND OTHER SERVICING PROCEDURES
Pursuant to the Pooling and Servicing Agreement, the Master Servicer is
responsible for servicing, collecting, enforcing and administering the
Receivables in accordance with customary and usual procedures for servicing its
own revolving credit line dealer wholesale loans, except where the failure to so
act would not materially and adversely affect the rights of the Trust.
Ford Credit covenants that it may only change the terms relating to the
Accounts if (i) in the Master Servicer's reasonable judgment, no Early
Amortization Event with respect to any Series will occur as a result of the
change and (ii) the change is made applicable to the comparable segment of the
portfolio of revolving credit line dealer wholesale loan accounts with similar
characteristics owned or serviced by Ford Credit and not only to the Accounts.
Servicing activities to be performed by the Master Servicer include
collecting and recording payments, communicating with dealers, investigating
payment delinquencies, evaluating the increase of credit limits, and maintaining
internal records with respect to each Account. Managerial and custodial services
performed by the Master Servicer on behalf of the Trust include providing
assistance in any inspections of the documents and records relating to the
Accounts and Receivables by the Trustee pursuant to the Pooling and Servicing
Agreement, maintaining the agreements, documents and files relating to the
Accounts and Receivables as custodian for the Trust and providing related data
processing and reporting services for certificateholders and on behalf of the
Trustee.
MASTER SERVICER COVENANTS
In the Pooling and Servicing Agreement the Master Servicer covenants that:
(a) it will duly satisfy all obligations on its part to be fulfilled under or in
connection with the Receivables and Accounts, will maintain in effect all
qualifications required in order to service the Receivables and Accounts and
will comply in all material respects with all requirements of law in connection
with servicing the Receivables and the Accounts, the failure to comply with
which would have a materially adverse effect on the Certificateholders of any
outstanding Series; (b) it will not permit any rescission or cancellation of a
Receivable except as ordered by a court of competent jurisdiction or other
government authority; (c) it will do nothing to impair the rights of the
Certificateholders in the Receivables or Accounts; and (d) it will not
reschedule, revise or defer payments due on any Receivable except in accordance
with its guidelines for servicing revolving credit line dealer wholesale loans.
Under the terms of the Pooling and Servicing Agreement, if the Transferor
or the Master Servicer discovers, or receives written notice, that any covenant
of the Master Servicer set forth above has not been complied with in all
material respects and such noncompliance has not been cured within 30 days
thereafter (or such longer period as the Trustee may agree to) and has a
materially adverse effect on the interests of Certificateholders in any
Receivable or Account, Ford Credit, as Master Servicer, will purchase such
Receivable or all Receivables in such Account, as applicable. If Ford Credit is
the Master Servicer, such purchase will be made on the Determination Date
following the expiration of the 30 day cure period and the Master Servicer will
be obligated to deposit into the Collection Account an amount equal to the
amount of such Receivable plus accrued and unpaid interest thereon in the
Collection Account. The amount of such deposit shall be deemed a Transfer
Deposit Amount. The purchase by the Master Servicer constitutes the sole remedy
available to the Certificateholders if such covenant or warranty of the Master
Servicer is not satisfied and the Trust's interest in any such purchased
Receivables shall be automatically assigned to the Master Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicer's compensation with respect to the Receivables for its
servicing activities and reimbursement for its expenses will be a monthly
servicing fee (the "Servicing Fee") in an amount payable in arrears on each
Distribution Date prior to the Termination Date generally equal to one-twelfth
of the product of (a) 1.0% or, if the Servicing Fee has been waived as described
below, 0% for the Distribution Date in respect of which the Servicing Fee has
been waived (the "Servicing Fee Rate"), and (b) the Pool Balance as of the last
day of the second preceding Collection Period. The share of the Servicing Fee
allocable to the Certificateholders of each Series with respect to any
Distribution Date (the "Monthly Servicing Fee") will generally be equal to
one-twelfth of the product of (a) the Servicing Fee Rate and (b) the Invested
Amount of such Series as of the last day of the second preceding Collection
Period. The remainder of the Servicing Fee shall be paid by the Transferor. The
Monthly Servicing Fee with respect to any Series shall be payable to the Master
Servicer solely to the extent amounts are available for distribution therefor in
accordance with the terms of the Pooling and Servicing Agreement.
The Master Servicer will be permitted to waive its right to receive the
Monthly Servicing Fee with respect to any Series on any Distribution Date, so
long as it believes that sufficient Interest Collections will be available on a
future Distribution Date to pay such Monthly Servicing Fee relating to such
waived Servicing Fee, in which case such Monthly Servicing Fee for such
Distribution Date shall be deemed to be zero.
The Master Servicer will pay from its servicing compensation certain
expenses incurred in connection with servicing the Accounts and the Receivables
including, without limitation, payment of fees and disbursements of the Trustee
and independent accountants and all other fees and expenses which are not
expressly stated in the Pooling and Servicing Agreement to be payable by the
Trust or the Certificateholders other than federal, state and local income and
franchise taxes, if any, of the Trust or the Certificateholders.
CERTAIN MATTERS REGARDING THE MASTER SERVICER
The Master Servicer may not resign from its obligations and duties under
the Pooling and Servicing Agreement, except upon determination that such duties
are no longer permissible under applicable law. No such resignation will become
effective until the Trustee or a successor to the Master Servicer has assumed
the Master Servicer's responsibilities and obligations under the Pooling and
Servicing Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the Master Servicer may be merged or consolidated or any person
resulting from any merger or consolidation to which the Master Servicer is a
party, or any person succeeding to the business of the Master Servicer, will be
the successor to the Master Servicer under the Pooling and Servicing Agreement.
MASTER SERVICER DEFAULT
In the event of any Master Servicer Default, the Trustee, by written notice
to the Master Servicer, may terminate all of the rights and obligations of the
Master Servicer, as master servicer, under the Pooling and Servicing Agreement
and in and to the Receivables and the proceeds thereof and appoint a new Master
Servicer (a "Servicing Transfer"). The rights and interest of the Transferor
under the Pooling and Servicing Agreement in the Transferor's Interest will not
be affected by any Servicing Transfer. The Trustee shall as promptly as possible
appoint a successor Master Servicer and if no successor Master Servicer has been
appointed by the Trustee and has accepted such appointment by the time the
Master Servicer ceases to act as Master Servicer, all rights, authority, power
and obligations of the Master Servicer under the Pooling and Servicing Agreement
shall pass to and be vested in the Trustee. Prior to any Servicing Transfer, the
Trustee will review any bids obtained from potential servicers meeting certain
eligibility requirements set forth in the Pooling and Servicing Agreement to
serve as successor Master Servicer for servicing compensation not in excess of
the Servicing Fee plus certain excess amounts payable to the Transferor.
A "Master Servicer Default" refers to any of the following events:
(a) failure by the Master Servicer to make any payment, transfer or
deposit, or to give instructions to the Trustee to make any payment, transfer or
deposit, on the date the Master Servicer is required to do so under the Pooling
and Servicing Agreement, which is not cured within a five business day grace
period;
(b) failure by the Master Servicer duly to observe or perform any other
covenants or agreements of the Master Servicer in the Pooling and Servicing
Agreement (exclusive of breaches of covenants in respect of which the Master
Servicer repurchases the related Receivables, as described under "Master
Servicer Covenants"), which failure has a materially adverse effect on the
Certificateholders of any outstanding Series and which continues unremedied for
a period of 30 days after the earlier of written notice or actual knowledge, or
the Master Servicer delegates its duties under the Pooling and Servicing
Agreement, except as specifically permitted thereunder;
(c) any representation, warranty or certification made by the Master
Servicer in the Pooling and Servicing Agreement or in any certificate delivered
pursuant to the Pooling and Servicing Agreement proves to have been incorrect in
any material respect when made, which has a materially adverse effect on the
rights of the Certificateholders of any outstanding Series, and which materially
adverse effect continues for a period of 60 days after written notice; or
(d) the occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the Master Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause 1 above for a period of ten business days or referred
to under clauses 2 or 3 for a period of 60 business days, shall not constitute a
Master Servicer Default if such delay or failure was caused by an act of God or
other similar occurrence. Upon the occurrence of any such event, the Master
Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of the Pooling and
Servicing Agreement and the Master Servicer shall provide the Trustee, any
Enhancement Provider, the Transferor and the Certificateholders prompt notice of
such failure or delay by it, together with a description of its efforts to so
perform its obligations. The Master Servicer shall immediately notify the
Trustee in writing of any Master Servicer Default reports.
On each Distribution Date (including each Distribution Date that
corresponds to a Payment Date (including any Expected Final Payment Date or
Special Payment Date), the Trustee will forward (or cause to be forwarded) to
each Certificateholder of a Series of record (which is expected to be Cede, as
nominee for DTC, unless Definitive Certificates are issued) a statement (the
"Distribution Date Statement") prepared by the Master Servicer setting forth the
following information (which, in the case of (c), (d) and (e) below, will be
stated on the basis of an original principal amount of $1,000 per Certificate if
the Accumulation Period, Amortization Period or an Early Amortization Period has
commenced) with respect to such Series: (a) the aggregate amount of collections,
the aggregate amount of Interest Collections and the aggregate amount of
Principal Collections processed during the immediately preceding Collection
Period; (b) the Series Allocation Percentage, the Floating Allocation Percentage
and the Principal Allocation Percentage for such Series and Collection Period;
(c) the total amount, if any, distributed on the Certificates of such Series;
(d) the amount of such distribution allocable to principal on the Certificates
of such Series; (e) the amount of such distribution allocable to interest on the
Certificates of such Series; (f) the Investor Default Amount allocable to such
Series for such Distribution Date; (g) the Draw Amount for such Series, if any,
for the preceding Collection Period; (h) the amount of the Investor Charge-Offs
allocable to such Series and the amounts of reimbursements thereof for the
preceding Collection Period; (i) the amount of the Monthly Servicing Fee
relating to such Series for the preceding Collection Period; (j) if applicable
to such Series, the Controlled Distribution Amount; (k) the Invested Amount, the
amount on deposit in the Excess Funding Account, if any, and the outstanding
principal balance of the Certificates for such Series and Distribution Date
(after giving effect to all distributions which will occur on each Distribution
Date); (l) the "pool factor" for the Certificates of such Series as of the
Determination Date with respect to such Distribution Date (consisting of an
eleven-digit decimal expressing the Invested Amount of such Series as of such
Determination Date (determined after taking into account any reduction in the
Invested Amount of such Series which will occur on such Distribution Date) as a
portion of the Initial Invested Amount of such Series); (m) the Available
Subordinated Amount for such Series and Determination Date; (n) the amount on
deposit in the Reserve Fund with respect to such Series and date; and (o) the
amounts on deposit in the Principal Funding Account and the Interest Funding
Account with respect to such Series and date.
On or before January 31 of each calendar year, the Trustee will furnish (or
cause to be furnished) to each person who at any time during the preceding
calendar year was a Certificateholder of record (which is expected to be Cede,
as nominee for DTC, unless Definitive Certificates are issued) a statement
containing the information required to be provided by an issuer of indebtedness
under the Code for such preceding calendar year or the applicable portion
thereof during which such person was a Certificateholder, together with such
other customary information as is required to be provided by an issuer of
indebtedness under the Code and such other customary information as is necessary
to enable the Certificateholders to prepare their tax returns. Moreover, as long
as the Certificateholder of record is Cede, as nominee for DTC, Certificate
Owners will receive tax and other information from Participants and Indirect
Participants rather than from the Trustee. See "Certain Federal Income Tax
Considerations".
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing provides that on or before April 30 of each
calendar year, the Master Servicer will cause a firm of nationally recognized
independent public accountants (who will also render other services to the
Master Servicer or the Transferor) to furnish a report relating to certain
matters in connection with the servicing of Ford Credit's portfolio of wholesale
receivables.
The Pooling and Servicing Agreement provides for delivery to the Trustee on
or before April 30 of each calendar year, of a statement signed by an officer of
the Master Servicer to the effect that the Master Servicer has fully performed,
or caused to be fully performed its obligations in all material respects under
the Pooling and Servicing Agreement throughout the preceding year or, if there
has been a default in the performance of any such obligation, specifying the
nature and status of the default.
Copies of all statements, certificates and reports furnished to the Trustee
may be obtained by a request in writing delivered to the Trustee.
AMENDMENTS
The Pooling and Servicing Agreement may be amended by the Transferor, the
Master Servicer and the Trustee, without Certificateholder consent, so long as
any such action shall not, as evidenced by an opinion of counsel, adversely
affect in any material respect the interests of any Certificateholders.
The Pooling and Servicing Agreement may be amended by the Transferor, the
Master Servicer and the Trustee with the consent of the holders of Certificates
evidencing not less than 66 2/3% of the aggregate unpaid principal amount of the
Certificates of all adversely affected Series for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Pooling and Servicing Agreement or of modifying in any manner the rights of
such Certificateholders. No such amendment, however, may (a) reduce in any
manner the amount of, or delay the timing of, distributions required to be made
on any Certificate, (b) change the definition or the manner of calculating any
Certificateholders' Interest, (c) reduce the amount available under any
Enhancement, (d) adversely affect the rating of any Series or class by each
Rating Agency without the consent of the holders of Certificates of such Series
or class evidencing not less than 66 2/3% of the aggregate unpaid principal
amount of the Certificates of such Series or class or (e) reduce the aforesaid
percentage of the unpaid principal amount of Certificates, the holders of which
are required to consent to any such amendment, in the case of (a), without the
consent of the holder of such Certificate and, in the case of (b), (c) and (e),
without the consent of all Certificateholders of the adversely affected Series.
Promptly following the execution of any amendment to the Pooling and Servicing
Agreement (other than an amendment described in the preceding paragraph), the
Trustee will furnish written notice of the substance of such amendment to each
certificateholder.
The Pooling and Servicing Agreement may not be amended in any manner which
materially adversely affects the interests of any Enhancement Provider without
its prior consent.
LIST OF CERTIFICATEHOLDERS
Upon written request of any three or more Certificateholders of a Series of
record the Trustee will afford such Certificateholders access during business
hours to the current list of Certificateholders of such Series for purposes of
communicating with other Certificateholders of such Series with respect to their
rights under the Pooling and Servicing Agreement. See "--Book-Entry
Registration" and "--Definitive Certificates".
The Pooling and Servicing Agreement will not provide for any annual or
other meetings of Certificateholders.
THE TRUSTEE
Unless otherwise specified in the accompanying Prospectus Supplement, The
Chase Manhattan Bank, a New York banking corporation, will act as Trustee under
the Pooling and Servicing Agreement. The Trustee is located at 450 West 33rd
Street, New York, New York 10001. The Transferor, the Master Servicer and their
respective affiliates may from time to time enter into normal banking and
trustee relationships with the Trustee and its affiliates. The Trustee may hold
Certificates in its own name with the same rights it would have if it were not
the Trustee. In addition, for purposes of meeting the legal requirements of
certain local jurisdictions, the Trustee shall have the power to appoint a
co-trustee or separate trustees of all or a part of the Trust. In the event of
such appointments, all rights, powers, duties and obligations shall be conferred
or imposed upon the Trustee and such separate trustee or co-trustee jointly, or
in any jurisdiction in which the Trustee shall be incompetent or unqualified to
perform certain acts singly upon such separate trustee or co-trustee, who shall
exercise and perform such right powers, duties and obligations solely at the
direction of the Trustee.
The Trustee may resign at any time, in which event the Transferor will be
obligated to appoint a successor Trustee. The Master Servicer may also remove
the Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Master Servicer may appoint a successor Trustee. Any
resignation or removal of the Trustee and appointment of a successor Trustee
does not become effective until the acceptance of the appointment by the
successor Trustee.
DESCRIPTION OF THE RECEIVABLES PURCHASE AGREEMENT
The Receivables initially transferred to the Trust by FCAR were acquired by
FCAR from Ford Credit pursuant to the Receivables Purchase Agreement. The
following summary describes certain terms of the Receivables Purchase Agreement
and is qualified in its entirety by reference to the Receivables Purchase
Agreement.
SALE OR TRANSFER OF RECEIVABLES
Pursuant to the Receivables Purchase Agreement, Ford Credit has sold and
transferred to the Transferor all of its right, title and interest in and to all
of the Receivables and the Related Security as of the Initial Cut-Off Date and
all of the Receivables thereafter created. As described herein, pursuant to the
Pooling and Servicing Agreement, the Transferor has transferred to the Trust all
of its right, title and interest in and to the Receivables Purchase Agreement.
In connection with the sale or transfer of the Receivables to the
Transferor, Ford Credit has indicated in its computer files that the Receivables
have been sold or transferred to the Transferor, and that such Receivables have
been transferred by the Transferor to the Trust. In addition, Ford Credit
provided to FCAR a computer file or microfiche or written list containing a true
and complete list of all such Receivables, identifying the balances of the
Receivables as of the Initial Cut-Off Date. The records and agreements relating
to the Accounts and Receivables have not been, and will not be, segregated by
Ford Credit from other documents and agreements relating to other accounts and
receivables and will not be stamped or marked to reflect the sale or transfer of
the Receivables to the Transferor, but the computer records of Ford Credit have
been marked to evidence such sale or transfer. Ford Credit has filed UCC
financing statements with respect to the Receivables meeting the requirements of
Michigan state law. See "Risk Factors--Certain Legal Aspects" and "Certain Legal
Aspects of the Receivables--Transfer of Receivables".
REPRESENTATIONS AND WARRANTIES
Ford Credit has made or will make certain representations and warranties to
the Transferor to the effect that, among other things, (a) as of each Closing
Date, it was duly incorporated and in good standing and that it has the
authority to consummate the transactions contemplated by the Receivables
Purchase Agreement and (b) as of the Initial Cut-Off Date and each Series
Cut-Off Date (or, in the case of an Additional Account, as of the Additional
Cut-Off Date and Addition Date), each Account or Additional Account was an
Eligible Account.
Ford Credit also has made or will make representations and warranties to
the Transferor relating to the Receivables to the effect, among other things,
that (a) as of the Initial Closing Date and each Closing Date, each of the
Accounts was or is an Eligible Account or, if it was or is an Ineligible Account
on such date, such Account is being removed from the Trust in accordance with
the requirements of the Pooling and Servicing Agreement, (b) the amount of
Receivables that are reported as Ineligible Receivables transferred to the
Transferor on the Initial Cut-Off Date, each Series Cut-Off Date or any
Additional Cut-Off Date for the purpose of facilitating the administration and
reporting obligations of the Master Servicer is true and correct and there are
no other Receivables that are Ineligible Receivables except as so reported and
(c) as of the date any new Receivable is created, such Receivable is an Eligible
Receivable. In the event of a breach of any representation and warranty set
forth in this paragraph which results in an Ineligible Receivable and the
requirement that the Transferor accept retransfer of such Ineligible Receivable
pursuant to the Pooling and Servicing Agreement, then Ford Credit will
repurchase such Ineligible Receivable from the Transferor on the date of such
retransfer. The purchase price for such Ineligible Receivable will be the face
amount thereof, of which at least the amount of any cash deposit required to be
made by the Transferor under the Pooling and Servicing Agreement in respect of
the retransfer of such Ineligible Receivable will be paid in cash.
Ford Credit also has made or will make representations and warranties to
the Transferor to the effect, among other things, that as of the Initial Closing
Date and each Closing Date, (a) the Receivables Purchase Agreement constitutes a
legal, valid and binding obligation of Ford Credit and (b) the Receivables
Purchase Agreement constitutes a valid sale or transfer to the Transferor of all
right, title and interest of Ford Credit in and to the Receivables, whether then
existing or thereafter created in the Accounts, the Related Security and the
proceeds thereof which is effective as to each Receivable upon the creation
thereof. If the breach of any of the representations and warranties described in
this paragraph results in the obligation of the Transferor under the Pooling and
Servicing Agreement to accept retransfer of the Receivables, Ford Credit will be
obligated to repurchase the Receivables retransferred to Ford Credit for an
amount of cash equal to the amount of cash the Transferor is required to deposit
under the Pooling and Servicing Agreement in connection with such retransfer.
Ford Credit has agreed to indemnify the Transferor and to hold the
Transferor harmless from and against any and all losses, damages and expenses
(including reasonable attorneys' fees) suffered or incurred by the Transferor if
the foregoing representations and warranties are materially false.
CERTAIN COVENANTS
In the Receivables Purchase Agreement, Ford Credit has covenanted that it
will perform its obligations under the agreements relating to the Receivables
and the Accounts in conformity with its then-current policies and procedures
relating to the Receivables and the Accounts.
Ford Credit has covenanted further that, except for the sale and
conveyances under the Receivables Purchase Agreement and the interests created
under the Pooling and Servicing Agreement, Ford Credit will not sell, pledge,
assign or transfer any interest in the Receivables to any other person. Ford
Credit also has covenanted to defend and indemnify the Transferor for any loss,
liability or expense incurred by the Transferor in connection with a breach by
Ford Credit of any of its representations, warranties or covenants contained in
the Receivables Purchase Agreement.
Ford Credit has agreed not to realize upon any security interest in a
Vehicle that it may have in respect of advances or loans to Dealers other than
the related Receivable until the Trust has fully realized on its security
interest in such Receivable. See "The Dealer Floorplan Financing
Business--Intercreditor Agreement in respect of Security Interests in the
Vehicles and the Non-Vehicle Related Security."
In addition, Ford Credit has expressly acknowledged and consented to the
Transferor's assignment of its rights relating to the Receivables under the
Receivables Purchase Agreement to the Trustee.
TERMINATION
The Receivables Purchase Agreement will terminate immediately after the
Trust terminates. In addition, if Ford Credit becomes party to any bankruptcy or
similar proceeding (other than as a claimant) and, if such proceeding is not
voluntary and is not dismissed within 60 days of its institution, Ford Credit
will immediately cease to sell or transfer Receivables to the Transferor and
will promptly give notice of such event to the Transferor and to the Trustee.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
Ford Credit has sold and assigned the Receivables to the Transferor, and
the Transferor in turn has sold and assigned the Receivables to the Trust. The
Transferor has represented and warranted and will represent and warrant on each
Closing Date that such sale to the Trust constituted a valid transfer and
assignment to the Trust of all right, title and interest of the Transferor in
and to the Receivables and that, under the UCC (as in effect in Michigan), there
exists a valid, subsisting and enforceable first priority perfected ownership
interest in the Receivables, in existence at the time the Receivables are sold
and assigned to the Trust or at the date of addition of any Additional Accounts,
in favor of the Trust and a valid, subsisting and enforceable first priority
perfected ownership interest in the Receivables created thereafter in favor of
the Trust on and after their creation. However, the transfer of Receivables by
the Transferor to the Trust could be deemed to create a security interest under
the UCC. For a discussion of the Trust's rights arising from these
representations and warranties not being satisfied, see "Series
Provisions--Representations and Warranties".
Each of Ford Credit and the Transferor has represented that the Receivables
are "chattel paper" for purposes of the UCC as in effect in Michigan. If the
Receivables are deemed to be chattel paper and the transfer thereof by either
Ford Credit to the Transferor or by the Transferor to the Trust is deemed either
to be a sale or to create a security interest, the UCC as in effect in Michigan
applies and the transferee must either take possession of the chattel paper or
file an appropriate financing statement or statements in order to perfect its
interest therein. Financing statements covering the Receivables will be filed
under the UCC as in effect in Michigan by both the Transferor and the Trust to
perfect their respective interests in the Receivables and continuation
statements will be filed as required to continue the perfection of such
interests. The Receivables will not be stamped to indicate the interest of the
Transferor or the Trustee.
There are certain limited circumstances under the UCC and applicable
federal law in which prior or subsequent transferees of Receivables could have
an interest in such Receivables with priority over the Trust's interest. A
purchaser of the Receivables who gives new value and takes possession of the
instruments which evidence the Receivables (i.e., the chattel paper) in the
ordinary course of such purchaser's business may, under certain circumstances,
have priority over the interest of the Trust in the Receivables. A tax or other
government lien on property of Ford Credit or the Transferor arising prior to
the time a Receivable is conveyed to the Trust may also have priority over the
interest of the Trust in such Receivable. Under the Receivables Purchase
Agreement, Ford Credit has warranted to the Transferor, and under the Pooling
and Servicing Agreement the Transferor has warranted to the Trust, that the
Receivables have been transferred free and clear of the lien of any third party.
Each of Ford Credit and the Transferor has also covenanted that it will not
sell, pledge, assign, transfer or grant any lien on any Receivable or, except as
described under "Series Provisions--Supplemental Certificates", the Transferor's
Certificate (or any interest therein) other than to the Trust. In addition,
while Ford Credit is the Master Servicer, cash collections on the Receivables
may, under certain circumstances, be commingled with the funds of Ford Credit
prior to each Distribution Date and, in the event of the bankruptcy of Ford
Credit, the Trust may not have a perfected interest in such collections.
CERTAIN MATTERS RELATING TO BANKRUPTCY
Ford Credit has warranted to the Transferor in the Receivables Purchase
Agreement that the sale of the Receivables by it to the Transferor is a valid
sale of the Receivables to the Transferor. In addition, Ford Credit and the
Transferor have agreed to treat the transactions described herein as a sale of
the Receivables to the Transferor, and Ford Credit has taken or will take all
actions that are required under Michigan law to perfect the Transferor's
ownership interest in the Receivables. Notwithstanding the foregoing, if Ford
Credit were to become a debtor in a bankruptcy case and a creditor or trustee in
bankruptcy of such debtor or such debtor itself were to take the position that
the sale of Receivables from such debtor to the Transferor should be
recharacterized as a pledge of such Receivables to secure a borrowing from such
debtor, then delays in payments of collections of Receivables to the Transferor
could occur or (should the court rule in favor of any such trustee, debtor in
possession or creditor) reductions in the amount of such payments could result.
In a 1993 case decided by the United States Court of Appeals for the Tenth
Circuit, Octagon Gas System, Inc. v. Rimmer, the court determined that
"accounts", as defined under the Uniform Commercial Code, and which would likely
include the Receivables, may properly be included in the bankruptcy estate of a
transferor regardless of whether the transfer of such Receivables is treated as
a sale or a secured loan. The circumstances under which the Octagon ruling would
apply are not fully known and the extent to which the Octagon decision will be
followed in other courts or outside of the Tenth Circuit is not certain. Much of
Ford Credit's business is conducted outside the geographic area subject to the
jurisdiction of the Tenth Circuit. If the findings in the Octagon case were
applied in a Ford Credit bankruptcy, however, the Receivables would be part of
its bankruptcy estate, would be subject to claims of certain creditors and would
be subject to the potential delays and reductions in payments to the Transferor
and Certificateholders described in the preceding paragraph even if the transfer
is treated as a sale.
In addition, if Ford Credit were to become a debtor in a bankruptcy case
and a creditor or trustee-in-bankruptcy of such debtor or such debtor itself
were to request a court to order that Ford Credit should be substantively
consolidated with the Transferor, delays in payments on the Certificates could
result. Should the bankruptcy court rule in favor of any such creditor,
trustee-in-bankruptcy or such debtor, reductions in such payments could result.
The Transferor has warranted to the Trust that the transfer of the
Receivables to the Trust is a sale of the Receivables to the Trust. The
Transferor will be required to take all actions that are required under Michigan
law to perfect the Trust's ownership interest in the Receivables and the
Transferor has warranted to the Trust that the Trust will at all times have a
first priority perfected ownership interest therein and, with certain
exceptions, or proceeds thereof. Nevertheless, a tax or government lien on
property of Ford Credit or the Transferor arising prior to the time a Receivable
is conveyed to the Trust may have priority over the interest of the Trust in
such Receivable. FCAR's limited liability company agreement provides that, under
certain circumstances, FCAR is required to have at least one independent member
having at least two independent directors (as defined therein) in which event it
shall not file a voluntary application for relief under Title 11 of the United
States Code (the "Bankruptcy Code") without the affirmative vote of its
independent member. Pursuant to the Pooling and Servicing Agreement, the
Trustee, all certificateholders and any Enhancement Provider will covenant that
they will not at any time institute against the Transferor any bankruptcy,
reorganization or other proceedings under any federal or state bankruptcy or
similar law. In addition, certain other steps will be taken to avoid the
Transferor's becoming a debtor in a bankruptcy case. Notwithstanding such steps,
if the Transferor were to become a debtor in a bankruptcy case, and a bankruptcy
trustee for the Transferor or the Transferor as debtor in possession or a
creditor of the Transferor were to take the position that the transfer of the
Receivables from the Transferor to the Trust should be recharacterized as a
pledge of such Receivables, then delays in payments on the Certificates or
(should the court rule in favor of any such trustee, debtor in possession or
creditor) reductions in the amount of such payments could result.
The Transferor does not intend to file, and Ford Credit will agree that it
will not cause the Transferor to file, a voluntary application for relief under
the Bankruptcy Code or any similar applicable state law with respect to the
Transferor so long as the Transferor is solvent and does not foresee becoming
insolvent.
If Ford Credit or the Transferor were to become a debtor in a bankruptcy
case causing an Early Amortization Event to occur, then, pursuant to the
Receivables Purchase Agreement, new Receivables would no longer be transferred
to the Transferor and, pursuant to the Pooling and Servicing Agreement, only
collections on Receivables theretofore sold to the Transferor and transferred to
the Trust would be available to be applied to pay interest accruing on the
Certificates and to pay the principal amount of the Certificates. Under such
circumstances, the Master Servicer is obligated to allocate all collections on
Principal Receivables to the oldest principal balance first. If such allocation
method were to be altered by the bankruptcy court, the rate of payment on the
Certificates might be adversely affected. In addition, distributions of
principal on each Certificate would not be subject to any applicable Controlled
Distribution Amount.
The occurrence of certain events of bankruptcy, insolvency or receivership
with respect to the Master Servicer will result in a Master Servicer Default,
which Master Servicer Default, in turn, will result in an Early Amortization
Event. If no other Master Servicer Default other than the commencement of such
bankruptcy or similar event exists, a trustee-in-bankruptcy of the Master
Servicer may have the power to prevent either the Trustee or the
certificateholders from appointing a successor Master Servicer.
Payments made in respect of repurchases of Receivables by Ford Credit or
the Transferor pursuant to the Pooling and Servicing Agreement may be
recoverable by Ford Credit or the Transferor, as debtor in possession, or by a
creditor or a trustee-in-bankruptcy of Ford Credit or the Transferor as a
preferential transfer from Ford Credit or the Transferor if such payments are
made within one year prior to the filing of a bankruptcy case in respect of Ford
Credit.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Set forth below is a general discussion of federal income tax consequences
of the purchase, ownership and disposition of the Certificates. This discussion
does not purport to deal with all aspects of federal income taxation that may be
relevant to holders of the Certificates in light of their particular
circumstances, nor to certain types of holders subject to special treatment
under the federal income tax laws (for example, banks, life insurance companies
and tax-exempt organizations). Prospective investors are advised to consult
their own tax advisors with regard to the federal income tax consequences of
purchasing, holding and disposing of the Certificates, as well as the tax
consequences arising under the laws of any state, foreign country or other
jurisdiction. This discussion is based upon present provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the regulations promulgated
thereunder, and judicial or ruling authority, all of which are subject to
change, which change may be retroactive. No ruling on any of the issues
discussed below will be sought from the Internal Revenue Service (the "IRS").
Treatment of the Certificates as Debt. The Transferor and the
Certificateholders will express in the Pooling and Servicing Agreement the
intent that, for federal, state and local income and franchise tax purposes, the
Certificates will be debt secured by the Receivables. FCAR, by initially
entering into, and by the acceptance of the assignment of, the Pooling and
Servicing Agreement, and each Certificateholder, by the acceptance of a
Certificate, will agree to treat the Certificates as debt for federal, state and
local income and franchise tax purposes. However, the Pooling and Servicing
Agreement generally refers to the transfer of the Receivables as a "sale", and
because different criteria are used in determining the non-tax accounting
treatment of the transaction, the Transferor will treat the Pooling and
Servicing Agreement, for certain non-tax purposes, as effecting a transfer of an
ownership interest in the Receivables and not as creating a debt obligation.
A basic premise of federal income tax law is that the economic substance of
a transaction generally determines the tax consequences. The form of a
transaction, while a relevant factor, is not conclusive evidence of its economic
substance. In appropriate circumstances, the courts have allowed taxpayers, as
well as the IRS, to treat a transaction in accordance with its economic
substance, as determined under federal income tax law, even though the
participants in the transaction have characterized it differently for non-tax
purposes.
The determination of whether the economic substance of a property transfer
is a sale or a loan secured by the transferred property has been made by the IRS
and the courts on the basis of numerous factors designed to determine whether
the transferor has relinquished (and the transferee has obtained) substantial
incidents of ownership in the property. Among those factors, the primary factors
examined are whether the transferee has the opportunity to gain if the property
increases in value, and has the risk of loss if the property decreases in value.
Based upon its analysis of such factors, Brown & Wood LLP, special tax counsel
to the Transferor and the Trust ("Tax Counsel"), is of the opinion that the
Transferor will properly be treated as the owner of the Receivables for federal
income tax purposes and, accordingly, the Certificates will properly be
characterized for federal income tax purposes as debt that is secured by the
Receivables.
Treatment of the Trust. The Trust could be viewed for federal income tax
purposes either as a collateral arrangement or as a separate entity that owns
the Receivables. However, in the opinion of Tax Counsel, in the former event the
Trust will be disregarded for federal income tax purposes and in the latter
event the Trust would not be an association (or publicly traded partnership)
taxable as a corporation. Therefore, in the opinion of Tax Counsel, the Trust
will not be subject to federal income tax.
As used herein, the term "U.S. Certificateholder" means a beneficial owner
of a Certificate that is for federal income tax purposes (a) a citizen or
resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any state
thereof, or the District of Columbia (unless, in the case of a partnership,
Treasury regulations provide otherwise) (c) an estate the income of which is
subject to federal income taxation regardless of its source or (d) a trust if a
court within the United States is able to exercise primary supervision over the
administration of such trust and one or more United States persons have the
authority to control all substantial decisions of such trust. Notwithstanding
the preceding sentence, to the extent provided in Treasury regulations, certain
trusts in existence on August 20, 1996, and treated as United States persons
prior to such date, that elect to continue to be treated as United States
persons will also be a U.S. Certificateholder. As used herein, the term
"Non-U.S. Certificateholder" means a beneficial owner of a Certificate that is
not a U.S. Certificateholder.
U.S. Certificateholders. Assuming the Certificates are debt for federal
income tax purposes and are not issued with original issue discount, interest
thereon will be taxable as ordinary income for federal income tax purposes when
received by U.S. Certificateholders utilizing the cash basis method of
accounting and when accrued by U.S. Certificateholders utilizing the accrual
method of accounting. Interest on the Certificates may also constitute
"investment income" for purposes of certain limitations of the Code concerning
the deductibility of investment interest expense.
Original Issue Discount. The following summary is a general discussion of
the federal income tax consequences to U.S. Certificateholders of the purchase,
ownership and disposition of Certificates issued with original issue discount
("OID Certificates"). The following summary is based upon final Treasury
regulations (the "OID Regulations") issued by the IRS on January 27, 1994 as
amended on June 11, 1996 under the original issue discount provisions of the
Code.
Original issue discount is the excess of the stated redemption price at
maturity of a Certificate over its issue price, if such excess equals or exceeds
a de minimis amount (generally 1/4 of 1% of the Certificate's stated redemption
price at maturity multiplied by the number of complete years to maturity or, in
the case of Certificates that do not pay qualified stated interest, multiplied
by its weighted average maturity). The issue price of a Series of Certificates
equals the first price at which a substantial amount of such Certificates is
sold (ignoring sales to 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 Certificate is the
sum of all payments provided by the Certificate other than "qualified stated
interest" payments. "Qualified stated interest" generally is stated interest
that is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually at a single fixed rate. In addition, under the
OID Regulations, if a Certificate bears interest for one or more accrual periods
at a rate below the rate applicable for the remaining term of such Certificate
(e.g., Certificates with teaser rates or interest holidays), and if the greater
of either the resulting foregone interest on such Certificate or any "true"
discount on such Certificate (i.e., the excess of such Certificate's stated
principal amount over its issue price) equals or exceeds a specified de minimis
amount, then the stated interest on the Certificate would be treated as original
issue discount rather than qualified stated interest.
Payments of qualified stated interest on a Certificate are taxable to a
U.S. Certificateholder as ordinary interest income at the time such payments are
received or are accrued (in accordance with the U.S. Certificateholder's regular
method of tax accounting). Original issue discount is included in income as
ordinary interest for federal income tax purposes as it accrues under a constant
yield method in advance of receipt of the cash payments attributable to such
income, regardless of a U.S. Certificateholder's regular method of tax
accounting. In general, the amount of original issue discount included in income
by the initial U.S. Certificateholder of an OID Certificate is the sum of the
daily portions of original issue discount with respect to such OID Certificate
for each day during the taxable year (or portion of the taxable year) on which
such U.S. Certificateholder held such OID Certificate. The "daily portion" of
original issue discount on any OID Certificate is determined by allocating to
each day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the OID Certificate,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. The amount of original issue
discount allocable to each accrual period is generally equal to the difference
between (a) the product of the OID Certificate's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined on the
basis of compounding at the close of each accrual period and appropriately
adjusted to take into account the length of the particular accrual period) and
(b) the amount of any qualified stated interest payments allocable to such
accrual period. The "adjusted issue price" of an OID Certificate at the
beginning of any accrual period is the sum of the issue price of the OID
Certificate plus the amount of original issue discount allocable to all prior
accrual periods minus the amount of any prior payments on the OID Certificate
that were not qualified stated interest payments. Under these rules, U.S.
Certificateholders generally will have to include in income increasingly greater
amounts of original issue discount in successive accrual periods.
The initial U.S. Certificateholder of a Certificate issued with de minimis
original issue discount will be required to include such de minimis original
issue discount in income, as gain recognized from the retirement of the
Certificate, as principal payments are made in the proportion that each such
principal payment bears to the stated principal amount of the Certificate.
Floating-rate Certificates are subject to special rules depending on
whether a floating-rate Certificate qualifies as a variable rate debt
instrument. A floating-rate Certificate will qualify as a "variable rate debt
instrument" if (a) its issue price does not exceed the total non-contingent
principal payments due under the floating-rate Certificate by more than a
specified de minimis amount and (b) it provides for stated interest, paid or
compounded at least annually, at current values of (i) one or more qualified
floating-rates, (ii) a single fixed rate and one or more qualified
floating-rates, (iii) a single objective rate, or (iv) a single fixed rate and a
single objective rate that is a qualified inverse floating-rate.
A "qualified floating-rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
floating-rate Certificate is denominated. Although a multiple of a qualified
floating-rate will generally not itself constitute a qualified floating-rate, a
variable rate equal to the product of a qualified floating-rate and a fixed
multiple that is greater than 0.65 but not more than 1.35 will constitute a
qualified floating-rate. A variable rate equal to the product of a qualified
floating-rate and a fixed multiple that is greater than 0.65 but not more than
1.35, increased or decreased by a fixed rate, will also constitute a qualified
floating-rate. In addition, under the OID Regulations, two or more qualified
floating-rates that can reasonably be expected to have approximately the same
values throughout the term of the floating-rate Certificate (e.g., two or more
qualified floating-rates with values within 25 basis points of each other as
determined on the floating-rate Certificate's issue date) will be treated as a
single qualified floating-rate. Notwithstanding the foregoing, a variable rate
that would otherwise constitute a qualified floating-rate but which is subject
to one or more restrictions such as a maximum numerical limitation (i.e., a cap)
or a minimum numerical limitation (i.e., a floor) may, under certain
circumstances, fail to be treated as a qualified floating-rate under the OID
Regulations unless such cap or floor is fixed throughout the term of the
Certificate. An "objective rate" is a rate that is not itself a qualified
floating rate but is determined using a single fixed formula and that is based
on objective financial or economic information. A rate will not qualify as an
objective rate if it is based on information that is within the control of the
issuer (or a related party) or that is unique to the circumstances of the issuer
(or a related party), such as dividends, profits, or the value of the issuer's
stock (although a rate does not fail to be an objective rate merely because it
is based on the credit quality of the issuer). A "qualified inverse floating
rate" is any objective rate where such rate is equal to a fixed rate minus a
qualified floating rate, as long as variations in the rate can reasonably be
expected to inversely reflect contemporaneous variations in the qualified
floating rate. The OID Regulations also provide that if a Variable Certificate
provides for stated interest at a fixed rate for an initial period of one year
or less followed by a variable rate that is either a qualified floating rate or
an objective rate and if the variable rate on the Variable Certificate's issue
date is intended to approximate the fixed rate (e.g., the value of the variable
rate on the issue date does not differ from the value of the fixed rate by more
than 25 basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a floating-rate Certificate that qualifies as a "variable rate debt
instrument" provides for stated interest at a single qualified floating rate
which is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually, then any such stated interest will
constitute qualified stated interest and will be taxed accordingly. Thus, such
floating-rate Certificate will generally not be treated as having been issued
with original issue discount unless the stated principal amount exceeds the
issue price of such Certificate by a specified de minimis amount. The amount of
qualified stated interest and the amount of original issue discount, if any,
that accrues during an accrual period on such a Variable Certificate is
determined under the rules applicable to fixed rate debt instruments by assuming
that the variable rate is a fixed rate equal to (a) in the case of a qualified
floating rate or qualified inverse floating rate, the value, as of the issue
date, of the qualified floating rate or qualified inverse floating rate, or (b)
in the case of an objective rate (other than a qualified inverse floating rate),
a fixed rate that reflects the yield that is reasonably expected for the
Variable Certificate. The qualified stated interest allocable to an accrual
period is increased (or decreased) if the interest actually paid during an
accrual period exceeds (or is less than) the interest assumed to be paid during
the accrual period pursuant to the foregoing rules.
In general, any other Variable Certificate that qualifies as a "variable
rate debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of original issue
discount and qualified stated interest on the Variable Certificate. The OID
Regulations generally require that such a Variable Certificate be converted into
an "equivalent" fixed rate debt instrument by substituting any qualified
floating rate or qualified inverse floating rate provided for under the terms of
the Variable Certificate with a fixed rate equal to the value of the qualified
floating rate or qualified inverse floating rate, as the case may be, as of the
Variable Certificate's issue date. Any objective rate (other than a qualified
inverse floating rate) provided for under the terms of the Variable Certificate
is converted into a fixed rate that reflects the yield that is reasonably
expected for the Variable Certificate. In the case of a Variable Certificate
that qualifies as a "variable rate debt instrument" and provides for stated
interest at a fixed rate in addition to either one or more qualified floating
rates or a qualified inverse floating rate, the fixed rate is initially
converted into a qualified floating rate (or a qualified inverse floating rate,
if the Variable Certificate provides for a qualified inverse floating rate).
Under such circumstances, the qualified floating rate or qualified inverse
floating rate that replaces the fixed rate must be such that the fair market
value of the Variable Certificate as of the Variable Certificate's issue date is
approximately the same as the fair market value of an otherwise identical debt
instrument that provides for either the qualified floating rate or qualified
inverse floating rate rather than the fixed rate. Subsequent to converting the
fixed rate into either a qualified floating rate or a qualified inverse floating
rate, the Variable Certificate is then converted into an "equivalent" fixed rate
debt instrument in the manner described above.
Once the Variable Certificate is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S.
Certificateholder of the Variable Certificate will account for such original
issue discount and qualified stated interest as if the U.S. Certificateholder
held the "equivalent" fixed rate debt instrument. Each accrual period
appropriate adjustments will be made to the amount of qualified stated interest
or original issue discount assumed to have been accrued or paid with respect to
the "equivalent" fixed rate debt instrument in the event that such amounts
differ from the actual amount of interest accrued or paid on the Variable
Certificate during the accrual period.
If a Variable Certificate does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Variable Certificate would be
treated as a contingent payment debt obligation. U.S. Certificateholders should
be aware that on June 11, 1996, the Treasury Department issued final regulations
(the "CPDI Regulations") concerning the proper federal income tax treatment of
contingent payment debt instruments. In general, the CPDI Regulations would
cause the timing and character of income, gain or loss reported on a contingent
payment debt instrument to substantially differ from the timing and character of
income, gain or loss reported on a contingent payment debt instrument under
general principles of current federal income tax law. Specifically, the CPDI
Regulations generally require a U.S. Certificateholder of such an instrument to
include future contingent and noncontingent interest payments in income as such
interest accrues based upon a projected payment schedule. Moreover, in general,
under the CPDI Regulations, any gain recognized by a U.S. Certificateholder on
the sale, exchange, or retirement of a contingent payment debt instrument will
be treated as ordinary income and all or a portion of any loss realized could be
treated as ordinary loss as opposed to capital loss (depending upon the
circumstances). The CPDI Regulations apply to debt instruments issued on or
after August 13, 1996. The proper federal income tax treatment of Variable
Certificates that are treated as contingent payment debt obligations will be
more fully described in the applicable Prospectus Supplement. Furthermore, any
other special federal income tax considerations, not otherwise discussed herein,
which are applicable to any particular issue of Certificates will be discussed
in the applicable Prospectus Supplement.
U.S. Certificateholders may generally elect to include in income all
interest (including stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis market
discount, and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a Certificate by using the constant yield
method applicable to original issue discount, subject to certain limitations and
exceptions.
If an Early Amortization Event or Asset Composition Event occurs, the early
payments of principal as a result of either such event could result in
accelerating income corresponding to a portion of the unaccrued original issue
discount.
Market Discount. If a U.S. Certificateholder purchases a Certificate other
than an OID Certificate for an amount that is less than its issue price (or, in
the case of a subsequent purchaser, its stated redemption price at maturity) or,
in the case of an OID Certificate, for an amount that is less than its adjusted
issue price as of the purchase date, the amount of the difference will be
treated as "market discount", unless such difference is less than a specified de
minimis amount.
Under the market discount rules, a U.S. Certificateholder will be required
to treat any partial principal payment (or, in the case of an OID Certificate,
any payment that does not constitute qualified stated interest) on, or any gain
realized on the sale, exchange, retirement or other disposition of, a
Certificate as ordinary income to the extent of the lesser of (a) the amount of
such payment or realized gain or (b) the market discount which has not
previously been included in income and is treated as having accrued on such
Certificate at the time of such payment or disposition. Market discount will be
considered to accrue ratably during the period from the date of acquisition to
the maturity date of the Certificate, unless the U.S. Certificateholder elects
to accrue market discount on the basis of semiannual compounding.
A U.S. Certificateholder may be required to defer the deduction of all or a
portion of the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry a Certificate with market discount until the
maturity of the Certificate or its earlier disposition in a taxable transaction,
because a current deduction is only allowed on a market discount obligation to
the extent the net direct interest expense with respect to such obligation
exceeds an allocable portion of the market discount accruing on such obligation.
A U.S. Certificateholder may elect to include market discount in income
currently as it accrues, in which case the rules described above regarding (a)
the treatment as ordinary income of gain upon the disposition of the Certificate
and upon the receipt of certain cash payments and (b) the deferral of interest
deductions will not apply. Generally, such currently included market discount is
treated as ordinary interest for federal income tax purposes. Such an election
will apply to all debt instruments acquired by the U.S. Certificateholder on or
after the first day of the first taxable year to which such election applies and
may be revoked only with the consent of the IRS.
Premium. If a U.S. Certificateholder purchases a Certificate for an amount
that is greater than its stated redemption price at maturity, the amount of such
excess will be treated as "amortizable bond premium". A U.S. Certificateholder
may elect to amortize such premium using a constant yield method over the
remaining term of the Certificate and may offset interest otherwise required to
be included in income in respect of the Certificate during any taxable year by
the amortized amount of such excess for the taxable year. However, if the
Certificate may be optionally redeemed after the U.S. Certificateholder acquires
it at a price in excess of its stated redemption price at maturity, special
rules would apply which could result in a deferral of the amortization of some
bond premium until later in the term of the Certificate. Any election to
amortize bond premium applies to all taxable debt instruments acquired by the
U.S. Certificateholder on or after the first day of the first taxable year to
which such election applies and may be revoked only with the consent of the IRS.
Disposition of a Certificate. Except as discussed above, upon the sale,
exchange or retirement of a Certificate, a U.S. Certificateholder generally will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement of and such U.S.
Certificateholder's adjusted tax basis in the Certificate. A U.S.
Certificateholder's adjusted tax basis in a Certificate generally will equal
such U.S. Certificateholder's initial investment in the Certificate increased by
any original issue discount and accrued market discount that the U S.
Certificateholder included in income and decreased by the amount of any
payments, other than qualified stated interest payments, received and
amortizable bond premium taken with respect to such Certificate. Such gain or
loss generally would be long-term capital gain or loss if the Certificate were
held for more than the applicable holding period. The Taxpayer Relief Act of
1997 reduces the maximum rates on long-term capital gains recognized on capital
assets held by individuals taxpayers for more than eighteen months as of the
date of disposition (and would further reduce the maximum rates on such gains in
the year 2001 and thereafter for certain individual taxpayers who meet specified
conditions). Prospective investors should consult their own tax advisors
concerning these tax law changes.
Information Reporting and Backup Withholding. The Trustee will be required
to report annually to the IRS, and to each Certificateholder of record, the
amount of interest paid (and OID accrued, if any) on the Certificates (and the
amount withheld for federal income taxes, if any) for each calendar year, except
as to exempt holders (generally, holders that are corporations, tax-exempt
organizations, qualified pension and profit-sharing trusts, individual
retirement accounts, or nonresident aliens who provide certification as to their
status as non-residents). As long as the only "Certificateholder" of record is
Cede, as nominee for DTC, Certificateholders and the IRS will receive tax and
other information only from Participants and Indirect Participants rather than
from the Trustee. Each nonexempt Certificateholder will be required to provide,
under penalties of perjury, a certificate on IRS Form W-9 containing such
holder's name, address, federal taxpayer identification number and a statement
that such holder is not subject to backup withholding. Should a nonexempt
Certificateholder fail to provide the required certification, the Trustee (or
the Participants or Indirect Participants) will be required to withhold (or
cause to be withheld) 31% of the interest (and principal) otherwise payable to
the holder, and remit the withheld amounts to the IRS as a credit against the
holder's federal income tax liability.
Possible Classification of the Pooling and Servicing Agreement as a
Partnership or Association. Although, as described above, it is the opinion of
Tax Counsel that the Certificates will properly be characterized as debt for
federal income tax purposes, such opinion is not binding on the IRS and thus no
assurance can be given that such a characterization will prevail. If the IRS
were to contend successfully that the Certificates were not debt for federal
income tax purposes, the arrangement among the Transferor and the
Certificateholders might be classified for federal income tax purposes as a
partnership, an association taxable as a corporation or a "publicly traded
partnership" taxable as a corporation.
If the Certificates were treated as interests in such a partnership, the
partnership would in all likelihood be treated as a "publicly traded
partnership". A publicly traded partnership is, in general, taxable as a
corporation. If the Trust were in fact taxed as a publicly traded partnership,
the amount of income available for distribution to the Certificateholders could
be substantially reduced. If the partnership were nevertheless not taxable as a
corporation (because of an exception for an entity whose income is comprised of
certain "qualifying income" as defined in Section 7704 of the Code) it would not
be subject to federal income tax. Rather, each item of income, gain, loss,
deduction and credit generated through the ownership of the Receivables by the
partnership would be passed through to the partners in the partnership
(including the Certificateholders) according to their respective interests
therein.
The income reportable by the Certificateholders as partners in such a
partnership could differ from the income reportable by the Certificateholders as
holders of debt. However, except as provided below, it is not expected that such
differences would be material. If the Certificateholders were treated as
partners, a cash basis Certificateholder might be required to report income when
it accrues to the partnership rather than when it is received by the
Certificateholder. Moreover, if the Certificates were treated as interests in a
partnership, then in the case of a Certificateholder that is an individual,
estate or trust, the Certificateholder's share of expenses of the partnership
would be miscellaneous itemized deductions that in the aggregate are allowed
only to the extent they exceed two percent of the Certificateholder's adjusted
gross income (and, in the case of an individual Certificateholder, are subject
to certain other limitations). Finally, if the partnership were a "publicly
traded partnership" not taxable as a corporation, as discussed above, any
taxable income allocated to a Certificateholder that is a pension,
profit-sharing or employee benefit plan or other tax-exempt entity (including an
individual retirement account) would constitute "unrelated business taxable
income" generally taxable to the holder under the Code.
If, alternatively, the Certificates were treated as interests in either an
association taxable as a corporation or a "publicly traded partnership" taxable
as a corporation, the resulting entity would be subject to federal income tax at
corporate tax rates on its taxable income generated by ownership of the
Receivables. Moreover, all or part of distributions to Certificateholders would
probably be treated as dividend income to the Certificateholders and such
amounts would probably not be deductible in computing the entity's taxable
income. Such an entity-level tax could result in reduced distributions to
Certificateholders and the Certificateholders could be liable for a share of
such a tax.
Because the Transferor will treat the Certificates as indebtedness for
federal income tax purposes, the Trustee (and Participants and Indirect
Participants) will not comply with the tax reporting requirements that would
apply under these alternative characterizations of the Certificates.
Non-U.S. Certificateholders. Tax Counsel has given its opinion that the
Certificates will properly be classified as debt for federal income tax
purposes. Assuming the Certificates are debt:
(a) interest paid to a Non-U.S. Certificateholder will be exempt from
United States withholding taxes (including backup withholding taxes), provided
the holder complies with applicable identification requirements (and does not
actually or constructively own 10% or more of the voting stock of the Transferor
and is not a controlled foreign corporation with respect to the Transferor).
Applicable identification requirements will be satisfied if there is delivered
to a securities clearing organization (or bank or other financial institution
that holds the Certificates on behalf of the customer in the ordinary course of
its trade or business) (i) IRS Form W-8 signed under penalties of perjury by the
beneficial owner of such Certificates stating that such owner is not a United
States person and providing such owner's name and address, (ii) IRS Form 1001
signed by the beneficial owner of such Certificates or such owner's agent
claiming exemption from withholding under an applicable tax treaty, or (iii) IRS
Form 4224 signed by the beneficial owner of such Certificates or such owner's
agent claiming exemption from withholding on income effectively connected with
the conduct of a trade or business in the United States; provided in any such
case (A) the applicable form is delivered pursuant to applicable procedures and
is properly transmitted to the United States entity otherwise required to
withhold tax and (B) none of the entities receiving the form has actual
knowledge that such owner is a United States person or that any certification on
the form is false;
(b) a Non-U.S. Certificateholder will not be subject to federal income tax
on gain realized on the sale, exchange or redemption of such Certificate,
provided that (i) such gain is not effectively connected with the conduct of a
trade or business in the United States, (ii) in the case of a holder that is an
individual, such holder is not present in the United States for 183 days or more
during the taxable year in which such sale, exchange or redemption occurs and
(iii) in the case of gain representing accrued interest, the conditions
described in clause (a) are satisfied; and
(c) a Certificate held by an individual who at the time of death is a
nonresident alien will not be subject to federal estate tax as a result of such
individual's death if, immediately before the individual's death, (i) the
individual did not actually or constructively own 10% or more of the voting
stock of the Transferor and (ii) the holding of such Certificate was not
effectively connected with the conduct by the decedent of a trade or business in
the United States.
If the IRS were to contend successfully that the Certificates are interests
in a partnership (not taxable as a corporation), a Certificateholder that is a
nonresident alien or foreign corporation might be required to file a United
States individual or corporate income tax return and pay tax on its share of
partnership income at regular United States rates, including, in the case of a
corporation, the branch profits tax (and would be subject to withholding tax on
its share of partnership income). If the Certificates were recharacterized as
interests in an association taxable as a corporation or a "publicly traded
partnership" taxable as a corporation, to the extent distributions on the
Certificates were treated as dividends, a nonresident alien individual or
foreign corporation would generally be taxed on the gross amount of such
dividends (and subject to withholding) at a rate of 30% unless such rate were
reduced by an applicable treaty.
CERTAIN STATE AND LOCAL TAX CONSIDERATIONS
In addition to the federal income tax considerations described in "Certain
Federal Income Tax Considerations," potential investors should consider the
state and local income tax consequences of the acquisition, ownership, and
disposition of the Certificates. The activities of servicing and collecting the
Receivables will be undertaken by the Master Servicer, which is a Michigan
corporation. Because of the variation in each state's tax laws based in whole or
in part upon income, state and local income tax law may differ substantially
from the corresponding federal laws, and it is thus impossible to predict tax
consequences to holders of Certificates in all of the state taxing jurisdictions
in which they are already subject to tax. Hence, this discussion does not
purport to describe any aspect of the income tax laws of any state or locality.
Potential investors should consult their own tax advisors with respect to the
various state and local tax consequences of an investment in the Certificates.
ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans subject to ERISA
("Benefit Plans") and on persons who are parties in interest or disqualified
persons ("parties in interest") with respect to such Benefit Plans. Certain
employee benefit plans, such as governmental plans and church plans (if no
election has been made under section 410(d) of the Code), are not subject to the
restrictions of ERISA, and assets of such plans may be invested in the
Certificates without regard to the ERISA considerations described below, subject
to other applicable federal and state law. However, any such governmental or
church plan which is qualified under section 401(a) of the Code and exempt from
taxation under section 501(a) of the Code is subject to the prohibited
transaction rules set forth in section 503 of the Code. Any Benefit Plan
fiduciary which proposes to cause a Benefit Plan to acquire any of the
Certificates should consult with its counsel with respect to the potential
consequences under ERISA, and the Code, of the Benefit Plan's acquisition and
ownership of the Certificates.
Investments by Benefit Plans are also subject to ERISA's general fiduciary
requirements, including the requirement of investment prudence and
diversification and the requirement that a Benefit Plan's investments be made in
accordance with the documents governing the Benefit Plan.
PROHIBITED TRANSACTIONS
General
Section 406 of ERISA prohibits parties in interest with respect to a
Benefit Plan from engaging in certain transactions involving a Benefit Plan and
its assets unless a statutory or administrative exemption applies to the
transaction. Section 4975 of the Code imposes certain excise taxes (or, in some
cases, a civil penalty may be assessed pursuant to section 502(i) of ERISA) on
parties in interest which engage in non-exempt prohibited transactions.
Benefit Plan Asset Regulation
The United States Department of Labor ("Labor") has issued final
regulations concerning the definition of what constitutes the assets of a
Benefit Plan for purposes of ERISA and the prohibited transaction provisions of
the Code (the "Benefit Plan Asset Regulation"). The Benefit Plan Asset
Regulation describes the circumstances under which the assets of an entity in
which a Benefit Plan invests will be considered to be "plan assets" such that
any person who exercises control over such assets would be subject to ERISA's
fiduciary standards. In such an event, the Trustee and other persons, in
providing services with respect to the Trust's assets, may be parties in
interest with respect to such Benefit Plans, subject to the fiduciary
responsibility provisions of Title I of ERISA, including the prohibited
transaction provisions of Section 406 of ERISA, and Section 4975 of the Code
with respect to transactions involving the Trust's assets. Accordingly, if
Benefit Plans purchase Certificates, the Trust could be deemed to hold plan
assets unless one of the exceptions under the Benefit Plan Asset Regulations is
applicable to the Trust.
AVAILABILITY OF EXEMPTIONS FOR CERTIFICATES
The Plan Assets Regulation contains an exception (the "Publicly-Offered
Securities Exception") that provides that if a Benefit Plan acquires a
"publicly-offered security", the issuer of the security is not deemed to hold
plan assets by reason of a Benefit Plan's purchase of such security. A
publicly-offered security is a security that is (a) freely transferable, (b)
part of a class of securities that is owned, at the conclusion of the offering,
by 100 or more investors independent of the issuer and of one another and (c)
either is (i) part of a class of securities registered under Section 12(b) or
12(g) of the Exchange Act or (B) sold to the plan as part of an offering of
securities to the public pursuant to an effective registration statement under
the Securities Act and the class of securities of which such security is a part
is registered under the Exchange Act within 120 days (or such later time as may
be allowed by the Commission) after the end of the fiscal year of the issuer
during which the offering of such securities to the public occurred. If it is
anticipated that the Certificates for any Series will meet the criteria of the
Publicly-Offered Securities Exemption as set forth above, the Underwriters
specified in the accompanying Prospectus Supplement will notify the Trustee as
to whether or not the related Certificates will be held by 100 independent
persons at the conclusion of the offering. The Transferor will not, however,
determine whether the 100-investor requirement of the Publicly-Offered
Securities Exemption is satisfied with respect to the Certificates.
If the Certificates for any Series fail to meet the criteria of the
Publicly-Offered Securities Exemption and the Trust Assets are deemed to include
assets of Benefit Plans that are holders of such Certificates, transactions
involving the Trust and "parties in interest" or "disqualified persons" with
respect to such plans might be prohibited under Section 406 of ERISA and Section
4975 of the Code unless another ERISA prohibited transaction exemption is
applicable. Thus, for example, if a participant in any Benefit Plan is an
obligor or guarantor of one of the Receivables, under DOL interpretations the
purchase of the Certificates by such plan could constitute a prohibited
transaction. There are at least three class exemptions issued by the DOL that
may apply in such event: DOL Prohibited Transaction Exemptions 84-14 (Class
Exemption for Plan Asset Transactions Determined by Independent Qualified
Professional Asset Managers), 91-38 (Class Exemption for Certain Transactions
Involving Bank Collective Investment Funds), 90-1 (Class Exemption for
Transactions Involving Insurance Company Pooled Separate Accounts), and 96-23
(Class Exemption for Transactions Determined by In-House Asset Managers). There
is no assurance that these exemptions, even if all of the conditions specified
therein are satisfied, will apply to all transactions involving the Trust
Assets.
REVIEW BY BENEFIT PLAN FIDUCIARIES
Any Benefit Plan fiduciary considering whether to purchase any Certificates
on behalf of a Benefit Plan should consult with its counsel regarding the
applicability of the fiduciary responsibility and prohibited transaction
provisions of ERISA and the Code to such investment. Among other things, before
purchasing any Certificates, a fiduciary of a Benefit Plan subject to the
fiduciary responsibility provisions of ERISA or an employee benefit plan subject
to the prohibited transaction provisions of the Code should make its own
determination as to the availability of the exemptive relief provided in the
Benefit Plan Asset Regulations and also consider the availability of any other
prohibited transaction exemptions.
In particular, purchasers that are insurance companies should consult with
their counsel with respect to the United States Supreme Court case, John Hancock
------------
Mutual Life Insurance Co. v. Harris Bank and Trust, 510 U.S. 86 (1993). In
- ------------------------------------------------------
Harris Trust, the Supreme Court ruled that assets held in an insurance company's
- ------------
general account may be deemed to be "plan assets" under certain circumstances.
Purchasers should analyze whether the decision may have an impact with respect
to purchases of the Certificates.
UNDERWRITING
The Transferor may sell Certificates of any Series in any of three ways:
(a) through underwriters or dealers; (b) directly to one or more purchasers; or
(c) through agents. The applicable Prospectus Supplement will set forth the
terms of the offering of any Certificates of any Series, including, without
limitation, the names of any underwriters, the purchase price of such
Certificates and the proceeds to the Transferor from such sale, any underwriting
discounts and other items constituting underwriters' compensation, any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers.
If underwriters are used in a sale of any Certificates of any Series, such
Certificates will be acquired by the underwriters for their own account and may
be resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices to be
determined at the time of sale or at the time of commitment therefor. Such
Certificates may be offered to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
Unless otherwise set forth in the applicable Prospectus Supplement, the
obligations of the underwriters to purchase such Certificates will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all of such Certificates is any of such Certificates are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
Certificates of any Series also may be offered and sold, if so indicated in
the Prospectus Supplement, in connection with a remarketing upon their purchase,
in accordance with a redemption or repayment pursuant to their terms, by one or
more firms ("remarketing firms") acting as principals for their own accounts or
as agents for the Transferor. Any remarketing firm will be identified and the
terms of its agreement, if any, with the Transferor and its compensation will be
described in the Prospectus Supplement. Remarketing firms may be deemed to be
underwriters in connection with the Certificates remarketed thereby.
Certificates of any Series also may be sold directly by the Transferor or
through agents designated by the Transferor from time to time. Any agent
involved in the offer or sale of Certificates of any Series will be named, and
any commissions payable by the Transferor to such agent will be set forth, in
the applicable Prospectus Supplement. Unless otherwise indicated in the
applicable Prospectus Supplement, any such agent will act on a best efforts
basis for the period of appointment.
Any underwriters, dealers or agents participating in the distribution of
Certificates of any Series may be deemed to be underwriters and any discounts or
commissions received by them on the sale or resale of Certificates of any Series
may be deemed to be underwriting discounts and commissions under the Securities
Act. Agents and underwriters may be entitled under agreements entered into with
the Transferor to indemnification by the Transferor against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments that the agents or underwriters may be required to make
in respect thereof. Agents and underwriters may be customers of, engage in
transactions with, or perform services for, the Transferor or their affiliates
in the ordinary course of business.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Transferor by Hurley Smith, Esq., Secretary of the Master Servicer, and for
the underwriters or agents by Brown & Wood LLP. Certain federal income tax
matters will be passed upon for the Transferor and the Trust by Brown & Wood
LLP.
INDEX OF PRINCIPAL TERMS
Term Page
- ---- ----
Accounts.................................................................. 1
Accumulation Period....................................................... 11
Accumulation Period Commencement Date..................................... 11
Accumulation Period Length................................................ 11
Addition Date............................................................. 35
Additional Accounts....................................................... 38
Adjustment Payment........................................................ 50
Aggregate Available Subordinated Amount................................... 42
Amortization Period....................................................... 12
Asset Composition Event................................................... 10
Asset Correction Amount................................................... 29
Asset Composition Premium................................................. 29
Available Certificateholder Principal Collections...........................47
Available Transferor's Collections........................................ 43
Available Transferor's Interest Collections............................... 43
Available Transferor's Principal Collections.............................. 43
Available Subordinated Amount............................................. 13
Bankruptcy Code........................................................... 61
Benefit Plans............................................................. 69
Benefit Plan Asset Regulation............................................. 70
Cede...................................................................... 3
Cedel..................................................................... 7
Cedel Participants........................................................ 30
Certificate Owners........................................................ 3
Certificate Rate.......................................................... 9
Certificateholders' Interest.............................................. 6
Certificateholder Interest Collections.................................... 46
Certificates.............................................................. 1
Citibank.................................................................. 7
Closing Date.............................................................. 7
Code...................................................................... 62
Collection Account........................................................ 39
Collection Period......................................................... 8
Commission................................................................ 3
Controlled Amortization Amount............................................ 48
Controlled Distribution Amount............................................ 48
Cooperative............................................................... 31
Dealers................................................................... 5
Defaulted Amount.......................................................... 49
Defaulted Receivable...................................................... 49
Deficiency Amount......................................................... 44
Definitive Certificates................................................... 32
Depositaries.............................................................. 7
Depository................................................................ 27
Determination Date........................................................ 14
Distribution Date......................................................... 27
DTC....................................................................... 3
Draw Amount............................................................... 44
Early Amortization Event.................................................. 51
Early Amortization Period................................................. 12
Eligible Accounts......................................................... 5
Eligible Deposit Account.................................................. 39
Eligible Institution...................................................... 40
Eligible Investments...................................................... 40
Eligible Portfolio........................................................ 25
Eligible Receivable....................................................... 6
Enhancement............................................................... 4
Enhancement Provider...................................................... 36
ERISA.................................................................. 15, 69
Euroclear................................................................. 7
Euroclear Operator........................................................ 31
Euroclear Participants.................................................... 31
Excess Funding Account.................................................... 7
Excess Principal Collections.............................................. 42
Excess Transferor's Percentage............................................ 44
Excess Servicing.......................................................... 46
Exchange Act.............................................................. 3
Expected Final Payment Date............................................... 10
Floating Allocation Percentage............................................ 41
Ford................................................................... 4, 21
Holders................................................................... 32
Indirect Participants..................................................... 30
Ineligible Receivable..................................................... 35
Initial Closing Date...................................................... 34
Initial Invested Amount................................................. 7, 41
Insolvency Laws........................................................... 20
Installment Balance Amount................................................ 37
Interest Determination Date............................................... 27
Interest Funding Account............................................... 9, 48
Interest Period........................................................... 27
Invested Amount........................................................... 41
Investment Proceeds....................................................... 46
IRS....................................................................... 63
Labor..................................................................... 70
Master Servicer........................................................... 1
Master Servicer Default................................................... 54
Miscellaneous Payments.................................................... 42
Monthly Interest.......................................................... 44
Monthly Principal......................................................... 48
Monthly Servicing Fee..................................................... 54
Morgan.................................................................. 7, 31
New Issuance.............................................................. 7
Non-U.S. Certificateholder................................................ 63
Non-Vehicle Related Security.............................................. 17
OID Certificates.......................................................... 63
OID Regulations........................................................... 63
Overconcentration Amount.................................................. 37
Participants.............................................................. 30
Payment Date........................................................... 9, 27
Pooling and Servicing Agreement........................................ 4, 26
Pool Balance.............................................................. 8
Principal Allocation Percentage........................................... 41
Principal Funding Account.............................................. 11, 48
Principal Receivables..................................................... 7
Principal Shortfalls...................................................... 42
Publicly-Offered Securities Exception.......................................70
Qualified Stated Interest...................................................63
Rating Agency............................................................. 19
Receivables............................................................... 1
Receivables Purchase Agreement............................................ 6
Record Date............................................................... 29
Reference Agent........................................................... 27
Reference Banks........................................................... 27
Related Security.......................................................... 4
Remarketing Firms......................................................... 71
Removal Commencement Date................................................. 39
Removal Notice............................................................ 39
Removal Accounts.......................................................... 20
Required Participation Amount............................................. 38
Required Participation Percentage......................................... 38
Required Subordinated Amount........................................... 13, 44
Reserve Fund.............................................................. 46
Reserve Fund Required Amount.............................................. 46
Reserve Fund Deposit Amount.................................................46
Revolving Period.......................................................... 11
Securities Act............................................................ 3
Series.................................................................... 1
Series Accounts........................................................... 10
Series Allocation Percentage.............................................. 42
Series Cut-Off Date....................................................... 11
Series Termination Date................................................... 52
Servicing Transfer........................................................ 55
Servicing Fee............................................................. 54
Servicing Fee Rate..........................................................54
Special Payment Date................................................... 12, 52
Subordinated Percentage................................................ 13, 45
Supplement................................................................ 7
Supplemental Certificate.................................................. 33
Tax Counsel............................................................... 62
Tax Opinion............................................................... 34
Transfer Date............................................................. 35
Transfer Deposit Amount................................................... 35
Transferor.............................................................. 1, 4
Transferor's Certificate.................................................. 33
Transferor's Interest................................................... 1, 6
Transferor's Participation Amount......................................... 44
Transferor's Percentage................................................... 44
Trust................................................................... 1, 4
Trust Assets............................................................ 1, 4
Trust Available Subordinated Amount....................................... 42
Trust Invested Amount..................................................... 42
Trustee................................................................... 4
UCC....................................................................... 16
Unallocated Principal Collections......................................... 42
U.S. Certificateholder.................................................... 62
Vehicles.................................................................. 4
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCES AND DISTRIBUTION.*
The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting compensation, are:
SEC Filing Fees.................................... $ 295
Legal Fees and Expenses............................ **
Accounting Fees and Expenses....................... **
Blue Sky Fees and Expenses......................... **
Trustee's Fees and Expenses........................ **
Rating Agency Fees................................. **
Printing and Engraving Fees........................ **
Miscellaneous...................................... **
Total......................................... $ **
------
- --------------------
* All amounts, except the SEC Filing Fee, are estimates for expenses incurred
in connection with the issuance and distribution of the Certificates in
an aggregate principal amount assumed for these purposes to be equal to
the aggregate of the $1,000,000 of Certificates registered hereby.
** To be completed by Amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 16 of the Limited Liability Company Agreement of the Transferor
sets forth certain rights of the managers, employees and agents of the
Transferor to indemnification.
Section 18-108 of the Delaware Limited Liability Act, 6 Del. C. ss. 18-101
------
et seq., provides as follows:
18-108. Indemnification.--Subject to such standards and
restrictions, if any, as are set forth in its limited
liability company agreement, a limited liability company may,
and shall have the power to, indemnify and hold harmless any
member or manager or other person from and against any and all
claims and demands whatsoever.
Section 16 of the Limited Liability Company Agreement of Ford Credit Auto
Receivables LLC provides as follows:
16. Indemnification. (a) Subject to Section 16(g), 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, by reason of the fact that he is or was a
Manager, employee or agent of the LLC, shall be indemnified
and held harmless by the LLC to the fullest extent legally
permissible against all expenses, liabilities and losses
(including attorneys' fees and disbursements), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit
or proceeding.
(b) To the extent that a Manager, employee or agent of the LLC
has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in paragraph (a) of
this Section 16, or in defense of any claim, issue or matter
therein, he shall be indemnified by the LLC against expenses
(including attorneys' fees and disbursements) actually and
reasonably incurred by him in connection therewith without the
necessity of any action being taken by the LLC other than the
determination, in good faith, that such defense has been
successful. In all other cases wherein indemnification is
provided by this Section 16, unless ordered by a court,
indemnification shall be made by the LLC only as authorized in
the specific case upon a determination that indemnification of
the Manager, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct
specified in this Section 16. Such determination shall be made
(i) by the Board of Managers by a majority vote of a quorum
consisting of Managers who were not parties to such action,
suit or proceeding, or (ii) if such a quorum is not
obtainable, or even if obtainable a quorum of disinterested
Managers so directs, by independent legal counsel in a written
opinion.
(c) The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself,
----------------
create a presumption that the Person seeking indemnification
did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the
LLC, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
Entry of a judgment by consent as part of a settlement shall
not be deemed a final adjudication of liability for negligence
or misconduct in the performance of duty, nor of any other
issue or matter.
(d) Subject to Section 16(g), expenses (including attorneys'
fees and disbursements) incurred by a Manager, employee or
agent of the LLC in defending any civil, criminal,
administrative or investigative action, suit or proceeding may
be paid by the LLC in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of
Managers in the specific case upon receipt of an undertaking
by or on behalf of such Manager, employee or agent to repay
such amount unless it shall ultimately be determined that he
is entitled to be indemnified by the LLC. Expenses (including
attorneys' fees and disbursements) incurred by other employees
or agents of the LLC in defending in any civil, criminal,
administrative or investigative action, suit or proceeding may
be paid by the LLC upon such terms and conditions, if any, as
the Board of Managers deems appropriate.
(e) No Manager of the LLC shall be personally liable to the
LLC for monetary damages for any breach of fiduciary duty by
such person as a Manager. Notwithstanding the foregoing
sentence, a Manager shall be liable to the extent provided by
applicable law (i) for breach of the Manager's duty of loyalty
to the LLC or the Member, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a
knowing violation of law or (iii) for any transaction from
which the Manager derived an improper personal benefit. No
amendment to or repeal of this Section 16(e) shall apply to or
have any effect on the liability or alleged liability of any
Manager of the LLC for or with respect to any acts or
omissions of such Manager occurring prior to such amendment.
(f) The indemnification and advancement of expenses provided
by this Section 16 shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement
may be entitled under any agreement, vote of the Board of
Managers or otherwise, both as to action in an official
capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased
to be a Manager, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such
person.
(g) Any amounts payable by the LLC in accordance with this
Section 16 shall be payable solely to the extent of funds
actually received by the LLC under the Program Documents or in
connection with other Permitted Transactions.
Similar indemnification provisions in Section 5 of Article Ninth of the
Certificate of Incorporation of both Ford Motor Company and Ford Motor Credit
Company are applicable to managers, employees and agents of the Transferor who
serve as such at the request of Ford Motor Company or Ford Motor Credit Company.
The Transferor is insured for liabilities it may incur pursuant to Section
16 of its Limited Liability Company Agreement relating to the indemnification of
its managers, employees or agents. In addition, managers and certain key
employees are insured against certain losses that may arise out of their
employment and that are not recoverable under the indemnification provisions of
the Transferor's Limited Liability Company Agreement. The premium for both
insurance coverages is paid by Ford Motor Company.
ITEM 16. EXHIBITS.
1.1 Form of Underwriting Agreement.
3.1 Limited Liability Company Agreement of the Registrant.
4.1 Pooling and Servicing Agreement among the Registrant, the
Master Servicer and the Trustee.
4.2 Form of Supplement to the Pooling and Servicing Agreement,
including the form of the Certificates and other exhibits
thereto.
5.1 Opinion of Hurley Smith, Esq. with respect to certain matters
involving the Certificates.
8.1 Opinion of Brown & Wood LLP with respect to certain federal
income tax matters.
23.1 Consent of Hurley Smith, Esq. (included in opinions filed as
Exhibits 5.1 and 8.2).
23.2 Consent of Brown & Wood LLP (included in opinion filed as
Exhibit 8.1).
24.1 Powers of Attorney of Members of Registrant (included on
Page II-6).
25.1 Statement of Eligibility and Qualification of Trustee.*
- ------------------
* To be filed by Amendment.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes as follows:
(a) to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to select in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change of such information in the Registration Statement.
(b) that, for the purpose of determining any liability under the Securities
Act of 1933 each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to managers, employees or agents of the Registrant
pursuant to the foregoing provisions, 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 Securities 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 manager, employee or agent of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
manager, employee or agent in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, including that the security rating
requirement of Transaction Requirement B.5 will be met by the time of sale, and
has duly caused this Registration Statement on Form S-3 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Detroit,
State of Michigan, on the 19th day of June, 1998.
FORD CREDIT AUTO RECEIVABLES LLC
By: /s/ R.P. Conrad
----------------------------------
R.P. Conrad
Manager
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
manager of Ford Credit Auto Receivables LLC, a Delaware limited liability
company (the "Company"), hereby make H.D. Smith, R.P. Conrad, S.P. Thomas, J.P.
Burkhard and J.W. Bosscher, and each of them, attorneys-in-fact and agents of
the undersigned with full power and authority of substitution and
resubstitution, in any and all capacities, to execute for and on behalf of the
undersigned the Registration Statement on Form S-3 relating to which this power
of attorney is filed as an exhibit, and any and all pre-effective and
post-effective amendments or supplements to the foregoing Registration Statement
and any other documents and instruments incidental thereto, and to deliver and
file the same, with all exhibits thereto, and all documents and instruments in
connection therewith, with the Securities and Exchange Commission, and with each
exchange on which any class of securities of the Company is registered, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing that said
attorneys-in-fact and agents, and each of them, deem advisable or necessary to
enable the Company to effectuate the intents and purposes hereof, and the
undersigned hereby fully ratify and confirm all that said attorneys-in-fact and
agents, or any of them, or their respective substitutes, if any, shall do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Paul E. Gipson Manager June 19, 1998
------------------
(Paul E. Gipson)
/s/ Bernard J. Angelo Manager June 19, 1998
---------------------
(Bernard J. Angelo)
/s/ Hurley D. Smith Manager June 19, 1998
-------------------
(Hurley D. Smith)
/s/ Richard P. Conrad Manager June 19, 1998
---------------------
(Richard P. Conrad)
/s/ James W. Bosscher Manager June 19, 1998
---------------------
(James W. Bosscher)
FORD CREDIT AUTO LOAN MASTER TRUST II
[______%] [FLOATING RATE] AUTO LOAN
ASSET BACKED CERTIFICATES, SERIES 199__-__
FORD CREDIT AUTO RECEIVABLES LLC
(Transferor)
----------, ----
UNDERWRITING AGREEMENT
----------------------
,
- ----------------------
As Representative of the
Several Underwriters,
- ----------------------
- ----------------------
Dear Sirs:
1. Introductory. Ford Credit Auto Receivables LLC, a Delaware limited
------------
liability company (the "Transferor"), proposes to sell $__________ principal
amount of its [_______%] [Floating Rate] Asset Backed Certificates, Series
199__-__ (the "Certificates"), of the Ford Credit Auto Loan Master Trust II (the
"Trust"). Each Certificate will represent a fractional undivided interest in the
Trust. The assets of the Trust include, among other things, a pool of wholesale
receivables (the "Receivables") generated from time to time in a portfolio of
revolving financing arrangements (the "Accounts") with automobile dealers to
finance their automobile and light duty truck inventory and collections on the
Receivables, and certain monies due thereunder on or after __________, ____ (the
"Cutoff Date"), such Receivables having been sold to the Trust and serviced for
the Trust by Ford Motor Credit Company, a Delaware corporation (the "Master
Servicer" or "Ford Credit"). The Certificates will be issued in an aggregate
principal amount of $__________, which is approximately equal to ___% of the
aggregate principal balance of the Receivables, as of the Cutoff Date. The
Certificates will be issued pursuant to a pooling and servicing agreement, dated
as of September 30, 1997 (the "Pooling Agreement"), among the Transferor, the
Master Servicer and The Chase Manhattan Bank, as trustee (the "Trustee"), and
the Series 199__-__ Supplement to the Pooling Agreement, dated as of __________,
____ (the "Supplement" and, together with the Pooling Agreement, the "Pooling
and Servicing Agreement"), among the Transferor, the Master Servicer and the
Trustee. [In connection with the issuance of the Certificates, the Trust and
Ford Credit will enter into two interest rate swap agreements to be dated as of
_________, ____ (together, the "Interest Rate Swap Agreements").]
Capitalized terms used herein but not otherwise defined shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement.
2. Representations and Warranties of the Transferor. The Transferor
-----------------------------------------------------
represents and warrants to and agrees with the several underwriters named in
Schedule I hereto (the "Underwriters") (if there is only one Underwriter listed
in Schedule I, then "Representative" and "Underwriters" shall each refer to such
Underwriter) that:
(a) A registration statement (No. 333-_______), including a form of
prospectus, on Form S-3 in respect of the Certificates has been filed with the
Securities and Exchange Commission (the "Commission") in the form heretofore
delivered to the Underwriters, and has been declared effective. Such
registration statement and any post-effective amendment thereto, at the time
when it became or becomes effective, as applicable, including the exhibits
thereto and any material incorporated by reference therein, is hereinafter
referred to as the "Registration Statement," and the form of prospectus, as
then amended, is hereinafter referred to as a "Prospectus", with such form
being referred to as the "Prospectus". For purposes of this Agreement,
"Effective Time" means the most recent 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 conformed or will
conform, as applicable, in all material respects to the requirements of the
Securities Act of 1933, as amended (the "Act"), the Securities Exchange Act of
1934, as amended (the "Exchange Act"), where applicable, and the rules and
regulations of the Commission under the Act or the Exchange Act, as
applicable, and did not or 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 Transferor by the Underwriters
expressly for use in the Registration Statement relating to the Certificates.
On the date of this Agreement, the Registration Statement conforms, and at the
Effective Time the Registration Statement and the Prospectus did conform or
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 consummation by the Transferor of
the transactions contemplated by this Agreement, the Receivables Purchase
Agreement and the Pooling and Servicing Agreement, and the fulfillment of the
terms hereof and thereof, will not conflict with or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in the
creation of any lien, charge, or encumbrance upon any of the property or
assets of the Transferor 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 Transferor is a debtor or guarantor.
(d) This Agreement has been duly authorized, executed and delivered by
the Transferor.
3. Purchase, Sale, and Delivery of Certificates. On the basis of the
--------------------------------------------
representations, warranties and agreements herein contained, but subject to
the terms and conditions set forth herein, the Transferor agrees to sell to
the Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Transferor the aggregate principal amount of Certificates
set forth opposite the names of the Underwriters in Schedule I hereto. The
Certificates are to be purchased at the purchase price of __________% of the
aggregate principal amount thereof.
Against payment of the purchase price in immediately available funds
drawn to the order of the Transferor, the Transferor will deliver the
Certificates to the Representative, for the account of the Underwriters, at
the offices of Brown & Wood LLP, New York, New York, on __________, ____ at
__:00 __.m., New York time, or at such other time not later than seven full
business days thereafter as the Representative and the Transferor determine,
such time being herein referred to as the "Closing Date". The Certificates to
be so delivered will be initially represented by one or more Certificates
registered in the name of Cede & Co., the nominee of The Depository Trust
Company ("DTC"). The interests of beneficial owners of the Certificates will
be represented by book entries on the records of DTC and participating members
thereof. Definitive Certificates will be available only under limited
circumstances.
4. Offering by Underwriters. It is understood that, after the
------------------------
Registration Statement becomes effective, the Underwriters propose to offer
the Certificates for sale to the public (which may include selected dealers),
as set forth in the Prospectus.
5. Covenants of the Transferor. The Transferor covenants and agrees with
---------------------------
the Underwriters:
(a) If required, to file the Prospectus with the Commission pursuant to
and in accordance with subparagraph (1) of the Rule 424(b) not later than the
time specified therein. The Transferor 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 to 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 an 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 Certificates for offering or sale
in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus as amended or
supplemented or for additional information; and, in the event of the issuance
of any such stop order or of any order preventing or suspending the use of the
Prospectus 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 Certificates for offering and
sale under the securities laws of such states as the Representative may request
and to continue such qualifications in effect so long as necessary under such
laws for the distribution of such Certificates, provided that in connection
therewith the Transferor shall not be required to qualify as a foreign limited
liability company 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 Certificates shall be at the Representative's expense.
(d) To furnish the Underwriters with copies of the Registration Statement
(including exhibits) and copies of the Prospectus as amended or supplemented
in such quantities as the Representative may from time to time reasonably
request; and if, before a period of six months shall have elapsed after the
Effective Date and the delivery of the Prospectus shall be at the time
required by law in connection with sales of any such Certificates, either (i)
any event shall have occurred as a result of which the Prospectus would
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (ii) for any
other reason it shall be necessary during such same period to amend or
supplement the Prospectus as amended or supplemented, to notify the
Representative and to prepare and furnish to the Representative as the
Representative may from time to time reasonably request an amendment or a
supplement to the Prospectus that 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 Certificates at
any time six months or more after the Closing Date, upon the Representative's
request, but at the expense of such Underwriter, to prepare and deliver to
such Underwriter as many copies as the Representative may request of the
amended or supplemented Prospectus complying with Section 10(a)(3) of the Act.
(e) To make generally available to Certificateholders of the Trust as
soon as practicable after the Effective Date of the Registration Statement (as
such date is defined in Rule 158(c) under the Act), an earnings statement of
the Transferor complying with Rule 158 under the Act and covering a period of
at least twelve consecutive months beginning after such Effective Date.
(f) The Transferor will furnish to the Representative copies of the
Registration Statement (one of which will be signed and will include all
exhibits), each form of 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 Certificates are outstanding, to furnish the
Representative copies of all reports or other communications (financial or
other) furnished to Certificateholders of the Trust, and to deliver to the
Representative during such same period, (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed with the
Commission and (ii) such additional information concerning the business and
financial condition of the Transferor as the Representative may from time to
time reasonably request.
(h) To pay or cause to be paid all costs and expenses incident to the
performance of its obligations hereunder including any fees charged by the
rating agency or rating agencies that initially rate the Certificates, and the
reasonable expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto required within
six months from the Effective Date pursuant to Section 5(d) hereof) it being
understood that, except as provided in this paragraph (h) and Section 9
hereof, the Underwriters will pay all their own costs and expenses, including,
without limitation, the cost of printing any agreement among underwriters,
transfer taxes on resale of the Certificates by the Underwriters, and any
advertising expenses connected with any offers that the Underwriters may make.
Notwithstanding anything to the contrary contained in the foregoing, (i) the
Underwriters shall pay directly (A) 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 (B) the reasonable
fees and expenses of Brown & Wood LLP as Underwriters' counsel and (ii) the
Transferor shall pay (A) the Commission the filing fee with respect to the
Certificates; (B) all fees of any rating agencies rating the Certificates; (C)
all fees and expenses of the Trustee; (D) all reasonable fees and expenses of
counsel to the Trustee; (E) all fees and expenses of [Accountants] relating to
the letter referred to in Section 6(a) of the Underwriting Agreement; (F) all
fees and expenses of accountants incurred in connection with the delivery of
any accountant's or auditor's reports required pursuant to the Pooling and
Servicing Agreement; (G) the cost of printing any preliminary and final
prospectus relating to the Certificates, and the Registration Statement; and
(H) any other fees and expenses incurred in connection with the performance of
its obligations under the Underwriting Agreement.
(i) For a period from the date of this Agreement until the retirement of
the Certificates, or until such time as the Underwriters shall cease to
maintain a secondary market in the Certificates, whichever occurs first, to
deliver to the Representative the annual statements of compliance and the
annual independent certified public accountants' reports furnished to the
Trustee pursuant to Article III of the Pooling and Servicing Agreement, as
soon as such statements and reports are furnished to the Trustee.
(j) On or before the Closing Date, the Transferor shall cause Ford
Credit's computer records relating to the Receivables contained in any
Accounts to be marked to show the Trust's absolute ownership of the
Receivables, and from and after the Closing Date neither the Transferor nor
the Master Servicer shall take any action inconsistent with the Trust's
ownership of such Receivables other than as permitted by the Pooling and
Servicing Agreement.
(k) To the extent, if any, that the rating provided with respect to the
Certificates by the rating agency or agencies that initially rate the
Certificates is conditional upon the furnishing of documents or the taking of
any other actions by the Transferor, the Transferor shall furnish such
documents and take any such other actions.
6. Conditions of the Obligations of the Underwriters. The obligation of
-------------------------------------------------
the Underwriters to purchase and pay for the Certificates will be subject to
the accuracy of the representations and warranties on the part of the
Transferor herein, to the accuracy of the statements of officers of the
Transferor made pursuant to the provisions hereof, to the performance by the
Transferor of its obligations hereunder and to the following additional
conditions precedent:
(a) On or prior to the Closing Date, [Accountants] 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
__:00 __.m., New York time, on the day following the date of this Agreement or
such later date as shall have been consented to by the Representative; and
prior to the Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Transferor,
shall be contemplated by the Commission.
(c) The Representative shall have received as of the Closing Date an
officer's certificate signed by a member or manager of the Transferor
representing and warranting that, as of the Closing Date, the representations
and warranties of the Transferor in this Agreement will be true and correct in
all material respects, that the Transferor has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date in all material respects, that no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission.
(d) Since the respective dates as of which information is given in the
Prospectus as amended or supplemented, there shall not have occurred any
material adverse change, or any development involving a prospective material
adverse change, in or affecting particularly the business or assets of the
Trust, the Transferor, Ford Credit or Ford Motor Company or any material
adverse change in the financial position or results or operations of the
Trust, the Transferor, Ford Credit or Ford Motor Company 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 Certificates on the
terms and in the manner contemplated in the Prospectus as amended or
supplemented.
(e) Subsequent to the execution and delivery of this Agreement, the
United States shall not have become engaged in hostilities that have resulted
in the declaration of a national emergency or a declaration of war that makes
it impracticable or inadvisable in the Representative's reasonable judgment to
proceed with the public offering of the delivery of the Certificates on the
terms and in the manner contemplated in the Prospectus as amended or
supplemented.
(f) ____________, of Ford Credit and the Transferor, or other counsel
satisfactory to the Representative in its reasonable judgment, shall have
furnished to the Representative, his written opinion, dated the Closing Date,
in form reasonably satisfactory to the Representative in its reasonable
judgment, to the effect that:
(i) The Transferor has been duly formed and is validly existing as a
limited liability company in good standing under the laws of the State of
Delaware, and is duly qualified to transact business and is in good
standing in each jurisdiction in the United States of America in which the
conduct of its business or the ownership of its property requires such
qualification.
(ii) This Agreement has been duly authorized, executed and delivered
by the Transferor.
(iii) The Pooling and Servicing Agreement and the Receivables Purchase
Agreement have been duly authorized, executed and delivered by, and each
constitutes a valid and binding obligation of, the Transferor.
(iv) The consummation of the transactions contemplated by this
Agreement, the Pooling and Servicing Agreement[,][and] the Receivables
Purchase Agreement[ and the Interest Rate Swap Agreements], 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
Transferor pursuant to the terms of, any indenture, mortgage, deed of
trust, loan agreement, guarantee, lease financing agreement or similar
agreement or instrument known to such counsel under which the Transferor is
a debtor or guarantor, nor will such action result in any violation of the
provisions of the Limited Liability Company Agreement of the Transferor.
(v) The Certificates have been duly authorized and executed by the
Transferor; when authenticated by the Trustee in accordance with the
Pooling and Servicing Agreement and delivered and paid for pursuant to the
Underwriting Agreement, the Certificates will constitute valid and binding
obligations entitled to the benefits provided by the Pooling and Servicing
Agreement.
(vi) The Registration Statement has become effective under the Act
and, to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or threatened by the
Commission, the Registration Statement and the Prospectus as amended or
supplemented and any further amendments and supplements thereto made by the
Transferor prior to the Closing Date (other than the financial statements
and other accounting information contained in the Registration Statement or
the Prospectus as amended or supplemented or any further amendments or
supplements thereto, or omitted therefrom, as to which such counsel need
express no opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder.
(vii) Such counsel believes that neither the Registration Statement
(other than the financial statements and other accounting information
contained therein or omitted therefrom, as to which such counsel need
express no opinion) nor any amendment hereto, at the time the same became
effective, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(viii) Such counsel believes that at the Closing Date the Prospectus
as amended or supplemented (other than the financial statements and the
other accounting information contained therein or omitted therefrom, as to
which such counsel need express no opinion) does not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(ix) Such counsel does not know of any contract or other document of a
character required to be filed as an exhibit to the Registration Statement
or required to be incorporated by reference into the Prospectus as amended
or supplemented or required to be described in the Registration Statement
or the Prospectus as amended or supplemented that is not filed or
incorporated by reference or described as required.
(x) Such counsel does not know of any legal or governmental
proceedings pending to which the Transferor is a party or to which any
property of the Transferor is 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 that,
in his opinion, will not have a material adverse effect upon the general
affairs, financial position, net worth or results of operations (on an
annual basis) of the Transferor and will not materially and adversely
affect the performance by the Transferor of its obligations under, or the
validity and enforceability of, the Pooling and Servicing Agreement, the
Receivables Purchase Agreement or the Certificates.
(xi) The Certificates, the Pooling and Servicing Agreement, the
Receivables Purchase Agreement and this Agreement each conform in all
material respects with the descriptions thereof contained in the
Registration Statement and the Prospectus.
(xii) The Transferor has full power and authority to sell and assign
the property sold or to be sold and assigned to and deposited with the
Trustee as part of the Trust and has duly authorized such sale and
assignment to the Trustee by all necessary action.
(xiii) Prior to any sale or assignment thereof by the Transferor to
the Trust, the Transferor was the sole owner of all right, title and
interest in, and had good and marketable title to, the Receivables
transferred by it to the Trust. The assignment of the Receivables, all
documents and instruments relating thereto and all proceeds thereof to the
Trustee, pursuant to the Pooling and Servicing Agreement, vest in the
Trustee all interests that were purported to be conveyed thereby, were free
and clear of any liens, security interests or encumbrance except as
specifically permitted pursuant to the Pooling and Servicing Agreement.
(xiv) Immediately prior to the transfer of the Receivables to the
Trustee, the Transferor's interest in the Receivables, the Related
Security, the security interests in the Vehicles securing the Receivables
and the proceeds of each of the foregoing was perfected upon the filing of
the UCC-1 financing statement the form of which is attached to such opinion
with the Secretary of State of the State of Michigan and constituted a
perfected first priority interest therein. If a court concludes that the
transfer of the Receivables from the Transferor to the Trustee is a sale,
the interest of the Trustee in the Receivables, the Related Security, the
security interests in the Vehicles securing the Receivables and the
proceeds of each of the foregoing will be perfected upon the filing of the
UCC-1 financing statement the form of which is attached to such opinion
with the Secretary of State of the State of Michigan and will constitute a
first priority perfected interest therein. If a court concludes that such
transfer is not a sale, the Pooling and Servicing Agreement constitutes a
grant by the Transferor to the Trustee of a valid security interest in the
Receivables, the Related Security, the security interests in the Vehicles
securing the Receivables and the proceeds of each of the foregoing, which
security interest is perfected upon the filing of the UCC-1 financing
statement the form of which is attached to such opinion with the Secretary
of State of the State of Michigan and will constitute a first priority
perfected security interest therein. No filing or other action, other than
the filing of the UCC-1 financing statements with the Secretary of State of
the State of Michigan referred to above, is necessary to perfect and
maintain the interest or the security interest of the Trustee in the
Receivables, the security interests in the Vehicles securing the
Receivables and the proceeds of each of the foregoing against third
parties.
(xv) The Transferor is not, and will not as a result of the offer and
sale of the Certificates as contemplated by this Agreement become, an
"investment company" as defined in the Investment Company Act.
(xvi) The statements in the Prospectus under the heading "Certain
State and Local Tax Considerations" accurately describe the material
Michigan tax consequences to holders of the Certificates.
Such opinion may be made subject to the qualifications that the enforceability
of the terms of the Pooling and Servicing Agreement, the Receivables Purchase
Agreement and the Certificates 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.
(g) ___________, __________ of Ford Credit and the Transferor, 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.
(ii) The indemnification agreement (the "Indemnification Agreement")
dated as of the date hereof, between Ford Credit and the Underwriters, has
been duly authorized, executed and delivered by Ford Credit.
(iii) The Pooling and Servicing Agreement, the Receivables Purchase
Agreement [and the Interest Rate Swap Agreements] have been duly
authorized, executed and delivered by, and each constitutes a valid and
binding obligation of, Ford Credit.
(iv) The consummation of the transactions contemplated by the Pooling
and Servicing Agreement, the Receivables Purchase Agreement[, the Interest
Rate Swap Agreements] and the Indemnification Agreement, and the
fulfillment of the terms thereof, will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under
(in each case material to Ford Credit and its subsidiaries considered as a
whole), or result in the creation or imposition of any lien, charge or
encumbrance (in each case material to Ford Credit and its subsidiaries
considered as a whole) upon any of the property or assets of Ford Credit
pursuant to the terms of, any indenture, mortgage, deed of trust, loan
agreement, guarantee, lease financing agreement or similar agreement or
instrument known to such counsel under which Ford Credit is a debtor or
guarantor, nor will such action result in any violation of the provisions
of the Certificate of Incorporation or the By-Laws of Ford Credit.
(v) Such counsel does not know of any legal or governmental
proceedings pending to which Ford Credit is a party or to which any
property of Ford Credit is 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 that,
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 Pooling
and Servicing Agreement, the Receivables Purchase Agreement[, the Interest
Rate Swap Agreements] or the Indemnification Agreement.
(vi) Ford Credit had and has full power and authority to sell and
assign the property sold and assigned or to be sold and assigned to the
Transferor pursuant to the Receivables Purchase Agreement and has duly
authorized such sale and assignment to the Transferor by all necessary
corporate action.
(vii) The statements in the Prospectus under the caption "Risk
Factors--Certain Legal Aspects" and the caption "Certain Legal Aspects of
the Receivables", to the extent they constitute matters of law or legal
conclusions, are correct in all material respects.
(viii) The Receivables are "chattel paper" under the Uniform
Commercial Code.
(ix) Immediately prior to the sale of the Receivables to the
Transferor, Ford Credit owned the Receivables free and clear of any lien,
security interest or charge. With respect to each Receivable constituting
part of the Trust, such Receivable is secured by a validly perfected first
priority security interest in the vehicle financed thereby in favor of Ford
Credit as a secured party, or Ford Credit has instituted appropriate
procedures that if followed (and such counsel has no reason to believe that
they will not be so followed) will result in the perfection of a first
priority security interest in the vehicle financed thereby in favor of Ford
Credit as a secured party. Each such Receivable has been duly and validly
assigned to the Transferor by Ford Credit.
(x) All filings necessary under applicable law to perfect both the
sale of the Receivables by Ford Credit to the Transferor pursuant to the
Receivables Purchase Agreement have been made and, provided that neither
Ford Credit nor the Transferor relocated its principal place of business in
a state other than Michigan and that Ford Credit maintains the list of
Receivables for inspection by interested parties as described above, no
other filings (other than the filing of continuation statements) need be
made to maintain the perfection of the sale of the Receivables either to
the Transferor pursuant to the Receivables Purchase Agreement or to the
Trustee pursuant to the Pooling and Servicing Agreement.
(xi) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the Trust
is not, and will not be as a result of the offer and sale of the
Certificates contemplated by this Agreement, 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 Pooling and Servicing Agreement,
the Receivables Purchase Agreement[, the Interest Rate Swap Agreements] or
the Indemnification Agreement, except such as may be required under federal
or state securities laws in connection with the acquisition by the
Underwriters of the Certificates, filings with respect to the transfer of
the Receivables to the Transferor pursuant to the Receivables Purchase
Agreement and to the Trustee pursuant to the Pooling and Servicing
Agreement 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 Transferor is a
party or to which any property of either Ford Credit or the Transferor is
subject, and no such proceedings are known by such counsel to be threatened
or contemplated by governmental authorities or threatened by others (A)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agreement, the Pooling and
Servicing Agreement, the Receivables Purchase Agreement[, the Interest Rate
Swap Agreements] or the Indemnification Agreement, or (B) seeking adversely
to affect the federal income tax attributes of the Certificates as
described in the Prospectus under the heading "Certain Federal Income Tax
Considerations."
(xiv) Neither the issuance or sale of the Certificates, nor the
execution and delivery of the Certificates, the Pooling and Servicing
Agreement, the Receivables Purchase Agreement[, the Interest Rate Swap
Agreements], the Indemnification Agreement or this Agreement, nor the
consummation of any of the other transactions contemplated herein or in the
Pooling and Servicing Agreement, the Receivables Purchase Agreement[, the
Interest Rate Swap Agreements] or the Indemnification Agreement by Ford
Credit or the Transferor, as the case may be, contravenes or will
contravene the terms of any material provision of any statute, order, or
regulation applicable to Ford Credit or the Transferor, as the case may be,
the failure with which to comply could have a material adverse effect on
Ford Credit and its subsidiaries considered as a whole or the Transferor,
as the case may be.
(h) Brown & Wood LLP (or such other counsel satisfactory to the
Representative) shall have furnished their written opinion, dated the Closing
Date, with respect to the characterization of the transfer of the Receivables
by Ford Credit to the Transferor as a sale, and with respect to the
characterization of the transfer of the Receivables from the Transferor to the
Trust, to the Representative and to Ford Credit, and such opinion shall be in
substantially the form previously discussed with the Representative and their
counsel and in any event satisfactory in form and in substance to the
Representative and their counsel and to Ford Credit.
(i) Brown & Wood LLP, special federal tax counsel to the Transferor,
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 the statements in the
Registration Statement and each Prospectus under the headings "Certain Federal
Income Tax Considerations" and "ERISA Considerations," 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.
(j) The Representative shall have received an opinion of Brown & Wood LLP
addressed to the Representative, dated the Closing Date, with respect to the
validity of the Certificates and such other related matters as the
Representative shall require and the Transferor 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.
(k) The Representative shall have received an opinion addressed to the
Representative, the Transferor and the Master Servicer of __________, counsel
to the Trustee, dated the Closing Date and satisfactory in form and substance
to the Representative and to counsel to the Underwriters, to the effect that:
(i) The Trustee has been duly incorporated and is validly existing as
a ________ in good standing under the laws of ________ with full corporate
trust power and authority to enter into and perform its obligations under
the Pooling and Servicing Agreement[ and the Interest Rate Swap
Agreements].
(ii) The Pooling and Servicing Agreement [and the Interest Rate Swap
Agreements] [has] [have] been duly executed and delivered by the Trustee,
and, insofar as the laws governing the trust powers of the Trustee are
concerned and assuming due authorization, execution and delivery thereof by
the Transferor and the Master Servicer, the Pooling and Servicing Agreement
[and the Interest Rate Swap Agreements each] constitutes a legal, valid and
binding obligation of the Trustee, enforceable against the Trustee in
accordance with its terms, except (A) 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
(B) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(iii) The Certificates have been duly authenticated and delivered by
the Trustee.
(iv) Neither the execution nor delivery by the Trustee of the Pooling
and Servicing Agreement[, the Interest Rate Swap Agreements] nor the
consummation of any of the transactions by the Trustee contemplated thereby
required the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to, any
governmental authority or agency under any existing federal or _______ law
governing the trust powers of the Trustee, except such as have been
obtained, made or taken.
(l) The Representative shall have received an officer's certificate dated
the Closing Date of the Chairman of the Board, the President, the Executive
Vice President-Finance or the Treasurer of each of Ford Credit, the Transferor
and the Master Servicer in which such officers shall state that, to the best
of their knowledge after reasonable investigation, the representations and
warranties of the Transferor and the Master Servicer contained in the Pooling
and Servicing Agreement and the representations and warranties of Ford Credit
and the Transferor contained in the Receivables Purchase Agreement are true
and correct in all material respects, that Ford Credit, the Transferor or the
Master Servicer, as the case may be, has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied under such
agreements at or prior to the Closing Date in all material respects.
(m) The Interest Rate Swap shall have been duly authorized, executed and
delivered by each party thereto and all fees due and payable to Ford Credit
thereunder shall have been paid in full on or prior to the Closing Date.
(n) The Certificates shall have been rated in the highest rating category
by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., and
Moody's Investors Service, Inc.
7. Indemnification and Contribution.
--------------------------------
(a) The Transferor will indemnify and hold each Underwriter harmless
against any losses, claims, damages, or liabilities, joint or several, to
which such Underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, either
of the Prospectuses, 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
Transferor 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 Transferor by any Underwriter through the
Representative specifically for use therein; and provided further, that the
Transferor shall not be liable to any Underwriter or any person controlling
any Underwriter under the indemnity agreement in this paragraph 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 Certificates to a person to whom there was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the related Prospectus or of the related Prospectus as then amended or
supplemented (excluding documents incorporated by reference), whichever is
most recent, if the Transferor has previously furnished copies thereof to such
Underwriter.
The indemnity agreement in this paragraph shall be in addition to any
liability which the Transferor may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act.
(b) Each Underwriter will indemnify and hold harmless the Transferor
against any losses, claims, damages or liabilities to which the Transferor 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, either of the Prospectuses 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 Transferor by such Underwriter through the
Representative specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Transferor in connection with
investigating or defending any such action or claim.
The indemnity agreement in this paragraph 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 Transferor
within the meaning of the Act.
(c) Promptly after receipt by an indemnified party under paragraph (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 paragraph (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 paragraph to such indemnified party
unless the indemnifying party shall have received other notice addressed and
delivered in the manner provided in Section 10 hereof of the commencement of
such actions 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 paragraph. 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 paragraph 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 paragraph (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 Transferor on the one hand and the Underwriters on the other from the
offering of the Certificates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Transferor 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 Transferor on the one
hand and the underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Transferor 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 related Prospectus as amended or supplemented
with respect to the Certificates. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Transferor 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 Certificates to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the related Prospectus or the related Prospectus as then
supplemented or amended (excluding documents incorporated by reference),
whichever is more recent, if the Transferor has previously furnished copies
thereof to such Underwriter. The Transferor and the Underwriters, severally
and not jointly, agree that it would not be just and equitable if contribution
pursuant to this paragraph 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 paragraph. 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 paragraph 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 paragraph, no Underwriter shall
be required to contribute any amount in excess of the amount by which the
total price at which the Certificates underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
8. Survival of Certain Representations and Obligations. The respective
---------------------------------------------------
indemnities, agreements, representations, warranties and other statements of
the Transferor (including, without limitation, Section 5(k)) or its 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 or the
Transferor or any of their respective representatives, officers or directors
of any controlling person, and will survive delivery of and payment for the
Certificates.
9. Failure to Purchase the Certificates. If the purchase of the
------------------------------------
Certificates shall not be consummated by the Underwriters because the
condition set forth in Section 6(e) has occurred, then the Transferor shall be
under no liability to the Underwriters with respect to the Certificates except
as provided in Section 5(h) and Section 7 hereof; but if for any other reason
any Certificates are not delivered by the Transferor as provided herein, the
Transferor 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 Certificates, but the Transferor shall then have no
further liability to any Underwriter with respect to such Certificates except
as provided in Section 5(h) and Section 7 hereof. If any Underwriter or
Underwriters default on their obligations to purchase Certificates hereunder
and the aggregate principal amount of Certificates that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the total principal amount of Certificates, the Representative may make
arrangements satisfactory to the Transferor for the purchase of such
Certificates by other persons, including the non-defaulting Underwriter or
Underwriters, but if no such arrangements are made by the Closing Date, the
non-defaulting Underwriter or Underwriters shall be obligated, in proportion
to their commitments hereunder, to purchase the Certificates that such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters so default and the aggregate principal amount of
Certificates with respect to which such default or defaults occur exceeds 10%
of the total principal amount of Certificates and arrangements satisfactory to
the non-defaulting Underwriter or Underwriters and the Transferor for the
purchase of such Certificates by other persons are not made within 36 hours
after such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter or the Transferor, except as provided
in Section 8. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter or Underwriters from liability for its
default.
10. Notices. All communications hereunder will be in writing and, if sent
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to the Representative or the Underwriters, will be mailed, delivered or sent
by facsimile transmission and confirmed to ____________, Attention:
__________, if sent to the Transferor, will be mailed, delivered or sent by
facsimile transmission, and confirmed to it at Ford Credit Auto Receivables
LLC, The American Road, Dearborn, Michigan 48121, Attention: Secretary.
11. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the Underwriters and the Transferor and their respective
successors and the officers and directors and controlling persons referred to
in Section 7, and no other person will have any right or obligations
hereunder.
12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
13. Counterparts. This Agreement may be executed by each of the parties
------------
hereto in any number of counterparts, and by each of the parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us a counterpart hereof, whereupon this letter and your
acceptance hereof shall constitute a binding agreement.
Very truly yours,
FORD CREDIT AUTO RECEIVABLES LLC
By: ___________________________
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
- ------------------------------
Acting on their own behalf and
as Representative of the
several Underwriters.
By: ______________________
Name:
Title:
SCHEDULE I
Series 199__-__ Certificates
----------------------------
___________________............................................... $__________
___________________............................................... $__________
Series 199__-__ Certificate Total .................................$__________
EXECUTION
LIMITED LIABILITY COMPANY AGREEMENT
FORD CREDIT AUTO RECEIVABLES LLC,
(A Delaware Limited Liability Company)
The undersigned Member has formed a limited liability company pursuant to
a Certificate of Formation dated as of August 14, 1997 and filed in the office
of the Delaware Secretary of State on August 18, 1997 in accordance with the
Delaware Limited Liability Company Act. 6 Del. C. Section 18-101, et seq. (as
--- - -- ---
amended from time to time, the "Act") and, in connection therewith, hereby
agrees as follows:
1.1 Definitions. Except as otherwise defined herein, all capitalized
-----------
terms used in this Limited Liability Company Agreement (the "Agreement") shall
have the same meanings ascribed to them in the Pooling and Servicing
Agreement, dated as of September 30, 1997, by and among Ford Credit Auto
Receivables LLC, as Transferor, Ford Motor Credit Company ("Ford Credit"), as
Master Servicer, and The Chase Manhattan Bank, a New York banking corporation,
as Trustee (the "Trustee"). Such agreement, as amended, supplemented or
otherwise modified and in effect from time to time, is referred to herein as
the "Pooling and Servicing Agreement".
1.2 Headings. The headings in this Agreement are included solely for
--------
convenience and identification and are in no way intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or
any provision thereof.
2. Name. The name of the limited liability company formed and continued
----
hereby is "Ford Credit Auto Receivables LLC" (hereinafter, the "LLC"). The
business of the LLC may be conducted under any other name designated in
writing by the Board of Managers (as defined below) in compliance with
applicable law.
3. Registered Office. The registered office of the LLC in the State of
-----------------
Delaware is located at 1209 Orange Street, in the City of Wilmington, County
of New Castle.
4. Registered Agent. The name and address of the registered agent of
----------------
the LLC for service of process on the LLC in the State of Delaware is The
Corporation Trust Company, 1209 Orange Street, in the City of Wilmington,
County of New Castle.
5. Place of Business. The principal place of business of the LLC shall
-----------------
be on the premises of Ford Credit located at The American Road, Dearborn,
Michigan 48121. The Board of Managers at any time and from time to time may
change the location of the LLC's principal place of business and may establish
additional offices as it shall deem advisable.
6. Purpose and Character of Business. The nature of the business or
---------------------------------
purposes to be conducted or promoted by the LLC is to engage in the following
activities:
(a) to execute and deliver, and to cause the Trustee to execute and
deliver, the Pooling and Servicing Agreement and thereby form Ford
Credit Auto Loan Master Trust II (the "Trust"), to execute and
deliver the Receivables Purchase Agreement and any other related
agreements, documents or certificates, and to take any other such
actions, as may be necessary or incidental to the accomplishment of
such purposes (the Pooling and Servicing Agreement and the
Receivables Purchase Agreement, together with such other related
agreements, documents and certificates, being collectively referred
to herein as the "Program Documents");
(b) to acquire from time to time and on a continuing basis from Ford
Credit pursuant to the Receivables Purchase Agreement any or all
right, title and interest in, to and under the Initial Accounts, the
Additional Accounts and the Receivables arising under such Accounts,
any security with respect thereto (the "Related Security") and all
monies due or to become due and all amounts received with respect
thereto and all proceeds and Recoveries thereof;
(c) to acquire, finance, hold, assign, pledge and otherwise deal
with wholesale and retail receivables (in addition to the
Receivables) or leases arising out of the sale or lease of motor
vehicles, farm or industrial equipment and related activities and
transactions ( such other receivables and leases collectively
referred to herein as "Other Receivables");
(d) to transfer from time to time and on a continuing basis to the
Trust pursuant to the Pooling and Servicing Agreement any and all of
LLC's right, title and interest in, to and under the Initial
Accounts, the Additional Accounts and the Receivables arising
thereunder, the Related Security with respect thereto and all monies
due or to become due and all amounts received with respect thereto
and all proceeds and Recoveries thereof;
(e) to take any and all actions required pursuant to the Pooling and
Servicing Agreement to perfect under applicable law and in all
applicable jurisdictions the transfer of the Receivables and the
Related Security to the Trust;
(f) to transfer from time to time Other Receivables to one or more
trusts pursuant to one or more pooling and servicing agreements or
similar agreements or contractual arrangements;
(g) to authorize, sell and deliver or participate in the issuance of
one or more Series or Classes of Certificates issued by the Trust;
(h) to acquire certificates of participation or other evidences of
fractional undivided interest issued by one or more trusts,
including grantor trusts, the assets of which include Other
Receivables (collectively, the "certificates") or one or more series
or classes of bonds, notes or other evidences of indebtedness
secured or collateralized by one or more pools of Other Receivables
or by certificates (collectively, the "Notes");
(i) to authorize, issue, sell and deliver or participate in the
issuance of one or more series or classes of certificates or Notes,
provided that the LLC shall have no liability under any certificates
or Notes except to the extent of the one or more pools of Other
Receivables (or, if applicable, certificates) securing or
collateralizing such certificates or Notes;
(j) to hold and enjoy any and all of the rights and privileges
accruing to the holder of the Transferor's Interest in Trust Assets
as represented by the Transferor's Certificate;
(k) to hold and enjoy all the rights and privileges of any class of
any series of certificates or any class of any series of Notes,
including any class of certificates or Notes which may be
subordinate to any other class of certificates or Notes,
respectively;
(l) to perform any and all other duties, covenants and obligations
of the Transferor under the Program Documents and to take such other
actions as may be necessary or incidental to the performance of such
obligations under the Program Documents;
(m) to negotiate, authorize, execute and deliver, or assume or
perform the obligations under, any agreement, instrument or document
relating to the activities set forth in clauses (a) through (l)
above, including but not limited to any trust agreement, sale and
servicing agreement, pooling and servicing agreement, indenture,
reimbursement agreement, indemnification agreement, placement
agreement or underwriting agreement; and
(n) to engage in any activity and to exercise any and all powers
permitted to limited liability companies under the laws of the State
of Delaware that are related or incidental to the foregoing and
necessary, convenient or advisable to accomplish the foregoing (such
business activities and transactions specified in this Section 6
collectively referred to hereinafter as "Permitted Transactions").
7. Conduct of Business. (a) Notwithstanding any other provision of this
-------------------
Agreement and any provision of law that otherwise so empowers the LLC, the LLC
shall not, without the prior written confirmation of each applicable Rating
Agency that such action will not result in a reduction or withdrawal of the
rating assigned to any outstanding Series or Class of Certificates (the
"Rating Agency Condition"), do any of the following:
(i) engage in any business or activity other than a Permitted
Transaction;
(ii) create, incur or assume any indebtedness or issue any security
or sell or transfer any receivables (including the Receivables) to a trust or
other Person which issues a security in respect of any such receivables unless
any such indebtedness or security has no recourse to any assets of the LLC
other than the specified assets to which such indebtedness or security
relates;
(iii) become or remain liable, directly or contingently, in
connection with any indebtedness or other liability of any other Person,
whether by guarantee, endorsement (other than endorsements of negotiable
instruments for deposit or collection in the ordinary course of business),
agreement to purchase or purchase, agreement to supply or advance funds, or
otherwise, except in connection with Permitted Transactions;
(iv) make or suffer to exist any loans or advances to, or extend any
credit to, or make any investments (by way of transfer of property,
contributions to capital, purchase of stock or securities or evidences of
indebtedness, acquisition of the business or assets, or otherwise) in, any
Affiliate other than in connection with Permitted Transactions; provided,
--------
however, that the LLC shall not be prohibited under this clause (a)(iv) from
- -------
causing a distribution of cash to its Member;
(v) enter into any transaction or merger or consolidation with or
into any other entity, or convey its properties and assets substantially as an
entirety to any entity, other than with respect to a Permitted Transaction
(including, without limitation, the issuance of Supplemental Certificates),
unless (A) the entity (if other than the LLC) formed as a result of or
surviving such consolidation or merger, or which acquires the properties and
assets of the LLC is (i) organized and existing under the laws of the State of
Delaware, (ii) expressly assumes all of the Transferor's obligations under the
Pooling and Servicing Agreement and other Program Documents and (iii) is
governed under a charter document containing provisions substantially
identical to the provisions of Section 6 and 7 of this Agreement; (B) the
Rating Agencies and the Trustee shall have received at least 10 days' prior
notice of any such merger, consolidation or sale of assets; (C) such merger,
consolidation or sale of assets will not conflict with any provisions of the
Certificate of Formation of LLC; and (D) immediately after giving effect to
such merger, consolidation or sale of assets, no default or event of default
by or relating to the LLC shall have occurred and be continuing under any
material agreement to which the LLC is a party;
(vi) become party to, or permit any of its properties to be bound
by, any indenture, mortgage, instrument, contract, agreement, lease or other
undertaking, with the exception of the Program Documents or any other any
documents relating to a Permitted Transaction;
(vii) amend, modify, alter, change or repeal any provision of
Section 6 or 7 of this Agreement; provided, however, the LLC reserves the
-------- -------
right to amend, alter, change or repeal any provision contained in its
Certificate of Formation or this Agreement in a manner now or hereafter
prescribed by the Act, and all rights conferred upon the Member herein are
granted subject to this reservation; and
(viii) terminate, amend, supplement, modify or waive any provision
of the Program Documents, or request, consent, agree, suffer to exist or
permit any such cancellation, termination, amendment, supplement, modification
or waiver thereof.
(b) The LLC shall at all times:
(i) to the extent the LLC's office is located in the premises of the
Member or any Affiliate thereof, pay fair market rent for such
office space and a fair share of any overhead costs;
(ii) maintain the LLC's books, financial statements, accounting
records and other corporate documents and records separate from
those of the Member, any Affiliate thereof or any other entity;
(iii) not commingle the LLC's assets with those of the Member or any
Affiliate thereof, and not hold itself out as being liable for the
debts of another;
(iv) act solely in its corporate name and through its own managers
and agents, invoices and letterhead and hold itself out as a
separate entity, not identify itself as a division of any other
person or entity, and correct any known misunderstanding regarding
its separate identity;
(v) separately manage its liabilities from those of the Member or
any Affiliate thereof and pay its own liabilities, including all
administrative expenses, from its own separate assets, provided that
-------- ----
the Member or any Affiliate thereof may pay certain of the
organizational costs of the LLC, and the LLC shall reimburse the
Member or any such Affiliate for its allocable portion of shared
expenses paid by the Member or such Affiliate;
(vi) pay from the LLC's assets all obligations and indebtedness of
any kind incurred by the LLC;
(vii) operate in such a manner that it would not be substantively
consolidated for purpose of applicable bankruptcy laws with any
other entity;
(viii) have a sufficient number of Managers and any other authorized
agents to manage its operations; and
(ix) maintain adequate capital in light of its contemplated business
operations.
(c) The LLC shall abide by all corporate formalities, including the
maintenance of current minute books, and the LLC shall cause its financial
statements to be prepared in accordance with generally accepted accounting
principles in manner that indicates the separate existence of the LLC and its
assets and liabilities. The LLC shall not assume the liabilities of the Member
or any Affiliate thereof, and shall not guarantee the liabilities of the
Member or any Affiliate thereof. The Board of Managers of the LLC shall make
decisions with respect to the business and daily operations of the LLC
independent of, and not dictated by, the Member or any Affiliate thereof.
(d) Without the unanimous written consent of all of the Managers, the LLC
shall not institute proceedings to be adjudicated bankrupt or insolvent, or
consent to the institution of bankruptcy or insolvency proceedings against it,
or file a petition seeking relief or consent to reorganization or relief,
under any applicable federal or state law relating to bankruptcy, or consent
to the appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the LLC or a substantial part of its property,
or make any assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or take any corporate
action in furtherance of any such action.
8. The Board of Managers. Pursuant to Section 18-402 of the Act, and to
---------------------
the extent specifically set forth in this Agreement, certain activities of the
LLC shall be managed through a Board of Managers (the "The Board of
Managers"). The Board of Managers shall have the following characteristics:
(a) The Board of Managers shall be composed of no fewer than five
(5) individuals (each, a "Manager") and shall at all times include
at least two (2) individuals who are Independent Managers. An
"Independent Manager" shall be an individual who is not at such
time, and shall not have been at any time during the preceding five
years, a director, officer or employee of Ford Credit, Ford Motor
Company ("Ford"), or of any major creditor thereof, and who is not
the beneficial owner, at the time of such individual's appointment
as an Independent Manager or at any time thereafter while serving as
an Independent Director, of more than 1,000 shares in the aggregate
of all classes of common stock of Ford or any of its other
subsidiaries or Affiliates, or if greater, such number of shares the
value of which constitutes more than 10% of such individual's net
worth. The term "major creditor" shall mean a financial institution
to which Ford Credit or Ford (or any of their subsidiaries or
Affiliates) has outstanding indebtedness for borrowed money in a sum
sufficiently large as would reasonably be expected to influence the
judgment of the proposed Independent Manager adversely to the
interests of the LLC when its interests are adverse to those of Ford
Credit or Ford (or any of their subsidiaries or Affiliates);
(b) except as otherwise provided in this Agreement, all actions of
the Board of Managers shall require a majority vote of the quorum of
the Managers; provided, however, that the Board of Managers may
-------- -------
delegate the day-to-day management of the LLC to an individual or
entity which may or may not be a Manager;
(c) the Board of Managers shall meet annually and at such other
times as may be necessary for the business of the LLC upon at least
five (5) business days' prior written notice of the time, place and
purpose of the meeting given by any two (2) Managers. Meetings of
the Board of Managers may be in person or by conference telephone or
other similar communications system, and actions of the Board of
Managers may be by written consent. The presence of three (3)
Managers shall constitute a quorum. Each Manager has the right to
one vote. Each Manager not only has the right to his own vote, but
may vote by proxy for one other Manager (except for votes which
require unanimous consent of the Managers hereunder, in which case
no Independent Manager shall be permitted to vote by proxy);
(d) the term of each Manager shall be one year, and the Member shall
unanimously designate the Managers, and shall replace or reappoint
such Managers annually, by executing a certificate signed by an
authorized officer of the Member setting forth the name of each
Manager for the following year; and the Member may remove any
Manager with or without cause by executing a certificate setting
forth the Manager being removed and the replacement Manager;
provided, however, that the Member may not remove any Independent
-------- -------
Manager without the unanimous written consent of at least one other
Independent Manager not subject to such removal and without
satisfying the Rating Agency Condition;
(e) in the event there exists a vacancy on the Board of Managers,
the Member shall, as soon as practicable, execute a certificate
setting forth a replacement Manager; and
(f) the debts, obligations and liabilities of the LLC, whether
arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the LLC, and no Manager shall be
obligated for any such debt, obligation or liability of the LLC
solely by reason of its acting as a Manager of the LLC.
9. Powers of the Managers. Subject to Sections 7, 10, 11 and 15, the
----------------------
Board of Managers is authorized on behalf of the LLC to do or cause to be done
any of the Permitted Transactions set forth in Section 6 hereof.
10. Restrictions on the Powers of the Managers. The Board of Managers
------------------------------------------
shall not have the authority to:
(a) cause the LLC to do any acts in violation of or in breach of the
Pooling and Servicing Agreement, any other Program Document or any
other agreement entered into by the LLC;
(b) take any action in contravention of the Act, the Certificate of
Formation or this Agreement;
(c) take any action that would make it impossible to carry on the
ordinary business of the LLC;
(d) admit any Person as a member of the LLC;
(e) knowingly perform any act that would subject the Member to loss
of limited liability in any jurisdiction; or
(f) except as permitted under Section 7(a)(vii), take any action to
amend or modify the Certificate of Formation or this Agreement.
11. Duties and Obligations of the Managers.
--------------------------------------
(a) Subject to Section 7, the Board of Managers shall take all
action that may be necessary or appropriate for the continuation of
the LLC's valid existence as a limited liability company under the
laws of the State of Delaware (and each other jurisdiction in which
such existence is necessary to protect the limited liability of the
Member or to enable the LLC to conduct the business in which it is
engaged).
(b) Each Manager shall devote to the LLC such time as he shall deem
necessary to conduct the LLC's business and affairs in an
appropriate manner.
(c) The Board of Managers shall use their best efforts, in the
conduct of the LLC's activities and business, to put all Persons
with whom the LLC deals on notice that the Member is not liable for
the LLC's obligations, and all agreements to which the LLC is a
party shall include a statement to the effect that the LLC is a
limited liability company formed under the Act; provided, however,
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the failure to include such a statement in an agreement to which the
LLC is a party shall not affect the LLC's power and authority or
authorization to enter into such agreement.
(d) The Board of Managers shall prepare or cause to be prepared and
shall file or cause to be filed on or before the due date (or any
extension thereof) any federal, state or local tax returns required
to be filed by the LLC. The Board of Managers shall cause the LLC to
pay any taxes payable by the LLC; provided, however, that the
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Managers shall not be required to cause the LLC to pay any tax so
long as the LLC is contesting in good faith and by appropriate legal
proceedings the validity, applicability or amount thereof and such
contest does not materially endanger any right or interest of the
LLC.
(e) The Board of Managers shall, from time to time, submit, or cause
to be submitted, to any appropriate state securities administrator
all documents, papers, statistics and reports required to be filed
with or submitted to such state securities administrator.
(f) The Board of Managers shall use their best efforts to cause the
LLC to be formed, reformed, or qualified to engage in investment
activities, or be registered under any applicable assumed or
fictitious name statute or similar law in any state in which the LLC
then makes investments or transacts business, if such formation,
reformation, qualification or registration is necessary or desirable
in order to protect the limited liability of the Member or to permit
the LLC lawfully to own or make investments or transact business.
(g) The Board of Managers, as an "authorized person" within the
meaning of the Act shall from time to time, prepare and file, or
cause to be prepared and filed, any amendment or restatement to the
Certificate of Formation or this Agreement and other similar
documents that are required by law to be filed and recorded for any
reason, in such office or offices as are required under the laws of
the State of Delaware or any other state in which the LLC is then
formed or qualified.
12. Tax Characterization. (a) It is intended that the LLC be classified
--------------------
for Federal income tax purposes as an agent for the Member.
(b) The books and records of the LLC shall be maintained on an accrual
basis. The LLC may report its operations for tax purposes on the accrual
method. The taxable year of the LLC shall be the calendar year.
13. Admission of Member, Capital Contribution, Percentage Interest;
---------------------------------------------------------------
Appointment of Managers. (a) Simultaneously with the execution and delivery of
- -----------------------
this Agreement, Ford Credit shall be admitted as the sole Member of the LLC
with an interest of 100% (as such percentage may change from time to time, a
"Percentage Interest"). The name and address of the Member is as follows:
-------------------
Ford Motor Credit Company
The American Road
Dearborn, MI 48121
(b) Capital contributions to the LLC shall be made by the Member in
consideration for its Percentage Interest.
(c) The Member hereby appoints the following persons to serve initially
as Managers on the Board of Managers of the LLC:
1. Paul E. Gipson
2. Bernard J. Angelo
3. Hurley D. Smith
4. Richard P. Conrad
5. James W. Bosscher
14. Distributions. At the time determined by a majority of the Managers,
-------------
but at least once during each fiscal year, the Managers shall cause the LLC to
distribute any cash held by it which is neither reasonably necessary for the
operation of the LLC or the performance of its obligations under the Program
Documents nor in the violation of Sections 18-607 or 18-804 of the Act or in
connection with any Permitted Transaction.
15. Powers; Liability of Member. (a) Subject to Sections 6 and 7, the
---------------------------
Member shall have the right and authority to take all actions specifically
enumerated in the Certificate of Formation or this Agreement or which the
Member otherwise deems necessary, useful or appropriate for the day-to-day
management and conduct of the LLC's business. All instruments, contracts,
agreements and documents providing for the acquisition, mortgage or
disposition of property of the LLC shall be valid and binding on the LLC only
if executed by any officer of the Member, which officer shall also be an
"authorized person" within the meaning of the Act for purposes of executing
the LLC's Certificate of Formation.
(b) Except as expressly provided in the Program Documents or in any
documents relating to Permitted Transactions, the debts, obligations and
liabilities of the LLC, whether arising in contract, tort or otherwise, shall
be solely the debts, obligations and liabilities of LLC, and the Member shall
not be obligated for any such debt, obligation or liability of the LLC solely
by reason of its status as a Member of the LLC.
16. Indemnification. (a) Subject to Section 16(g), 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, by reason of the fact that he is or was a Manager, employee
or agent of the LLC, shall be indemnified and held harmless by the LLC to the
fullest extent legally permissible against all expenses, liabilities and
losses (including attorneys' fees and disbursements), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
(b) To the extent that a Manager, employee or agent of the LLC has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in paragraph (a) of this Section 16, or in defense of
any claim, issue or matter therein, he shall be indemnified by the LLC against
expenses (including attorneys' fees and disbursements) actually and reasonably
incurred by him in connection therewith without the necessity of any action
being taken by the LLC other than the determination, in good faith, that such
defense has been successful. In all other cases wherein indemnification is
provided by this Section 16, unless ordered by a court, indemnification shall
be made by the LLC only as authorized in the specific case upon a
determination that indemnification of the Manager, employee or agent is proper
in the circumstances because he has met the applicable standard of conduct
specified in this Section 16. Such determination shall be made (i) by the
Board of Managers by a majority vote of a quorum consisting of Managers who
were not parties to such action, suit or proceeding, or (ii) if such a quorum
is not obtainable, or even if obtainable a quorum of disinterested Managers so
directs, by independent legal counsel in a written opinion.
(c) The termination of any action, suit or proceeding by judgement,
order, settlement, conviction, or upon a plea of nolo contendere or its
---------------
equivalent, shall not, of itself, create a presumption that the Person seeking
indemnification did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the LLC, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful. Entry of a judgement by consent as part of a
settlement shall not be deemed a final adjudication of liability for
negligence or misconduct in the performance of duty, nor of any other issue or
matter.
(d) Subject to Section 16(g), expenses (including attorneys' fees and
disbursements) incurred by a Manager, employee or agent of the LLC in
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the LLC in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Managers in the
specific case upon receipt of an undertaking by or on behalf of such Manager,
employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the LLC. Expenses
(including attorneys' fees and disbursements) incurred by other employees or
agents of the LLC in defending in any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the LLC upon such
terms and conditions, if any, as the Board of Managers deems appropriate.
(e) No Manager of the LLC shall be personally liable to the LLC for
monetary damages for any breach of fiduciary duty by such person as a Manager.
Notwithstanding the foregoing sentence, a Manager shall be liable to the
extent provided by applicable law (i) for breach of the Manager's duty of
loyalty to the LLC or the Member, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law or (iii)
for any transaction from which the Manager derived an improper personal
benefit. No amendment to or repeal of this Section 16(e) shall apply to or
have any effect on the liability or alleged liability of any Manager of the
LLC for or with respect to any acts or omissions of such Manager occurring
prior to such amendment.
(f) The indemnification and advancement of expenses provided by this
--------
Section 16 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement may by entitled under any agreement,
vote of the Board of Managers or otherwise, both as to action in an official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a Manager, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
(g) Any amounts payable by the LLC in accordance with this Section 16
shall be payable solely to the extent of funds actually received by the LLC
under the Program Documents or in connection with other Permitted
Transactions.
17. Compensation. The Managers shall receive such compensation for their
------------
services as may be agreed between the Manager and the Member from time to
time.
18. Term. Pursuant to Section 18-801 of the Act, the LLC shall dissolve,
----
and its affairs shall be wound up, only upon the earliest to occur of (a) one
year and one day following the payment in full of all outstanding securities
issued by, or outstanding liabilities of, the Trust (or securities issued, or
liabilities incurred, with respect to any other Permitted Transaction), and
(b) the occurrence of the thirtieth anniversary of the date of filing of the
Certificate of Formation of the LLC.
19. Assignments. Pursuant to Section 18-702 of the Act, the Member may
-----------
sell, assign or participate any or all of its Percentage Interest at any time
without the consent of the Board of Managers, and the assignee of any such
Percentage Interest shall possess all of the rights and obligations of a
member hereunder, and the right to become a member pursuant to Section 18-704
of the Act.
20. Limited Liability. The Member shall have no liability for the
-----------------
obligations of the LLC except to the extent provided herein and in the Program
--------
Documents or any documents in connection with any other Permitted Transaction.
21. Bankruptcy of the Member. If any event of bankruptcy specified in
------------------------
Section 18-304(a) shall occur with respect the Member, then the Member shall,
notwithstanding the occurrence of such event of bankruptcy, remain a Member of
the LLC and, notwithstanding such event of bankruptcy, the LLC shall continue,
subject to the provisions of Section 18.
22. Amendments. Except as provided in Section 11(g) with respect to
----------
amendments required by law, this Agreement may be amended only in a writing
signed by the Member existing at the time of this Agreement; provided that, if
-------- ----
any securities issued by the Trust are outstanding, no such amendment shall be
effective without satisfaction of the Rating Agency Condition; provided
--------
further, that the provisions of Sections 6, 7, 19, 20, 21 and 22 hereof may be
- -------
amended only with the unanimous written consent of the Board of Managers.
23. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the undersigned Member has duly executed this
Agreement as of the 30th day of September, 1997.
FORD MOTOR CREDIT COMPANY
By:/s/
----------------------
Name:
Title:
EXECUTION
FORD CREDIT AUTO RECEIVABLES LLC
Transferor
FORD MOTOR CREDIT COMPANY
Master Servicer
and
THE CHASE MANHATTAN BANK
Trustee
Ford Credit Auto Loan Master Trust II
POOLING AND SERVICING AGREEMENT
Dated as of September 30, 1997
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitional Provisions . . . . . . . . . . . . . . 24
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables . . . . . . . . . . . . . . . . 25
SECTION 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . . . 27
SECTION 2.03. Representations and Warranties of the
Transferor Relating to the Transferor
and the Agreement . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.04. Representations and Warranties of the
Transferor Relating to the Receivables . . . . . . . . . . 31
SECTION 2.05. Addition of Accounts . . . . . . . . . . . . . . . . . . . 33
SECTION 2.06. Covenants of the Transferor . . . . . . . . . . . . . . . 36
SECTION 2.07. Removal of Eligible Accounts . . . . . . . . . . . . . . . 39
SECTION 2.08. Removal of Ineligible Accounts . . . . . . . . . . . . . . 41
SECTION 2.09. Transfer of Ineligible Receivables . . . . . . . . . . . . 42
ARTICLE III
Administration and Servicing
of Receivables
SECTION 3.01. Acceptance of Appointment and Other
Matters Relating to the Master Servicer . . . . . . . . . 42
SECTION 3.02. Servicing Compensation . . . . . . . . . . . . . . . . . . 44
SECTION 3.03. Representations, Warranties and Covenants
of the Master Servicer . . . . . . . . . . . . . . . . . . 45
SECTION 3.04. Reports and Records for the Trustee . . . . . . . . . . . 48
SECTION 3.05. Annual Master Servicer's Certificate . . . . . . . . . . . 48
SECTION 3.06. Annual Independent Public Accountants'
Servicing Report . . . . . . . . . . . . . . . . . . . . . 49
SECTION 3.07. Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 3.08. Notices to Ford Credit . . . . . . . . . . . . . . . . . . 50
SECTION 3.09. Adjustments . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE IV
Rights of Certificateholders and
Allocation and Application of Collections
SECTION 4.01. Rights of Certificateholders . . . . . . . . . . . . . . . 50
SECTION 4.02. Establishment of the Collection Account . . . . . . . . . 51
SECTION 4.03. Allocations and Applications of
Collections and Other Funds . . . . . . . . . . . . . . . 52
SECTION 4.04. Unallocated Principal Collections . . . . . . . . . . . . 54
ARTICLE V
Distributions and Reports to
Certificateholders
SECTION 5.01. Distributions and Reports to Certificateholders . . . . . 54
ARTICLE VI
The Certificates
SECTION 6.01. The Certificates . . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.02. Authentication of Certificates . . . . . . . . . . . . . . 55
SECTION 6.03. New Issuances . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.04. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 6.05. Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 6.06. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 61
SECTION 6.07. Access to List of Registered
Certificateholders' Names and Addresses . . . . . . . . . 62
SECTION 6.08. Book-Entry Certificates . . . . . . . . . . . . . . . . . 62
SECTION 6.09. Notices to Depository . . . . . . . . . . . . . . . . . . 63
SECTION 6.10. Definitive Certificates . . . . . . . . . . . . . . . . . 63
SECTION 6.11. Global Certificate; Exchange Date . . . . . . . . . . . . 64
SECTION 6.12. Meetings of Certificateholders . . . . . . . . . . . . . . 66
ARTICLE VII
Other Matters Relating
to the Transferor
SECTION 7.01. Liability of the Transferor . . . . . . . . . . . . . . . 68
SECTION 7.02. Limitation on Liability of the Transferor . . . . . . . . 68
SECTION 7.03. Transferor Indemnification of the Trust
and the Trustee . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VIII
Other Matters Relating
to the Master Servicer
SECTION 8.01. Liability of the Master Servicer . . . . . . . . . . . . . 70
SECTION 8.02. Merger or Consolidation of, or Assumption of,
the Obligations of the Master Servicer . . . . . . . . . . 70
SECTION 8.03. Limitation on Liability of the Master
Servicer and Others . . . . . . . . . . . . . . . . . . . 70
SECTION 8.04. Master Servicer Indemnification of the
Trust and the Trustee . . . . . . . . . . . . . . . . . . 71
SECTION 8.05. The Master Servicer Not to Resign . . . . . . . . . . . . 71
SECTION 8.06. Access to Certain Documentation and
Information Regarding the Receivables . . . . . . . . . . 72
SECTION 8.07. Delegation of Duties . . . . . . . . . . . . . . . . . . . 72
SECTION 8.08. Examination of Records . . . . . . . . . . . . . . . . . . 72
SECTION 8.09. Additional Expenses . . . . . . . . . . . . . . . . . . . 72
ARTICLE IX
Early Amortization Events
SECTION 9.01. Early Amortization Events . . . . . . . . . . . . . . . . 73
ARTICLE X
Servicing Defaults
SECTION 10.01. Servicing Defaults . . . . . . . . . . . . . . . . . . . 75
SECTION 10.02. Trustee to Act; Appointment of Successor . . . . . . . . 78
ARTICLE XI
The Trustee
SECTION 11.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.02. Certain Matters Affecting the Trustee . . . . . . . . . . 82
SECTION 11.03. Trustee Not Liable for Recitals in
Certificates . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 11.04. Trustee May Own Certificates . . . . . . . . . . . . . . 83
SECTION 11.05. The Master Servicer to Pay Trustee's Fees
and Expenses . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 11.06. Eligibility Requirements for Trustee . . . . . . . . . . 83
SECTION 11.07. Resignation or Removal of Trustee . . . . . . . . . . . . 84
SECTION 11.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . 84
SECTION 11.09. Merger or Consolidation of Trustee . . . . . . . . . . . 85
SECTION 11.10. Appointment of Co-Trustee or Separate
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.11. Tax Returns . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11.12. Trustee May Enforce Claims Without
Possession of Certificates . . . . . . . . . . . . . . . 87
SECTION 11.13. Suits for Enforcement . . . . . . . . . . . . . . . . . . 87
SECTION 11.14. Representations and Warranties of Trustee . . . . . . . . 87
SECTION 11.15. Maintenance of Office or Agency . . . . . . . . . . . . . 88
ARTICLE XII
Termination
SECTION 12.01. Termination of Trust . . . . . . . . . . . . . . . . . . 88
SECTION 12.02. Final Distribution . . . . . . . . . . . . . . . . . . . 88
SECTION 12.03. Transferor's Termination Rights . . . . . . . . . . . . . 90
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 13.02. Protection of Right, Title and Interest to Trust . . . . 92
SECTION 13.03. Limitation on Rights of Certificateholders . . . . . . . 93
SECTION 13.04. No Petition . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 13.05. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 13.06. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 13.07. Severability of Provisions . . . . . . . . . . . . . . . 95
SECTION 13.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 13.09. Certificates Nonassessable and Fully Paid . . . . . . . . 95
SECTION 13.10. Further Assurances . . . . . . . . . . . . . . . . . . . 95
SECTION 13.11. No Waiver; Cumulative Remedies . . . . . . . . . . . . . 96
SECTION 13.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 13.13. Third-Party Beneficiaries . . . . . . . . . . . . . . . . 96
SECTION 13.14. Actions by Certificateholders . . . . . . . . . . . . . . 96
SECTION 13.15. Rule 144A Information . . . . . . . . . . . . . . . . . . 96
SECTION 13.16. Action by Trustee . . . . . . . . . . . . . . . . . . . . 96
SECTION 13.17. Merger and Integration . . . . . . . . . . . . . . . . . 97
SECTION 13.18. Headings . . . . . . . . . . . . . . . . . . . . . . . . 97
EXHIBITS
Exhibit A Form of FCAR Certificate
Exhibit B Form of Assignment of
Receivables in Additional
Accounts
Exhibit C Form of Annual Master
Servicer's Certificate
Exhibit D Forms of Legends
Exhibit E Form of Letter of
Representations
Exhibit F Forms of Certificates
for European
Transfer
Exhibit G Forms of Opinions of
Counsel
Exhibit H Form of Reassignment
of Receivables in
Removal Accounts
Exhibit I Form of Receivables
Purchase Agreement
POOLING AND SERVICING AGREEMENT dated as of September 30, 1997, by
and among FORD CREDIT AUTO RECEIVABLES LLC, a Delaware limited liability
company, as Transferor, FORD MOTOR CREDIT COMPANY, a Delaware corporation, as
Master Servicer, and THE CHASE MANHATTAN BANK, a New York corporation, as
Trustee.
In consideration of the mutual agreements herein contained, each
party agrees as follows for the benefit of the other parties and for the
benefit of the Certificateholders and the other Beneficiaries to the extent
provided herein:
ARTICLE I
Definitions
-----------
SECTION 1.01. Definitions. Whenever used in this Agreement, the
-----------
following words and phrases shall have the following meanings:
"Account" shall mean each Initial Account and, from and after the
-------
related Addition Date, each Additional Account. The term "Account" shall not
apply to any Removal Accounts reassigned or assigned to the Transferor or the
Master Servicer in accordance with the terms of this Agreement.
"Act" shall mean the Securities Act of 1933, as amended.
---
"Addition Date" shall mean, with respect to Additional Accounts,
--------------
the date from and after which such Additional Accounts are to be included as
Accounts pursuant to Section 2.05(c).
"Addition Notice" shall have the meaning specified in Section
----------------
2.05(c).
"Additional Accounts" shall mean each individual wholesale
--------------------
financing account established with a Dealer pursuant to a Floorplan Financing
Agreement, which account is designated pursuant to Section 2.05(a),
2.05(b)(i) or 2.05(b)(ii) to be included as an Account and is identified in
the computer file or microfiche or written list delivered to the Trustee by
the Transferor pursuant to Sections 2.01 and 2.05(d).
"Additional Cut-Off Date" shall mean, with respect to Additional
------------------------
Accounts, the day specified in the Addition Notice delivered with respect to
such Additional Accounts pursuant to Section 2.05(c).
"Adjustment Payment" shall have the meaning specified in Section
-------------------
3.09.
"Affiliate" shall mean, with respect to any specified Person, any
---------
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any 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.
"Agent" shall mean, with respect to any Series, the Person so
-----
designated in the related Supplement.
"Agreement" shall mean this Pooling and Servicing Agreement, as the
---------
same may from time to time be amended, modified or otherwise supplemented,
including, with respect to any Series or Class, the related Supplement.
"Aggregate Available Subordinated Amount" shall mean the sum of the
---------------------------------------
Available Subordinated Amount and the SWAP Available Subordinated Amount.
"Allocable Miscellaneous Payments" shall mean, with respect to any
---------------------------------
Series and for any Collection Period, the product of the amount of
Miscellaneous Payments for such Collection Period and a fraction, the
numerator of which is the Invested Amount for such Series immediately prior
to the following Distribution Date and the denominator of which is the Trust
Invested Amount as of such time.
"Applicants" shall have the meaning specified in Section 6.07.
----------
"Assignment" shall have the meaning specified in Section 2.05(d).
----------
"Authorized Newspaper" shall mean any newspaper or newspapers of
---------------------
general circulation in New York City customarily published on each Business
Day, whether or not published on Saturdays, Sundays and holidays.
"Automatic Additional Accounts" shall have the meaning specified in
-----------------------------
Section 2.05(b)(ii).
"Available Subordinated Amount" shall mean, with respect to any
------------------------------
Series at any time of determination, an amount equal to the available
subordinated amount specified in the related Supplement at such time.
"Bearer Certificates" shall have the meaning specified in Section
-------------------
6.01.
"Beneficiary" shall mean any of the holders of the Investor
-----------
Certificates and any Enhancement Provider.
"Benefit Plan" shall have the meaning specified in Section 6.04(c).
------------
"Book-Entry Certificates" shall mean beneficial interests in the
------------------------
Investor Certificates, ownership and transfers of which shall be made through
book entries by a Depository as described in Section 6.08.
"Business Day" shall mean any day other than (a) a Saturday or a
------------
Sunday or (b) another day on which banking institutions or trust companies in
the State of Michigan or the State of New York are authorized or obligated by
law, executive order or governmental decree to be closed.
"Cedel" shall mean Cedel Bank, societe anonyme.
-----
"Certificate" shall mean any of the Investor Certificates or the
-----------
Transferor's Certificates.
"Certificate Owner" shall mean, with respect to a Book-Entry
------------------
Certificate, any person who is a beneficial owner of a Book-Entry
Certificate.
"Certificate Rate" shall mean, with respect to any Series or Class,
----------------
the certificate rate specified therefor in the related Supplement.
"Certificate Register" shall have the meaning specified in Section
---------------------
6.04.
"Certificateholder" or "Holder" shall mean an Investor
----------------- ------
Certificateholder or a Person in whose name any one of the Transferor's
Certificates is registered.
"Certificateholders' Interest" shall have the meaning specified in
----------------------------
Section 4.01.
"Class" shall mean, with respect to any Series, any one of the
-----
classes of Investor Certificates of that Series.
"Closing Date" shall mean, with respect to any Series, the Closing
------------
Date specified in the related Supplement.
"Collection Account" shall have the meaning specified in Section
-------------------
4.02.
"Collection Period" shall mean, with respect to any Distribution
------------------
Date, the calendar month preceding the month in which such Distribution Date
occurs.
"Collections" shall mean, without duplication, all payments by or
-----------
on behalf of Dealers received by the Master Servicer in respect of the
Receivables, in the form of cash, checks, wire transfers or any other form of
payment.
"Common Depositary" shall mean the Person specified in the
-------------------
applicable Supplement, as common depositary for the respective accounts of
any Foreign Clearing Agencies.
"Corporate Trust Office" shall mean the principal office of the
----------------------
Trustee in the City of New York, at which at any particular time its
corporate trust business shall be administered, which office at the date of
the execution of this Agreement is located at 450 West 33rd Street, 15th
Floor, New York, New York, Attention: Corporate Trust Department.
"Coupon" shall have the meaning specified in Section 6.01.
------
"Cut-Off Date" shall mean September 30, 1997.
------------
"Date of Processing" shall mean, with respect to any transaction,
-------------------
the date on which such transaction is first recorded on the Master Servicer's
computer file of accounts (without regard to the effective date of such
recordation).
"Dealer" shall mean a Person engaged generally in the business of
------
purchasing Vehicles from a manufacturer or distributor thereof and holding
such Vehicles for sale or lease in the ordinary course of business.
"Dealer Overconcentration" on any Determination Date shall mean,
-------------------------
with respect to any Dealer or group of affiliated Dealers (as determined in
accordance with the Master Servicer's standard procedures for identifying and
tracking Accounts of affiliated Dealers), the excess of (a) the aggregate
Principal Receivables included in all Accounts of such Dealer or group of
affiliated Dealers, as applicable, as of the last day of the immediately
preceding Collection Period over (b) 2% of the Pool Balance on the last day of
such immediately preceding Collection Period (or such higher percentage of the
Pool Balance (in no event to exceed 4%) as may be approved in writing from
time to time by each Rating Agency subject to such conditions and limitations
as each such Rating Agency may require).
"Defaulted Amount" on any Determination Date shall mean an amount
-----------------
(which shall not be less than zero) equal to (a) the sum for all the Accounts
of the amount of Principal Receivables which became Defaulted Receivables
during the immediately preceding Collection Period minus (b) the full amount
of any such Defaulted Receivables which are subject to reassignment or
assignment to the Transferor or the Master Servicer in accordance with the
terms of this Agreement; provided, however, that, if an Insolvency Event
-------- -------
occurs with respect to the Transferor, the amounts of such Defaulted
Receivables which are subject to reassignment to the Transferor shall not be
included in clause (b) and, if an Insolvency Event occurs with respect to the
Master Servicer, the amount of such Defaulted Receivables which are subject
to assignment to the Master Servicer shall not be included in clause (b).
"Defaulted Receivables" on any Determination Date shall mean (a)
----------------------
all Receivables which are charged off as uncollectible in respect of the
immediately preceding Collection Period in accordance with the Master
Servicer's customary and usual servicing procedures for servicing Dealer
floorplan receivables comparable to the Receivables which have not been sold
to third parties and (b) all Receivables which were Eligible Receivables when
transferred to the Trust on the initial Closing Date or the related Addition
Date or on their respective Transfer Date, which arose in an Account that
thereafter became an Ineligible Account and which remained outstanding for
any six consecutive Determination Dates (inclusive of the Determination Date
on which such determination is being made) after such Account became an
Ineligible Account.
"Definitive Certificates" shall have the meaning specified in
-----------------------
Section 6.08.
"Definitive Euro-Certificates" shall have the meaning specified in
----------------------------
Section 6.11.
"Deposit Date" shall mean each day on which the Master Servicer
------------
deposits Collections in the Collection Account pursuant to Section 4.03
hereof.
"Depository" shall mean The Depository Trust Company, as initial
----------
Depository, the nominee of which is CEDE & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
"Depository Agreement" shall mean, with respect to any Series or
---------------------
Class, the agreement among the Transferor, the Trustee and the initial
Depository, dated as of the related Closing Date substantially in the form of
Exhibit E.
"Depository Participant" shall mean a broker, dealer, bank or other
----------------------
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date" with respect to any Distribution Date shall
-------------------
mean the day that is two Business Days prior to such Distribution Date.
"Distribution Date" shall mean the fifteenth day of each month or,
-----------------
if such day is not a Business Day, the next succeeding Business Day.
"Distribution Date Statement" shall mean, with respect to any
-----------------------------
Series, a report prepared by the Master Servicer on each Determination Date
for the immediately preceding Collection Period in substantially the form set
forth in the related Supplement.
"Due Date" shall mean the close of business on the last Business
---------
Day of each month.
"Early Amortization Event" shall have the meaning specified in
-------------------------
Section 9.01 and, with respect to any Series, shall also mean any Early
Amortization Event specified in the related Supplement.
"Early Amortization Period" shall mean, with respect to any Series,
-------------------------
the period beginning at the close of business on the Business Day immediately
preceding the day on which the Early Amortization Event is deemed to have
occurred, and in each case ending upon the earlier to occur of (a) the
payment in full to the Investor Certificateholders of such Series of the
Invested Amount with respect to such Series, (b) the Termination Date with
respect to such Series and (c) if such Early Amortization Period has resulted
from the occurrence of an Early Amortization Event described in Section
9.01(a), the end of the first Collection Period during which an Early
Amortization Event would no longer be deemed to exist pursuant to Section
9.01(a), so long as no other Early Amortization Event with respect to such
Series shall have occurred and the scheduled termination of the Revolving
Period with respect to such Series shall not have occurred.
"Eligible Account" shall mean each individual wholesale financing
-----------------
account established with a Dealer pursuant to a Floorplan Financing Agreement
in the ordinary course of business, which, as of the date of determination
with respect thereto: (a) is in favor of a Dealer which is an Eligible
Dealer, (b) is in existence and maintained and serviced by or on behalf of
the Seller or such other Originator of such Account and (c) is an Account in
respect of which no amounts have been charged off as uncollectible or are
classified as past due or delinquent.
"Eligible Deposit Account" shall mean either (a) a segregated
--------------------------
account with an Eligible Institution or (b) a segregated trust account with
the corporate trust department of a depository institution or trust company
organized under the laws of the United States of America or any one of the
states thereof, including the District of Columbia (or any domestic branch of
a foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of such
depository institution or trust company shall have a credit rating from each
Rating Agency in one of its generic rating categories which signifies
investment grade.
"Eligible Dealer" shall mean a Dealer, as of the date of
----------------
determination thereof, (a) which is located in the United States of America
(including its territories and possessions), or such other jurisdiction as
shall have been specified by the Seller and as to which the Rating Agency
Condition shall have been satisfied, (b) which has not been identified by the
Master Servicer as being the subject of any voluntary or involuntary
bankruptcy proceeding or voluntary or involuntary liquidation, (c) in which
Ford or any Affiliate thereof does not have an equity investment and (d)
which has not been classified by the Master Servicer as in dealer "status"
(or comparable classification) under the applicable Floorplan Financing
Guidelines by reason of nonpayment or other circumstances evidencing a
general deterioration of financial condition.
"Eligible Institution" shall mean (a) the corporate trust
---------------------
department of the Trustee or (b) a depository institution or trust company
organized under the laws of the United States of America or any one of the
states thereof, or the District of Columbia (or any domestic branch of a
foreign bank), which at all times (i) has either (A) a long-term unsecured
debt rating of A2 or better by Moody's and of AAA or better by Standard &
Poor's or such other rating that is acceptable to each Rating Agency, as
evidenced by a letter from such Rating Agency to the Trustee or (B) a
certificate of deposit rating of P-1 by Moody's and A-1+ by Standard & Poor's
or such other rating that is acceptable to each Rating Agency, as evidenced
by a letter from such Rating Agency to the Trustee and (ii) whose deposits
are insured by the FDIC. If so qualified, the Trustee may be considered an
Eligible Institution for the purposes of clause (b) this definition.
"Eligible Investments" shall mean book-entry securities, negotiable
--------------------
instruments or securities represented by Instruments in bearer or registered
form having original or remaining maturities of 30 days or less, but in no
event occurring later than the Distribution Date next succeeding the
Trustee's acquisition thereof, which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws
of the United States of America or any state thereof (or any domestic
branch of a foreign bank) and subject to supervision and examination by
Federal or state banking or depository institution authorities;
provided, however, that at the time of the Trust's investment or
-------- -------
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a person or entity other than
such depository institution or trust company) thereof shall have a
credit rating from each of the Rating Agencies in the highest generic
investment category granted thereby;
(c) commercial paper having, at the time of the Trust's investment
or contractual commitment to invest therein, a rating of at least A-1+
by Standard Poor's (or A-1 in the case of any amount on deposit in the
Collection Account up to an amount equal to 20% of the aggregate
Invested Amount at the time of the Trust's investment or contractual
commitment to so invest) and P-1 by Moody's;
(d) investments in money market funds having a rating from each of
the Rating Agencies in the highest generic investment category granted
thereby or otherwise approved in writing thereby;
(e) demand deposits, time deposits and certificates of deposit
which are fully insured by the FDIC and having at the time of the
Trust's investment or contractual commitment to invest therein a credit
rating from each of the Rating Agencies in the highest generic
investment category granted thereby;
(f) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(g) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with (i) a depository institution
or trust company (acting as principal) described in clause (b) or (ii) a
depository institution or trust company the deposits of which are
insured by FDIC and which at the time of the Trust's investment or
contractual commitment to invest in such repurchase obligations, the
commercial paper or other short-term unsecured debt obligations of such
depository institution shall have a credit rating from each of the
Rating Agencies in the highest generic investment category granted
thereby; and
(h) any other investment as may be permitted by each Rating Agency
without reducing or withdrawing the rating of the Certificates of any
Series.
"Eligible Receivable" shall mean each Receivable:
-------------------
(a) which was originated or acquired by the Seller in the ordinary
course of business;
(b) which arose under an Eligible Account and is payable in
either United States dollars or such other currency as to which the
Rating Agency Condition shall have been satisfied;
(c) which is owned by the Seller at the time of sale by the Seller
to the Transferor;
(d) which represents the obligation of a Dealer to repay an
advance made to such Dealer to finance the acquisition of Vehicles;
(e) which at the time of creation and, except at the Closing Date
for the initial Series in the case of Receivables in respect of which
the related financed Vehicle has been sold, at the time of transfer to
the Trust is secured by, inter alia, a first priority perfected security
interest in the Vehicle relating thereto;
(f) which was created in compliance in all respects with all
Requirements of Law applicable thereto and pursuant to a Floorplan
Financing Agreement which complies in all respects with all Requirements
of Law applicable to any party thereto;
(g) with respect to which all consents, licenses, approvals or
authorizations of, or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given by the
related Originator, the related Manufacturer, the Seller, or the
Transferor in connection with the creation of such Receivable or the
transfer thereof to the Trust or the execution, delivery and performance
of the related Floorplan Financing Agreement pursuant to which such
Receivable was created, have been duly obtained, effected or given and
are in full force and effect;
(h) as to which at all times following the transfer of such
Receivable to the Trust, the Trust will have good and marketable title
thereto free and clear of all Liens arising prior to the transfer or
arising at any time other than Liens permitted by this Agreement;
(i) which has been the subject of a valid transfer and assignment
from the Transferor to the Trust of all the Transferor's right, title
and interest therein (including any proceeds thereof);
(j) which will at all times be the legal, valid, binding and
assignable payment obligation of the Dealer relating thereto,
enforceable against such Dealer in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in
effect, affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity);
(k) which at the time of transfer to the Trust is not subject to
any right of rescission, setoff, counterclaim or any other defense
(including defenses arising out of violations of usury laws) of the
Dealer;
(l) as to which, at the time of transfer of such Receivable to the
Trust, each of the related Manufacturer, the related Originator, the
Seller and the Transferor have satisfied all their respective
obligations with respect to such Receivable required to be satisfied at
such time;
(m) as to which, at the time of transfer of such Receivable to the
Trust, none of the related Manufacturer, the related Originator, the
Seller and the Transferor has taken or failed to take any action which
would impair the rights of the Trust or the Certificateholders therein;
(n) which constitutes "chattel paper" as defined in Article 9 of
the UCC as then in effect in the State of Michigan;
(o) with respect to which the representations set forth in
Sections 2.04(a)(i) and (ii) were correct as of the Transfer Date with
respect thereto;
(p) that was acquired by the Seller from PRIMUS and as to which at
the time of transfer to the Trust and at all times following such
transfer the Manufacturer of the related financed Vehicle (other than
Ford) has not filed a petition commencing a voluntary case under any
chapter of the Federal bankruptcy laws; or filed a petition or answer or
consent seeking reorganization, arrangement, adjustment, or composition
under any other similar applicable Federal law, or consented to the
filing of any such petition, answer, or consent; or appointed, or
consented to the appointment of, a custodian, receiver, liquidator,
trustee, assignee, sequestrator or other similar official in bankruptcy
or insolvency of it or of any substantial part of its property; or made
an assignment for the benefit of creditors, or admitted in writing its
inability to pay its debts generally as they become due; and
(q) that was acquired by the Seller from PRIMUS and as to which at
the time of the transfer to the Trust and at all times following such
transfer, none of the following events have occurred; (i) an order for
relief against the related Manufacturer (other than Ford) shall have
been entered by a court having jurisdiction in the premises under any
chapter of the Federal bankruptcy laws, and such order shall have
continued undischarged or unstayed for a period of 60 days; (ii) a
decree or order by a court having jurisdiction in the premises shall
have been entered approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of such
Manufacturer (other than Ford) under any other similar applicable
Federal law, and such decree or order shall have continued undischarged
or unstayed for period of 120 days; or (iii) a decree or order of a
court having jurisdiction in the premises for the appointment of a
custodian, receiver, liquidator, trustee, assignee, sequestrator, or
other similar official in bankruptcy or insolvency of such Manufacturer
(other than Ford) or of any substantial part of its property, or for the
winding up or liquidation of its affairs, shall have been entered, and
such decree or order shall have remained in force undischarged or
unstayed for a period of 120 days.
"Eligible Master Servicer" shall mean the Trustee or an entity
-------------------------
which, at the time of its appointment as Master Servicer, (a) is legally
qualified and has the capacity to service the Accounts, (b) in the sole
determination of the Trustee, which determination shall be conclusive and
binding, has demonstrated the ability to professionally and competently
service a portfolio of similar accounts in accordance with high standards of
skill and care and (c) is qualified to use the software that is then
currently being used to service the Accounts or obtains the right to use or
has its own software which is adequate to perform its duties under this
Agreement.
"Enhancement" shall mean the rights and benefits provided to the
-----------
Investor Certificateholders of any Series or Class pursuant to any letter of
credit, surety bond, cash collateral account, spread account, guaranteed rate
agreement, maturity liquidity facility, tax protection agreement, interest
rate swap agreement or other similar arrangement. The subordination of any
Series or Class to any other Series or Class or of the Transferor's Interest
to any Series or Class shall be deemed to be an Enhancement.
"Enhancement Agreement" shall mean any agreement, instrument or
----------------------
document governing the terms of any Series Enhancement or pursuant to which
any Series Enhancement is issued or outstanding.
"Enhancement Provider" shall mean the Person providing any
---------------------
Enhancement, other than any Certificateholders (including any holders of the
Transferor's Certificates) the Certificates of which are subordinated to any
Series or Class.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
"Euroclear Operator" shall mean Morgan Guaranty Trust Company of
-------------------
New York, Brussels office, as operator of the Euroclear System.
"Exchange Date" shall mean any date that is after the Series
--------------
Issuance Date, in the case of Definitive EuroCertificates in registered form,
or upon presentation of certification of non-United States beneficial
ownership (as described in Section 6.11), in the case of Definitive
EuroCertificates in bearer form.
"FCAR" shall mean Ford Credit Auto Receivables LLC, a Delaware
----
limited liability company, and its successors in interest to the extent
permitted hereunder.
"FCAR Certificate" shall mean the certificate executed by the
-----------------
Transferor and authenticated by the Trustee, substantially in the form of
Exhibit A.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
----
successor entity thereto.
"Final Maturity Date" shall have the meaning specified in Section
-------------------
12.01.
"Fleet Receivables" shall mean all amounts shown in special
------------------
accounts on the Master Servicer's records as amounts payable by any Dealer
designated by the Seller as a "fleet dealer" in respect of advances made by
the Seller to such Dealer or advances made by Ford or other Originator of
such receivable to such Dealer and purchased by the Seller.
"Floorplan Financing Agreement" shall mean, collectively, the group
-----------------------------
of related agreements between and among the Seller (either as the Originator
of a wholesale financing account or by virtue of assignment of such account
to the Seller by the applicable Originator), the Dealer with respect thereto
and, in the case of new Vehicles, a Vehicle manufacturer or distributor,
pursuant to which (a) the Seller or other applicable Originator agrees to
extend credit to such Dealer to finance used Vehicles and new Vehicles
manufactured by such manufacturer or distributed by such distributor, (b)
such Dealer grants to the applicable Originator a security interest in the
specific Vehicles financed by such Originator, certain other Vehicles,
certain other collateral and the proceeds thereof, (c) such Dealer agrees to
repay advances made by the applicable Originator at the time of Vehicle sale
or lease but in any event such Dealer agrees to repay, in the case of a new
Vehicle as to which Ford Credit is the Originator of the related Receivable,
not less than 90% of each such advance upon the sale or lease of the Vehicle
to which such advance relates and the remaining balance of such advance not
later than the first day of the second calendar month following the month in
which such sale or lease occurs, and (d) the obligations of such Dealer to
repay such advances is evidenced by one or more promissory notes of such
Dealer.
"Floorplan Financing Guidelines" shall mean the written policies
------------------------------
and procedures of the Originator of an Account, as such policies and
procedures may be amended from time to time, (a) relating to the operation of
a floorplan financing business, including the written policies and procedures
for determining the interest rate charged to Dealers, the other terms and
conditions relating to the applicable Originator's wholesale financing
accounts, the creditworthiness of Dealers and the extension of credit to
Dealers, and (b) relating to the maintenance of accounts and collection of
receivables.
"Ford" shall mean Ford Motor Company, a Delaware corporation, and
----
its successors in interest.
"Ford Credit" shall mean Ford Motor Credit Company, a Delaware
------------
corporation, and its successors in interest.
"Foreign Clearing Agency" shall mean Cedel and the Euroclear
------------------------
Operator.
"Global Certificate" shall have the meaning specified in Section
-------------------
6.11.
"Governmental Authority" shall mean the United States of America,
----------------------
or any other jurisdiction applicable to the Transferor, Seller or other
Originator of the Receivables as specified in the related Supplement, any
state, possession, territory or other political subdivision thereof, and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Incremental Default Amount" on any Determination Date shall mean
--------------------------
(a) the sum of (i) all the Ineligible Receivables which became Defaulted
Receivables during the immediately preceding Collection Period, (ii) the
Overconcentration Default Amount on such Determination Date and (iii) the
Installment Balance Default Amount on such Determination Date minus (b) the
full amount of any such Defaulted Receivables which are subject to a
reassignment or assignment to the Transferor or the Master Servicer in
accordance with the terms of this Agreement (but not less than zero);
provided, however, that, if an Insolvency Event occurs with respect to the
- -------- -------
Transferor, the amount of such Defaulted Receivables which are subject to
reassignment to the Transferor shall not be so subtracted and, if an
Insolvency Event occurs with respect to the Master Servicer, the amount of
such Defaulted Receivables which are subject to assignment to the Master
Servicer shall not be so subtracted; provided, further, that the Incremental
-------- -------
Default Amount for any Determination Date shall not exceed the sum of the
Overconcentration Amount, the Installment Balance Amount and the Ineligible
Amount, in each case, on such Determination Date.
"Ineligible Account" shall mean an Account that at the time of
-------------------
determination is not an Eligible Account.
"Ineligible Amount" on any Determination Date shall mean the amount
-----------------
of Ineligible Receivables included in the Trust on such Determination Date
pursuant to Section 2.09.
"Ineligible Receivable" shall mean any Receivable that is not an
----------------------
Eligible Receivable.
"Initial Account" shall mean each individual wholesale financing
---------------
account established with a Dealer pursuant to a Floorplan Financing Agreement
which is identified in the computer file or microfiche or written list
delivered to the Trustee on the first Closing Date by the Transferor pursuant
to Section 2.01.
"Initial Invested Amount" shall mean, with respect to any Series
------------------------
and for any date, an amount equal to the initial invested amount specified in
the related Supplement. The Initial Invested Amount for any Series may be
increased or decreased from time to time as specified in the related
Supplement.
"Insolvency Event" shall mean any event specified in Section
-----------------
9.01(b) or 9.01(c).
"Installment Balance" with respect to any Dealer shall mean the
--------------------
balance outstanding after the initial payment by such Dealer on any
Receivable and not immediately required to be remitted pursuant to the
related Floorplan Financing Agreement and Floorplan Financing Guidelines of
the Seller following the date of sale or lease of the related Vehicle.
"Installment Balance Amount" shall mean, on any Determination Date,
--------------------------
the aggregate amount of Installment Balances on such Determination Date in
respect of which the Seller has not received an offsetting payment from the
related Dealers.
"Installment Balance Default Amount" on any Determination Date
------------------------------------
shall mean the sum for all Installment Balances during the immediately
preceding Collection Period of the amount of Principal Receivables contained
in such Installment Balances which became Defaulted Receivables during such
Collection Period.
"Insurance Proceeds" with respect to an Account shall mean any
-------------------
amounts received by the Master Servicer pursuant to any policy of insurance
which is required to be paid to the applicable Originator pursuant to a
Floorplan Financing Agreement.
"Internal Revenue Code" shall mean the Internal Revenue Code of
---------------------
1986, as amended.
"Invested Amount" shall mean, with respect to any Series and for
---------------
any date, an amount equal to the invested amount specified in the related
Supplement.
"Investment Company Act" shall mean the Investment Company Act of
-----------------------
1940, as amended.
"Investor Certificateholder" shall mean the Person in whose name a
--------------------------
Registered Certificate is registered in the Certificate Register or the
bearer of any Bearer Certificate (or the Global Certificate, as the case may
be) or Coupon.
"Investor Certificates" shall mean any one of the certificates
----------------------
(including the Bearer Certificates, the Registered Certificates or any Global
Certificate) executed by the Transferor and authenticated by or on behalf of
the Trustee, substantially in the form attached to the related Supplement,
other than the Transferor's Certificates.
"Investors' Servicing Fee" shall mean the portion of the Servicing
-------------------------
Fee allocable to the Investor Certificateholders pursuant to the terms of the
Supplements.
"Lien" shall mean any mortgage, deed of trust, pledge,
----
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory
or other), preference, participation interest, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement and any
financing lease having substantially the same economic effect as any of the
foregoing.
"Manager" shall mean the lead manager, manager or co-manager or
-------
person performing a similar function with respect to an offering of
Definitive Euro-Certificates.
"Manufacturer" shall mean, with respect to any Receivable, the
------------
Vehicle manufacturer or distributor that entered into the related Floorplan
Financing Agreement.
"Manufacturer Overconcentration" on any Determination Date shall
------------------------------
mean the excess, if any, of (x) the aggregate Principal Receivables included
in the Pool Balance on the last day of the Collection Period immediately
preceding such Determination Date that were acquired by the Seller from all
other Originators and that relate to a particular Manufacturer (other than
Ford) over (y) 30% of the aggregate Principal Receivables on the last day of
such Collection Period that were acquired by the Seller from all other
Originators.
"Master Servicer" shall mean, initially, Ford Credit, in its
----------------
capacity as Master Servicer under this Agreement, and after any Servicing
Transfer, the Successor Master Servicer.
"Miscellaneous Payments" shall mean, with respect to any Collection
----------------------
Period, the sum of (a) Adjustment Payments and Transfer Deposit Amounts on
deposit in the Collection Account on the related Distribution Date and (b)
Unallocated Principal Collections available to be treated as Miscellaneous
Payments pursuant to Section 4.04 on such Distribution Date.
"Monthly Servicing Fee" shall mean, with respect to any Series, the
---------------------
amount specified therefor in the related Supplement.
"Moody's" shall mean Moody's Investors Service, Inc., or its
-------
successor.
"Non-Principal Collections" shall mean Collections under the
--------------------------
Receivables other than Principal Collections, provided that all Recoveries
shall be Non-Principal Collections.
"Non-Principal Receivables" with respect to any Account shall mean
--------------------------
all amounts billed to the related Dealer in respect of interest and all other
non-principal charges, including certain service fees and handling fees.
"Notice Date" shall have the meaning specified in Section 2.05(c).
-----------
"Officers' Certificate" shall mean (i) with respect to any
-----------------------
corporation, unless otherwise specified in this Agreement, a certificate
signed by (a) the Chairman of the Board, Vice Chairman of the Board,
President or any Vice President and (b) a Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary of such corporation and (ii) with respect to
any limited liability company, unless otherwise specified in this Agreement,
a certificate signed by any manager of such limited liability company.
"Opinion of Counsel" shall mean a written opinion of counsel, who
------------------
may be counsel of the Transferor or Ford Credit and who shall be reasonably
acceptable to the Trustee.
"Originator" shall mean (i) the Seller, in the case of Receivables
----------
originated by it or acquired by it from Ford, (ii) PRIMUS, in the case of
Receivables acquired by the Seller from PRIMUS and (iii) subject to the prior
approval of the Rating Agencies, such other Person as shall have originated
or underwritten Receivables in the ordinary course of its business under
Floorplan Financing Guidelines substantially similar to those applied by the
Seller.
"Overconcentration Amount" on any Determination Date shall mean the
------------------------
sum of (i) the aggregate Dealer Overconcentrations on such Determination
Date, (ii) the aggregate Manufacturer Overconcentrations on such
Determination Date and (iii) the PRIMUS Overconcentration on such
Determination Date.
"Overconcentration Default Amount" on any Determination Date shall
---------------------------------
mean the sum of (i) in the event of any Dealer Overconcentration during the
immediately preceding Collection Period, the lesser of (x) the aggregate
amount of such Principal Receivables which became Defaulted Receivables
during such Collection Period and (y) the aggregate amount of such Dealer
Overconcentrations on such Determination Date, (ii) with respect to those
Principal Receivables relating to a particular Manufacturer as to which there
existed a Manufacturer Overconcentration during the immediately preceding
Collection Period, the lesser of (x) the aggregate amount of such Principal
Receivables which became Defaulted Receivables during such Collection Period
and (y) the aggregate Manufacturer Overconcentrations on such Determination
Date and (iii) in the event of any PRIMUS Overconcentration with respect to
the immediately preceding Collection Period, the lesser of (x) the aggregate
amount of Principal Receivables as to which PRIMUS is the Originator that
became Defaulted Receivables during such Collection Period and (y) the PRIMUS
Overconcentration on such Determination Date.
"Permitted Transaction" shall have the meaning specified in Section
---------------------
2.06(f).
"Person" shall mean any legal person, including any individual,
------
corporation, partnership, association, joint-stock company, trust,
unincorporated organization, governmental entity or other entity of similar
nature.
"Pool Balance" shall mean, as of the time of determination thereof,
------------
the aggregate of Principal Receivables in the Trust at such time.
"PRIMUS" shall mean PRIMUS Automotive Financial Services, Inc., a
------
Delaware corporation, and its successors in interest.
"PRIMUS Overconcentration" shall mean the excess, if any, of (x)
-------------------------
the aggregate Principal Receivables included in the Pool Balance on the last
day of the Collection Period immediately preceding such Determination Date
that were acquired by the Seller from PRIMUS over (y) 30% of the Pool Balance
on the last day of such Collection Period.
"Principal Collections" shall mean Collections of principal under
---------------------
the Receivables reduced by Collections that are reclassified as Non-Principal
Collections pursuant to Section 4.03(e) hereof.
"Principal Receivables" with respect to an Account shall mean
----------------------
amounts shown on the Master Servicer's records as Receivables (other than
such amounts which represent Non-Principal Receivables) payable by the
related Dealer.
"Principal Terms" shall mean, with respect to any Series: (a) the
---------------
name or designation; (b) the initial principal amount (or method for
calculating such amount); (c) the Certificate Rate (or method for the
determination thereof); (d) the payment date or dates and the date or dates
from which interest shall accrue; (e) the method for allocating collections
to Investor Certificateholders; (f) the designation of any Series Accounts
and the terms governing the operation of any such Series Accounts; (g) the
Monthly Servicing Fee and the Investors' Servicing Fee; (h) the issuer and
terms of any form of Enhancement with respect thereto; (i) the terms on which
the Investor Certificates of such Series may be exchanged for Investor
Certificates of another Series, repurchased by the Transferor or remarketed
to other investors; (j) the Termination Date; (k) the number of Classes of
Investor Certificates of such Series and, if more than one Class, the rights
and priorities of each such Class; (l) the extent to which the Investor
Certificates of such Series will be issuable in temporary or permanent global
form (and, in such case, the depositary for such global certificate or
certificates, the terms and conditions, if any, upon which such global
certificate may be exchanged, in whole or in part, for Definitive
Certificates, and the manner in which any interest payable on a temporary or
global certificate will be paid); (m) whether the Investor Certificates of
such Series may be issued in bearer form and any limitations imposed thereon;
(n) the priority of such Series with respect to any other Series; (o) whether
such Series will be part of a group; and (p) any other terms of such Series.
"Purchase Price" shall mean, with respect to any Receivable for any
--------------
date on which such Receivable is to be purchased pursuant to Section 3.03,
(a) an amount equal to the amount payable by the Dealer in respect thereof as
reflected in the records of the Master Servicer as of the date of purchase
plus (b) interest accrued from the end of the last Collection Period in
respect of which interest on such Receivable was billed by the Master
Servicer, at a per annum rate equal to the rate being charged to the Dealer
under the related Floorplan Financing Agreement.
"Rating Agency" shall mean, with respect to any outstanding Series
--------------
or Class, each statistical rating agency selected by the Transferor to rate
the Investor Certificates of such Series or Class, unless otherwise specified
in the Supplement.
"Rating Agency Condition" shall mean, with respect to any action,
-----------------------
that each Rating Agency shall have notified the Transferor, the Master
Servicer and the Trustee in writing that such action will not result in a
reduction or withdrawal of the rating of any outstanding Series or Class with
respect to which it is a Rating Agency, unless otherwise specified in the
Supplement.
"Reassignment" shall have the meaning specified in Section 2.07(c).
------------
"Receivables" shall mean, with respect to an Account, all amounts
-----------
shown on the Master Servicer's records as amounts payable by the related
Dealer from time to time in respect of advances made by the Seller to such
Dealer, or advances or credits made by the related Originator to such Dealer
and acquired by the Seller, in each case to finance Vehicles by such Dealer,
together with the group of writings evidencing such amounts and the security
interest created in connection therewith. Receivables which become Defaulted
Receivables shall not be shown on the Master Servicer's records as amounts
payable (and will cease to be included as Receivables) on the day on which
they become Defaulted Receivables. Receivables which the Seller is unable to
transfer to the Transferor pursuant to the Receivables Purchase Agreement or
which the Transferor is unable to transfer to the Trust as provided in
Section 2.06(b) and Receivables which arise in Designated Accounts from and
after the related Removal Commencement Date shall not be included in
calculating the amount of Receivables. Notwithstanding anything to the
contrary in this Agreement, Fleet Receivables shall not be deemed to be
Receivables for the purposes of this Agreement.
"Receivables Purchase Agreement" shall mean the agreement between
-------------------------------
the Seller and the Transferor, in substantially the form attached hereto as
Exhibit I, dated as of the date hereof, governing the terms and conditions
upon which the Transferor is acquiring the initial Receivables transferred to
the Trust on the Closing Date and all Receivables acquired thereafter, as the
same may from time to time be amended, modified or otherwise supplemented.
"Record Date" shall mean, with respect to any Distribution Date,
------------
the close of business on the day preceding such Distribution Date; provided
that with respect to any Distribution Date for a Series for which Definitive
Certificates have been issued pursuant to Section 6.10, subsequent to the
issuance of such Definitive Certificates the Record Date for such
Distribution Date shall be the last day of the month preceding the month in
which such Distribution Date occurs.
"Recoveries" on any Determination Date shall mean all amounts
----------
received, including Insurance Proceeds, by the Master Servicer during the
Collection Period immediately preceding such Determination Date with respect
to Receivables which have previously become Defaulted Receivables.
"Reference Rate" shall mean, with respect to any Receivable, the
--------------
per annum rate of interest designated from time to time by the applicable
Originator pursuant to the related Floorplan Financing Agreement.
"Registered Certificateholder" shall mean the Holder of a
------------------------------
Registered Certificate.
"Registered Certificates" shall have the meaning specified in
------------------------
Section 6.01.
"Related Documents" shall mean, collectively, the Receivables
------------------
Purchase Agreement and, with respect to any Series, any applicable
Enhancement Agreement.
"Related Security" shall mean, with respect to any Receivable and
----------------
subject to the terms of the Receivables Purchase Agreement, the security
interest granted by or on behalf of the related Dealer with respect thereto,
including a first priority perfected security interest in the related
Vehicle, certain parts inventory, equipment, fixtures, service accounts or
realty with respect to such Dealer and all guarantees of any Receivable.
"Removal Account" shall have the meaning specified in Section
----------------
2.07(b).
"Removal Commencement Date" shall have the meaning specified in
--------------------------
Section 2.07(b).
"Removal Notice" shall have the meaning specified in Section
---------------
2.07(b).
"Required Participation Amount" shall mean, at any time of
--------------------------------
determination, an amount equal to (a) the sum of the amounts for each Series
obtained by multiplying the Required Participation Percentage for such Series
by the Initial Invested Amount for such Series at such time plus (b) the
Trust Aggregate Available Subordinated Amount on the immediately preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Distribution Date following such
Determination Date).
"Required Participation Percentage" shall mean, with respect to any
---------------------------------
Series, the percentage specified therefor in the related Supplement.
"Requirements of Law" for any Person shall mean the certificate of
-------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or Governmental Authority, in each case applicable to or binding
upon such Person or to which such Person is subject, whether Federal, state
or local (including usury laws and the Federal Truth in Lending Act).
"Responsible Officer" shall mean the Chairman or any Vice Chairman
-------------------
of the Board of Directors or Trustees of the Trustee, the Chairman or Vice
Chairman of the Executive or Standing Committee of the Board of Directors or
Trustees of the Trustee, the President, any Executive Vice President, Senior
Vice President, and any other officer of the Trustee customarily performing
functions within the corporate trust department 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 that relevant subject.
"Revolving Period" shall mean with respect to any Series, the
-----------------
period specified as such in the related supplement.
"Seller" shall mean Ford Credit.
------
"Series" shall mean any series of Investor Certificates.
------
"Series Account" shall mean any deposit, trust, escrow, reserve or
--------------
similar account maintained for the benefit of the Investor Certificateholders
of any Series or Class, as specified in any Supplement.
"Series Cut-Off Date" shall mean, with respect to any Series, the
-------------------
date specified as such in the related Supplement.
"Series Issuance Date" shall mean, with respect to any Series, the
--------------------
date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.03 and the related Supplement.
"Servicing Default" shall have the meaning specified in Section
-----------------
10.01.
"Servicing Fee" shall have the meaning specified in Section 3.02.
-------------
"Servicing Officer" shall mean any officer of the Master Servicer
------------------
involved in, or responsible for, the administration and servicing of the
Receivables whose name appears on a list of servicing officers furnished to
the Trustee by the Master Servicer as such list may from time to time be
amended.
"Servicing Transfer" shall have the meaning specified in Section
-------------------
10.01.
"Standard & Poor's" shall mean Standard & Poor's Rating Services, a
-----------------
division of the McGraw-Hill Companies, Inc. or its successor.
"Successor Master Servicer" shall have the meaning specified in
--------------------------
Section 10.02(a).
"Supplement" shall mean, with respect to any Series, a Supplement
----------
to this Agreement, executed and delivered in connection with the original
issuance of the Investor Certificates of such Series pursuant to Section
6.03, and all amendments thereof and supplements thereto.
"Supplemental Certificate" shall have the meaning specified in
------------------------
Section 6.03.
"Tax Opinion" shall mean, with respect to any action, an Opinion of
-----------
Counsel to the effect that, for U.S. Federal income tax purposes (a) such
action will not cause a taxable event with respect to any Investor
Certificateholders and (b) in the case of Section 6.03(b), the Investor
Certificates of the new Series will be characterized as debt or an interest
in a tax partnership (which partnership will not be treated as a result of
issuance of such Certificates as a "publicly traded partnership" within the
meaning of Section 7704 of the Code and applicable Treasury Regulations).
"Termination Date" shall mean, with respect to any Series, the
----------------
termination date specified in the related Supplement.
"Termination Notice" shall have the meaning specified in Section
-------------------
10.01.
"Termination Proceeds" shall have the meaning specified in Section
---------------------
12.02(c).
"Transfer Agent and Registrar" shall have the meaning specified in
----------------------------
Section 6.04.
"Transfer Date" shall have the meaning specified in Section 2.01.
-------------
"Transfer Deposit Amount" shall mean, with respect to any
-------------------------
Receivable reassigned or assigned to the Transferor or the Master Servicer,
as applicable, pursuant to Section 2.04(c) or Section 3.03(c), the amounts
specified in such Sections.
"Transferor" shall mean Ford Credit Auto Receivables LLC, a
----------
Delaware limited liability company.
"Transferor's Certificates" shall mean, collectively, the FCAR
--------------------------
Certificate and any outstanding Supplemental Certificates.
"Transferor's Interest" shall have the meaning specified in Section
---------------------
4.01.
"Transferor's Participation Amount" shall mean, at any time of
----------------------------------
determination, an amount equal to the Pool Balance at such time minus the
aggregate Invested Amounts for all outstanding Series at such time.
"Trust" shall mean the Ford Credit Auto Loan Master Trust II
-----
created by this Agreement, the corpus of which shall consist of the Trust
Assets.
"Trust Assets" shall have the meaning specified in Section 2.01.
------------
"Trust Aggregate Available Subordinated Amount" shall mean the sum
----------------------------------------------
of the aggregate available subordinated amounts for all outstanding Series at
such time, as specified in the related Supplement.
"Trust Available Subordinated Amount" shall mean, at any time of
------------------------------------
determination, the sum of the Available Subordinated Amounts, if any, for all
outstanding Series at such time.
"Trustee" shall mean The Chase Manhattan Bank, or its successor in
-------
interest, or any successor trustee appointed as herein provided.
"Trust Incremental Subordinated Amount" on any Determination Date
--------------------------------------
shall mean the excess, if any, of (a) the sum of the Overconcentration
Amount, the Installment Balance Amount and the Ineligible Amount, in each
case, on such Determination Date over (b) the Incremental Default Amount for
such Determination Date.
"Trust Invested Amount" shall mean, at any time of determination,
---------------------
the sum of the Invested Amounts for all outstanding Series at such time.
"Trust Termination Date" shall have the meaning specified in
-----------------------
Section 12.01.
"UCC" shall mean the Uniform Commercial Code, as amended from time
---
to time, as in effect in any specified jurisdiction.
"Unallocated Principal Collections" shall have the meaning
------------------------------------
specified in Section 4.04.
"Used Vehicle" shall mean any Vehicle held for sale by a Dealer
------------
that is determined to be a "used" Vehicle in accordance with the Master
Servicer's standard wholesale servicing practices.
"Vehicle" shall mean an automobile or light-duty truck.
-------
"Vice President" when used with respect to the Master Servicer
---------------
shall mean any vice president whether or not designated by a number or word
or words added before or after the title "vice president".
SECTION 1.02. 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 or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate
or other document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To
the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document
shall control.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section,
Schedule and Exhibit references contained in this Agreement are references to
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without
limitation".
(d) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
ARTICLE II
Conveyance of Receivables
-------------------------
SECTION 2.01. Conveyance of Receivables. By execution of this
--------------------------
Agreement, the Transferor does hereby transfer, assign, set over and
otherwise convey, without recourse (except as expressly provided herein), to
the Trust for the benefit of the Certificateholders and the other
Beneficiaries on the first Closing Date, in the case of the Initial Accounts,
and on the applicable Addition Date, in the case of Additional Accounts, (a)
all of its right, title and interest in, to and under the Receivables in each
Account and all Related Security with respect thereto owned by the Transferor
at the close of business on the Cut-Off Date, in the case of the Initial
Accounts, and on the applicable Additional Cut-Off Date, in the case of
Additional Accounts, and all monies due or to become due and all amounts
received with respect thereto and all proceeds (including "proceeds" as
defined in Section 9-306 of the UCC as in effect in the State of Michigan and
Recoveries) thereof and (b) all of the Transferor's rights, remedies, powers
and privileges with respect to such Receivables under the Receivables
Purchase Agreement. As of each Business Day prior to the earlier of (i) the
occurrence of an Early Amortization Event specified in Section 9.01(b), (c),
(d) or (e) and (ii) the Trust Termination Date, on which Receivables are
created in the Accounts (a "Transfer Date"), the Transferor does hereby
--------------
transfer, assign, set over and otherwise convey, without recourse (except as
expressly provided herein), to the Trust for the benefit of the
Certificateholders and the other Beneficiaries, all of its right, title and
interest in, to and under the Receivables in each Account (other than any
Receivables created in any Removal Account from and after the applicable
Removal Commencement Date) and all Related Security with respect thereto
owned by the Transferor at the close of business on such Transfer Date and
not theretofore conveyed to the Trust, all monies due or to become due and
all amounts received with respect thereto and all proceeds (including
"proceeds" as defined in Section 9-306 of the UCC as in effect in the State
of Michigan) and Recoveries thereof. Such property, together with all monies
on deposit in, and Eligible Investments credited to, the Collection Account
or any Series Account, any Enhancements and the Related Security with respect
to the Receivables shall collectively constitute the assets of the Trust (the
"Trust Assets"). The foregoing transfer, assignment, set-over and conveyance
------------
and any subsequent transfers, assignments, set-overs and conveyances do not
constitute, and are not intended to result in, the creation or an assumption
by the Trust, the Trustee, any Agent or any Beneficiary of any obligation of
the Master Servicer, the Transferor, the Seller, Ford, PRIMUS, any other
Originator or any other Person in connection with the Accounts, the
Receivables or under any agreement or instrument relating thereto, including
any obligation to any Dealers.
In connection with such transfers, the Transferor agrees to record
and file, at its own expense, a financing statement on form UCC-1 or any
other applicable form (and continuation statements when applicable) with
respect to the Receivables now existing and hereafter created for the sale of
chattel paper (as defined in Section 9-105 of the UCC as in effect in the
State of Michigan or, if applicable, in the corresponding Section of the UCC
as may be in effect in such other jurisdiction where either the Transferor's
or the Seller's chief executive offices or books and records relating to the
Receivables are located) meeting the requirements of applicable law in such
manner and in such jurisdictions as are necessary to perfect the sale and
assignment of the Receivables and the Related Security to the Trust, and to
deliver a file-stamped copy of such financing statements or other evidence of
such filing to the Trustee on or prior to the first Closing Date, in the case
of the Initial Accounts, and (if any additional filing is so necessary) the
applicable Addition Date, in the case of Additional Accounts. The Trustee
shall be under no obligation whatsoever to file such financing statement, or
a continuation statement to such financing statement, or to make any other
filing under applicable law in connection with such transfers.
In connection with such transfers, the Transferor further agrees,
at its own expense, on or prior to the first Closing Date, in the case of the
Initial Accounts, the applicable Addition Date, in the case of Additional
Accounts, and the applicable Removal Commencement Date, in the case of
Removal Accounts, (a) to cause the Seller to indicate in its computer files
as required by the Receivables Purchase Agreement, that the Receivables
created in connection with the Accounts (other than Removal Accounts) have
been transferred, and the Related Security assigned, to the Transferor in
accordance with the Receivables Purchase Agreement and sold to the Trust
pursuant to this Agreement for the benefit of the Certificateholders and the
other Beneficiaries and (b) to deliver to the Trustee (or cause the Seller to
do so) a computer file or microfiche or written list containing a true and
complete list of all such Accounts (other than Removal Accounts) specifying
for each such Account, as of the Cut-Off Date, in the case of the Initial
Accounts, and the applicable Additional Cut-Off Date, in the case of
Additional Accounts, (i) its account number, (ii) the aggregate amount of
Receivables outstanding in such Account and (iii) the aggregate amount of
Principal Receivables in such Account. Such file or list, as supplemented
from time to time to reflect Additional Accounts and Removal Accounts, shall
be marked as Schedule 1 to this Agreement and is hereby incorporated into and
made a part of this Agreement. The Trustee shall be under no obligation
whatsoever to verify the accuracy or completeness of the information
contained in Schedule 1 from time to time.
SECTION 2.02. Acceptance by Trustee. (a) The Trustee hereby
----------------------
acknowledges its acceptance, on behalf of the Trust, of all right, title and
interest previously held by the Transferor to the property, now existing and
hereafter created, conveyed to the Trust pursuant to Section 2.01 and
declares that it shall maintain such right, title and interest, upon the
trust herein set forth, for the benefit of the Certificateholders and the
other Beneficiaries. The Trustee further acknowledges that, prior to or
simultaneously with the execution and delivery of this Agreement, the
Transferor delivered to the Trustee the computer file or microfiche or
written list relating to the Initial Accounts described in the last paragraph
of Section 2.01.
(b) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
SECTION 2.03. Representations and Warranties of the Transferor
---------------------------------------------------
Relating to the Transferor and the Agreement. The Transferor hereby
- -------------------------------------------------
represents and warrants to the Trust and to the Trustee as of each Closing
Date that:
(a) Organization and Good Standing. The Transferor is a limited
------------------------------
liability company duly formed and validly existing and in good standing
under the law of the State of Delaware and has, in all material
respects, full power, authority and legal right to own its properties
and conduct its business as such properties are presently owned and such
business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement and to execute and deliver to the
Trustee pursuant hereto the Certificates.
(b) Due Qualification. The Transferor is duly qualified to do
------------------
business and, where necessary, is in good standing as a foreign limited
liability company (or is exempt from such requirement) and has obtained
all necessary licenses and approvals in each jurisdiction in which the
conduct of its business requires such qualification except where the
failure to so qualify or obtain licenses or approvals would not have a
material adverse effect on its ability to perform its obligations
hereunder.
(c) Due Authorization. The execution and delivery of this
------------------
Agreement and the applicable Supplement and the Related Documents and
the execution and delivery to the Trustee of the Certificates by the
Transferor and the consummation of the transactions provided for or
contemplated by this Agreement and the applicable Supplement and the
Related Documents, have been duly authorized by the Transferor by all
necessary action on the part of the Transferor.
(d) No Conflict. The execution and delivery of this Agreement,
-----------
the applicable Supplement, the Related Documents and the Certificates,
the performance of the transactions contemplated by this Agreement and
the applicable Supplement and the Related Documents and the fulfillment
of the terms hereof and thereof, will not conflict with, result in any
breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a material default
under, any indenture, contract, agreement, mortgage, deed of trust, or
other instrument to which the Transferor is a party or by which it or
its properties are bound.
(e) No Violation. The execution and delivery of this Agreement,
------------
the applicable Supplement, the Related Documents and the Certificates,
the performance of the transactions contemplated by this Agreement and
the applicable Supplement and the Related Documents and the fulfillment
of the terms hereof and thereof applicable to the Transferor, will not
conflict with or violate any material Requirements of Law applicable to
the Transferor.
(f) No Proceedings. There are no proceedings or, to the best
---------------
knowledge of the Transferor, investigations pending or threatened
against the Transferor before any Governmental Authority (i) asserting
the invalidity of this Agreement, the applicable Supplement, any of the
Related Documents 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 applicable
Supplement or the Related Documents, (iii) seeking any determination or
ruling that, in the reasonable judgment of the Transferor, would
materially and adversely affect the performance by the Transferor of its
obligations under this Agreement and the applicable Supplement or the
Related Documents, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement and the applicable Supplement, the Related Documents or the
Certificates or (v) seeking to affect adversely the income tax
attributes of the Trust under the United States Federal, or any other
applicable state, local or foreign jurisdiction's, income, single
business or franchise tax systems.
(g) All Consents Required. All appraisals, authorizations,
-----------------------
consents, orders, approvals or other actions of any Person or of any
governmental body or official required in connection with the execution
and delivery of this Agreement, the applicable Supplement, the Related
Documents and the Certificates, the performance of the transactions
contemplated by this Agreement, the applicable Supplement and any of the
Related Documents, and the fulfillment of the terms hereof and thereof,
have been obtained.
(h) Enforceability. This Agreement and the applicable Supplement
--------------
and the Related Documents each constitutes a legal, valid and binding
obligation of the Transferor enforceable against the Transferor in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement
of creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity).
(i) Record of Accounts. As of the first Closing Date, in the case
------------------
of the Initial Accounts, as of the applicable Addition Date, in the case
of the Additional Accounts, and, as of the applicable Removal
Commencement Date, in the case of Removal Accounts, Schedule 1 to this
Agreement is an accurate and complete listing in all material respects
of all the Accounts as of the Cut-Off Date, the applicable Additional
Cut-Off Date or the applicable Removal Commencement Date, as the case
may be, and the information contained therein with respect to the
identity of such Accounts and the Receivables existing thereunder is
true and correct in all material respects as of the Cut-Off Date, such
applicable Additional Cut-Off Date or such Removal Commencement Date, as
the case may be.
(j) Valid Transfer. This Agreement or, in the case of Additional
--------------
Accounts, the related Assignment constitutes a valid transfer and
assignment to the Trust of all right, title and interest of the
Transferor in the related Receivables and the Related Security and the
proceeds thereof and all of the Transferor's rights, remedies, powers
and privileges with respect to the Receivables under the Receivables
Purchase Agreement and, upon the filing of the financing statements
described in Section 2.01 with the Secretary of State of the State of
Michigan and, in the case of the Additional Receivables hereafter
created and the proceeds thereof, upon the creation thereof, the Trust
shall have a first priority perfected ownership interest in such
property, except for Liens permitted under Section 2.06(a). Except as
otherwise provided in this Agreement, neither the Transferor nor any
Person claiming through or under the Transferor has any claim to or
interest in the Trust Assets.
The representations and warranties set forth in this Section 2.03
shall survive the transfer and assignment of the Receivables to the Trust and
the issuance of the Certificates. Upon discovery by the Transferor, the
Master Servicer, any Agent or the Trustee of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the other parties, any Agent and to any Enhancement
Providers.
In the event of any breach of any of the representations and
warranties set forth in this Section 2.03 having a material adverse effect on
the interests of the Investor Certificateholders, then either the Trustee or
the Holders of Investor Certificates evidencing not less than a majority in
aggregate unpaid principal amount of all outstanding Investor Certificates,
by notice then given in writing to the Transferor (and to the Trustee, any
Enhancement Providers and the Master Servicer if given by the Investor
Certificateholders), may direct the Transferor to purchase the
Certificateholders' Interest within 60 days of such notice (or within such
longer period as may be specified in such notice), and the Transferor shall
be obligated to make such purchase on a Distribution Date occurring within
such 60-day period on the terms and conditions set forth below; provided,
--------
however, that no such purchase shall be required to be made if, by the end of
- -------
such 60-day period (or such longer period as may be specified), the
representations and warranties set forth in this Section 2.03 shall be
satisfied in all material respects, and any material adverse effect on the
Certificateholders' Interest caused thereby shall have been cured.
The Transferor shall deposit in the Collection Account in
immediately available funds on the Business Day preceding such Distribution
Date, in payment for such purchase, an amount equal to the sum of the amounts
specified therefor with respect to each outstanding Series in the related
Supplement. Notwithstanding anything to the contrary in this Agreement, such
amounts shall be distributed to the Investor Certificateholders on such
Distribution Date in accordance with Article IV and the terms of each
Supplement. If the Trustee or the Investor Certificateholders give notice
directing the Transferor to purchase the Certificateholders' Interest as
provided above, the obligation of the Transferor to purchase the
Certificateholders' Interest pursuant to this Section 2.03 shall constitute
the sole remedy respecting an event of the type specified in the first
sentence of this Section 2.03 available to the Investor Certificateholders
(or the Trustee on behalf of the Investor Certificateholders).
SECTION 2.04. Representations and Warranties of the Transferor
---------------------------------------------------
Relating to the Receivables. (a) Representations and Warranties. The
- ----------------------------- -------------------------------
Transferor hereby represents and warrants to the Trust that:
(i) Each Receivable and all Related Security existing on the first
Closing Date or, in the case of Additional Accounts, on the applicable
Addition Date, and on each Transfer Date, has been conveyed to the Trust
free and clear of any Lien.
(ii) With respect to each Receivable and all Related Security
existing on the first Closing Date or, in the case of Additional
Accounts, on the applicable Addition Date, and on each Transfer Date,
all consents, licenses, approvals or authorizations of or registrations
or declarations with any Governmental Authority required to be obtained,
effected or given by the Seller in connection with the conveyance of
such Receivable or Related Security to the Trust have been duly
obtained, effected or given and are in full force and effect.
(iii) On the Cut-Off Date and each Closing Date, each Initial
Account is an Eligible Account and, in the case of Additional Accounts,
on the applicable Additional Cut-Off Date and each subsequent Closing
Date, each such Additional Account is an Eligible Account.
(iv) On the first Closing Date, in the case of the Initial
Accounts, and, in the case of the Additional Accounts, on the applicable
Additional Cut-Off Date, and on each Transfer Date, each Receivable
conveyed to the Trust on such date is an Eligible Receivable or, if such
Receivable is not an Eligible Receivable, such Receivable is conveyed to
the Trust in accordance with Section 2.09.
(b) Notice of Breach. The representations and warranties set
-----------------
forth in this Section 2.04 shall survive the transfer and assignment of the
Receivables to the Trust and the issuance of the Certificates. Upon
discovery by the Transferor, the Master Servicer, any Agent or the Trustee of
a breach, of any of the representations and warranties set forth in this
Section 2.04, the party discovering such breach shall give prompt written
notice to the other parties and to any Enhancement Providers.
(c) Reassignment. In the event any representation or warranty
------------
under Section 2.04(a) is not true and correct as of the date specified
therein with respect to any Receivable or Account and such breach has a
material adverse effect on the Certificateholders' Interest in any such
Receivable or Account, then, within 30 days (or such longer period as may be
agreed to by the Trustee) of the earlier to occur of the discovery of any
such event by the Transferor or the Master Servicer, or receipt by the
Transferor or the Master Servicer of written notice of any such event given
by the Trustee, any Agent or any Enhancement Providers, the Transferor shall
accept a reassignment of such Receivable or, in the case of such an untrue
representation or warranty with respect to an Account, all Receivables in
such Account, on the Determination Date immediately succeeding the day of
such discovery or notice on the terms and conditions set forth in the next
succeeding paragraph; provided, however, that no such reassignment shall be
-------- -------
required to be made with respect to such Receivable if, by the end of such
30-day period (or such longer period as may be agreed to by the Trustee), the
breached representation or warranty shall then be true and correct in all
material respects and any material adverse effect caused thereby shall have
been cured.
The Transferor shall accept a reassignment of each such Receivable
by directing the Master Servicer to deduct, subject to the next sentence, the
principal amount of such Receivables from the Pool Balance on or prior to the
end of the Collection Period in which such reassignment obligation arises.
If, following such deduction, the Transferor's Participation Amount would be
less than the Trust Available Subordinated Amount on the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution Date
following such Determination Date), then not later than 12:00 noon on the day
on which such reassignment occurs, the Transferor shall deposit in the
Collection Account in immediately available funds the amount (the "Transfer
--------
Deposit Amount") by which the Transferor's Participation Amount would be less
- --------------
than such Trust Available Subordinated Amount (up to the principal amount of
such Receivables); provided that if the Transfer Deposit Amount is not
--------
deposited as required by this sentence, then the principal amounts of such
Receivables shall only be deducted from the Pool Balance to the extent that
the Transferor's Participation Amount is not reduced below the Trust
Available Subordinated Amount and the Receivables the principal amounts of
which have not been so deducted shall not be reassigned to the Transferor and
shall remain part of the Trust. Upon reassignment of any such Receivable,
but only after payment by the Transferor of the Transfer Deposit Amount, if
any, the Trust shall automatically and without further action be deemed to
transfer, assign, set over and otherwise convey to the Transferor, without
recourse, representation or warranty, all the right, title and interest of
the Trust in and to such Receivable, all Related Security and all moneys due
or to become due with respect thereto and all proceeds thereof. The Trustee
shall execute such documents and instruments of transfer or assignment and
take such other actions as shall reasonably be requested by the Transferor to
effect the conveyance of such Receivables pursuant to this Section. The
obligation of the Transferor to accept a reassignment of any such Receivable
and to pay any related Transfer Deposit Amount shall constitute the sole
remedy respecting the event giving rise to such obligation available to
Certificateholders (or the Trustee on behalf of Certificateholders).
SECTION 2.05. Addition of Accounts. (a) If, as of the close of
--------------------
business on the last day of any Collection Period, (i) the Pool Balance on
such day is less than the Required Participation Amount as of the following
Distribution Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on such Distribution Date), or (ii) the
result obtained by multiplying (x) the Transferor's Participation Amount as
of the following Distribution Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on such Distribution
Date), by (y) the percentage equivalent of the portion of the Transferor's
Interest represented by the FCAR Certificate is less than 2% of the Pool
Balance on such last day, then the Transferor shall, within 10 Business Days
following the end of such Collection Period, designate and transfer to the
Trust the Receivables (and the related Security) of additional Eligible
Accounts of the Transferor to be included as Accounts in a sufficient amount
such that after giving effect to such addition (i) the Pool Balance as of the
close of business on the Addition Date is at least equal to such Required
Participation Amount and (ii) the result obtained by multiplying (x) such
Transferor's Participation Amount by (y) the percentage equivalent of the
portion of the Transferor's Interest represented by the FCAR Certificate, is
at least equal to 2% of such Pool Balance, as the case may be. The
Transferor shall satisfy the conditions specified in Section 2.05(d) in
designating such Additional Accounts and conveying the related Receivables to
the Trust. The failure of the Transferor to transfer Receivables to the
Trust as provided in this paragraph solely as a result of the unavailability
of a sufficient amount of Eligible Receivables shall not constitute a breach
of this Agreement; provided, however, that any such failure will nevertheless
-------- -------
result in the occurrence of an Early Amortization Event described in Section
9.01(a).
(b)(i) The Transferor may from time to time, at its sole
discretion, subject to the conditions specified in paragraph (d) below,
voluntarily designate additional Eligible Accounts to be included as Accounts
and transfer to the Trust the Receivables (and the related Security) of such
Additional Accounts.
(ii) Notwithstanding the conditions specified in clauses (vi),
(viii) and (ix) of paragraph (d) of this Section 2.05, the
Transferor may from time to time, at its sole discretion, and
subject only to the limitations specified in this clause (ii) and
clauses (i) through (v) and (vii) of Section 2.05(d), voluntarily
designate Additional Accounts (such Additional Accounts as are
designated in accordance with the provisions described in this
clause (ii) collectively being referred to hereinafter as
"Automatic Additional Accounts"). Unless the Rating Agencies shall
-----------------------------
otherwise have consented in writing, neither the number of
Automatic Additional Accounts nor the aggregate amount of Principal
Receivables included in such Automatic Additional Accounts as of
any related Additional Cut-Off Date that are designated with
respect to any calendar quarter shall exceed 10% of the number of
Accounts or 10% of the Pool Balance, respectively, as of the first
day of such calendar quarter, and neither the number of Automatic
Additional Accounts nor the aggregate amount of Principal
Receivables included in such Automatic Additional Accounts as of
any related Additional Cut-Off Dates that are designated during any
twelve-month period commencing in October of any year shall exceed
20% of the number of Accounts or 20% of the Pool Balance,
respectively, as of the first day of such twelve-month period. On
or before January 31, April 30, July 31 and October 31 of each
calendar year, to the extent applicable, the Transferor shall have
delivered notice to each applicable Rating Agency with respect to
the addition of all Automatic Additional Accounts included as
Accounts during the three consecutive Collection Periods ending in
the calendar month prior to such date. On or before January 31 and
July 31 of each calendar year, to the extent applicable, the
Transferor shall have delivered to the Trustee, each Rating Agency
and any Enhancement Provider an Opinion of Counsel with respect to
the Automatic Additional Accounts included as Accounts during the
preceding sixth-month period confirming the validity and perfection
of each transfer of such Automatic Additional Accounts; provided,
--------
however, that for any period during which the long-term unsecured
-------
debt rating of the Seller by Standard & Poor's shall be at least
BBB- and not more than BBB+, such Opinion of Counsel (to the extent
applicable) shall be delivered on or before the end of each
calendar quarter with respect to Automatic Additional Accounts
included as Accounts during such calendar quarter, and for any
period during which such rating is less than BBB-, such Opinion of
Counsel (to the extent applicable) shall be delivered on or before
the end of each calendar month with respect to the Automatic
Additional Accounts included as Accounts during such calendar
month. If such Opinion of Counsel with respect to any Automatic
Additional Accounts is not so received, then Trustee shall reassign
such Automatic Additional Accounts to the Transferor.
(c) Receivables and Related Security from such Additional Accounts
shall be sold to the Trust effective on a date (the "Addition Date")
-------------
specified in a written notice provided by the Transferor (or the Master
Servicer on its behalf) to the Trustee, the Rating Agencies, any Agent and
any Enhancement Providers specifying the Additional Cut-Off Date and the
Addition Date for such Additional Accounts (the "Addition Notice") on or
---------------
before the fifth Business Day but not more than the 30th day prior to the
related Addition Date (the "Notice Date").
-----------
(d) The Transferor shall be permitted to convey to the Trust the
Receivables and all Related Security related thereto in any Additional
Accounts designated by the Transferor as such pursuant to Section 2.05(a) or
(b) only upon satisfaction of each of the following conditions on or prior to
the related Addition Date:
(i) the Transferor shall have provided the Trustee, any Agent, the
Rating Agencies and any Enhancement Providers with a timely Addition
Notice;
(ii) such Additional Accounts shall all be Eligible Accounts;
(iii) the Transferor shall have delivered to the Trustee a duly
executed written assignment (including an acceptance by the Trustee) in
substantially the form of Exhibit B (the "Assignment") and the computer
----------
file or microfiche or written list required to be delivered pursuant to
Section 2.01;
(iv) the Transferor shall, to the extent required by Section 4.03,
have deposited in the Collection Account all Collections with respect to
such Additional Accounts since the Additional Cut-Off Date;
(v) (A) no selection procedures reasonably believed by the
Transferor to be adverse to the interests of the Beneficiaries were used
in selecting such Additional Accounts; (B) the list of Additional
Accounts delivered pursuant to clause (iii) above is true and correct in
all material respects as of the Additional Cut-Off Date and (C) as of
each of the Notice Date and the Addition Date, neither the Seller nor
the Transferor was insolvent nor will either of them have been made
insolvent by such transfer nor are any of them aware of any pending
insolvency;
(vi) the Rating Agency Condition shall have been satisfied with
respect to such addition;
(vii) the addition of the Receivables arising in such Additional
Accounts shall not result in the occurrence of an Early Amortization
Event;
(viii) the Transferor shall have delivered to the Trustee and any
Enhancement Providers a certificate of a Vice President or more senior
officer confirming (A) the items set forth in paragraphs (ii) through
(vii) above and (B) that the Transferor reasonably believes that the
addition of the Receivables arising in such Additional Accounts will not
result in the occurrence of an Early Amortization Event; and
(ix) on or before each Addition Date, the Transferor shall have
delivered to the Trustee, each applicable Rating Agency and any
Enhancement Providers (A) an Opinion of Counsel with respect to the
Receivables in the Additional Accounts substantially in the form of
Exhibit G-2 and (B) except in the case of an addition required by
Section 2.05(a), a Tax Opinion with respect to such addition.
(e) The Transferor hereby represents and warrants as of the
applicable Addition Date as to the matters set forth in Section 2.05(d)(v).
Upon discovery by the Transferor, the Master Servicer, any Agent, the Trustee
or any Enhancement Providers of a breach of the foregoing representations and
warranties, the party discovering the breach shall give prompt written notice
to the other parties, to any Agent and to any Enhancement Providers.
SECTION 2.06. Covenants of the Transferor. The Transferor hereby
----------------------------
covenants that:
(a) No Liens. Except for the conveyances hereunder or as provided
--------
in Section 6.03(c), the Transferor will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer
to exist any Lien on, any Receivable or any Related Security, whether
now existing or hereafter created, or any interest therein, or the
Transferor's rights, remedies, powers or privileges with respect to the
Receivables under the Receivables Purchase Agreement, or the
Transferor's Interest or the Transferor's Certificates and the
Transferor shall defend the right, title and interest of the Trust in,
to and under the Receivables and the Related Security, whether now
existing or hereafter created, and such rights, remedies, powers and
privileges, against all claims of third parties claiming through or
under the Seller.
(b) Account Allocations. In the event that the Transferor is
-------------------
unable for any reason to transfer Receivables to the Trust, then the
Transferor agrees that it shall allocate, after the occurrence of such
event, payments on each Account with respect to the principal balance of
such Account first to the oldest principal balance of such Account and
to have such payments applied as Collections in accordance with the
terms of this Agreement. The parties hereto agree that Non-Principal
Receivables, whenever created, accrued in respect of Principal
Receivables which have been conveyed to the Trust shall continue to be a
part of the Trust notwithstanding any cessation of the transfer of
additional Principal Receivables to the Trust and Collections with
respect thereto shall continue to be allocated and paid in accordance
with the terms of this Agreement.
(c) Delivery of Collections. In the event that the Transferor,
------------------------
the Seller or any Affiliate thereof receives payments in respect of
Receivables, the Transferor and the Seller agree to pay or cause to be
paid to the Master Servicer or any Successor Master Servicer all
payments received thereby in respect of the Receivables as soon as
practicable after receipt thereof, but in no event later than two
Business Days after the receipt by the Transferor, the Seller or any
Affiliate thereof.
(d) Notice of Liens. The Transferor shall notify the Trustee
----------------
promptly after becoming aware of any Lien on any Receivable other than
the conveyances hereunder.
(e) Compliance with Law. The Transferor hereby agrees to comply in
-------------------
all material respects with all Requirements of Law applicable to the
Transferor.
(f) Activities of the Transferor. The Transferor will not engage
----------------------------
in any business or activity of any kind or enter into any transaction
other than (i) the businesses, activities and transactions contemplated
and authorized by this Agreement or the Related Documents, (ii)
acquiring, selling, holding, assigning, pledging and otherwise dealing
with wholesale and retail receivables or leases arising out of the sale
or lease of motor vehicles, farm or industrial equipment and related
activities and transactions, (iii) transferring such receivables to
trusts pursuant to a pooling and servicing agreement or similar
agreement or arrangement, (iv) authorizing, selling and delivering any
class of certificates or other securities of any such trust, (v)
acquiring from Ford Credit or any Affiliate thereof certificates issued
by one or more trusts to which Ford Credit or any Affiliate thereof
transferred receivables, (vi) issuing, selling, authorizing and
delivering one or more series and classes of bonds, notes or other
evidences of indebtedness secured or collateralized by one or more pools
of receivables or by certificates of any class issued by one or more
trusts established by Ford Credit or any Affiliate thereof
(collectively, the "Notes"), provided that the Transferor shall have no
-----
liability under any Notes except to the extent of the one or more pools
of receivables or the certificates securing or collateralizing such
Notes, (vii) holding and enjoying all of the rights and privileges of
any certificates issued by the trusts to the Transferor under the
related agreements and holding and enjoying all of the rights and
privileges of any class of any series of Notes, including any class of
Notes or certificates which may be subordinate to any other class of
Notes or certificates, respectively, (viii) performing its obligations
under the agreements and any indenture or other agreement (each, an
"Indenture") pursuant to which any Notes are issued, (ix) engaging in
---------
any activity and exercising any powers permitted to limited liability
companies under the laws of the State of Delaware that are related or
incidental to the foregoing and necessary, convenient or advisable to
accomplish the foregoing, and (x) any other activity in connection with
which the Rating Agency Condition has been satisfied (such businesses,
activities and transactions, collectively, "Permitted Transactions").
----------------------
(g) Indebtedness. The Transferor will not create, incur or assume
------------
any indebtedness or issue any securities or sell or transfer any
receivables to a trust or other Person which issues securities in
respect of any such receivables, unless (i) any such indebtedness or
securities have no recourse to any assets of the Transferor other than
the specified assets to which such indebtedness or securities relate and
(ii) the Rating Agency Condition shall have been satisfied in connection
therewith prior to the incurrence or issuance thereof.
(h) Guarantees. The Transferor will not become or remain liable,
----------
directly or contingently, in connection with any indebtedness or other
liability of any other Person, whether by guarantee, endorsement (other
than endorsements of negotiable instruments for deposit or collection in
the ordinary course of business), agreement to purchase or purchase,
agreement to supply or advance funds, or otherwise, except in connection
with Permitted Transactions and unless the Rating Agency Condition shall
have been satisfied with respect thereto.
(i) Investments. The Transferor will not make or suffer to exist
-----------
any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital,
purchase of stock or securities or evidences of indebtedness,
acquisition of the business or assets, or otherwise) in, any Affiliate,
unless prior thereto the Rating Agency Condition shall have been
satisfied with respect thereto; provided, however, that the Transferor
-------- -------
shall not be prohibited under this Section 2.06(i) from causing a
distribution of cash to its member (or, if applicable, to its members in
proportion to their respective percentage interests).
(j) Stock; Merger. The Transferor will not enter into any
--------------
transaction of merger or consolidation unless (A) the surviving Person
of such merger or consolidation assumes all of the Transferor's
obligations under this Agreement, (B) the Transferor shall have given
the Rating Agencies and the Trustee at least 10 days' prior notice and
the Rating Agency Condition shall have been satisfied with respect to
such transaction and (C) such merger or consolidation does not conflict
with any provisions of the Certificate of Formation of the Transferor,
or (ii) terminate, liquidate or dissolve itself (or suffer any
termination, liquidation or dissolution), or (iii) acquire or be
acquired by any Person, or (iv) otherwise make (or suffer) any material
change in the organization of or method of conducting its business.
(k) Agreements. The Transferor will not become a party to, or
----------
permit any of its properties to be bound by, any indenture, mortgage,
instrument, contract, agreement, lease or other undertaking, except this
Agreement, the Related Documents and any document relating to a
Permitted Transaction, or amend or modify its Certificate of Formation
or cancel, terminate, amend, supplement, modify or waive any of the
provisions of the Receivables Purchase Agreement or any of the other
Related Documents or request, consent or agree to or suffer to exist or
permit any such cancellation, termination, amendment, supplement,
modification or waiver unless, in any such case, the Rating Agency
Condition shall have been satisfied with respect thereto.
SECTION 2.07. Removal of Eligible Accounts. (a) On each
------------------------------
Determination Date the Transferor shall have the right to remove Accounts,
including all amounts then held by the Trust or thereafter received by the
Trust in respect of the Accounts being removed, from the Trust in the manner
prescribed in Section 2.07(b).
(b) To remove Accounts, including all amounts then held by the
Trust or thereafter received by the Trust in respect of the Accounts being
removed, the Transferor (or the Master Servicer on its behalf) shall take the
following actions and make the following determinations:
(i) not less than five Business Days prior to the Removal
Commencement Date, furnish to the Trustee, any Agent, any Enhancement
Providers and the Rating Agencies a written notice (the "Removal
-------
Notice") specifying the Determination Date (which may be the
------
Determination Date on which such notice is given) on which removal of
the Receivables of one or more Accounts (the "Removal Accounts") will
-----------------
occur (a "Removal Commencement Date");
-------------------------
(ii) from and after such Removal Commencement Date, cease to
transfer to the Trust any and all Receivables arising in such Removal
Accounts;
(iii) represent and warrant that the removal of any such Eligible
Account on any Removal Commencement Date shall not, in the reasonable
belief of the Transferor, cause an Early Amortization Event to occur or
cause the Pool Balance to be less than the Required Participation
Amount;
(iv) represent and warrant that no selection procedures reasonably
believed by the Transferor to be adverse to the interests of the
Beneficiaries were utilized in selecting the Accounts to be removed;
(v) represent and warrant that the Rating Agency Condition shall
have been satisfied with respect to such removal;
(vi) deliver to the Trustee, each Rating Agency, any Agent and any
Enhancement Providers a Tax Opinion, dated the Removal Commencement
Date, with respect to such removal;
(vii) on or before the related Removal Commencement Date, deliver to
the Trustee, any Agent and any Enhancement Providers an Officers'
Certificate confirming the items set forth in clauses (iii) through (v)
above and confirming that the Transferor reasonably believes that the
removal of the Removal Accounts will not result in the occurrence of an
Early Amortization Event; the Trustee may conclusively rely on such
Officers' Certificate and shall have no duty to make inquiries with
regard to the matters set forth therein and shall incur no liability in
so relying; and
(viii) on or before the fifth Business Day after the Removal
Commencement Date, furnish to the Trustee a computer file, microfiche
list or other list of the Removal Accounts that were removed on the
Removal Commencement Date, specifying for each Removal Account as of the
date of the Removal Notice its number, the aggregate amount outstanding
in such Removal Account and the aggregate amount of Principal
Receivables therein and represent that such computer file, microfiche
list or other list of the Removal Accounts is true and complete in all
material respects.
No Accounts shall be so removed unless the Rating Agency Condition shall have
been satisfied with respect to such removal.
(c) Any Principal Receivables arising in a Removal Account after
the Removal Commencement Date shall be the subject of the Reassignment
referred to in Section 2.07(d) and shall therefore not be included in the
Trust, and Collections in respect of the Receivables in such Eligible Account
shall be allocated as follows: (i) Principal Collections shall be allocated
first to the oldest outstanding principal balance of such Receivables and
(ii) Defaulted Receivables and Non-Principal Collections in respect of such
Eligible Account shall be allocated to the Trust on the basis of the ratio of
the Principal Receivables owned by the Trust in such Ineligible Account on
the related Business Day to the total amount of Principal Receivables in such
Ineligible Account on such Business Day, and the remainder of such Principal
Collections, Defaulted Receivables and Non-Principal Collections shall be
allocated to the Transferor.
(d) Subject to Section 2.07(b), on the Removal Commencement Date
with respect to any such Removal Account, such Removal Account shall be
deemed removed from the Trust for all purposes. After the Removal
Commencement Date and upon the written request of the Master Servicer, the
Trustee shall deliver to the Transferor a reassignment in substantially the
form of Exhibit H (the "Reassignment").
------------
SECTION 2.08. Removal of Ineligible Accounts. (a) On the fifth
-------------------------------
Business Day after any date on which an Account becomes an Ineligible Account
(such fifth Business Day shall be deemed to be the Removal Commencement Date)
the Transferor shall commence removal of the Receivable of such Ineligible
Account in the manner prescribed in Section 2.08(b).
(b) With respect to each Account that becomes an Ineligible
Account, the Transferor (or the Master Servicer on its behalf) shall take the
following actions and make the following determinations:
(i) furnish to the Trustee, any Agent and any Enhancement
Providers a Removal Notice specifying the Removal Commencement Date and
the Ineligible Accounts to be removed;
(ii) from and after such Removal Commencement Date, cease to
transfer to the Trust any and all Receivables arising in such Removal
Accounts; and
(iii) within five Business Days after the Removal Commencement Date,
amend Schedule 1 by delivering to the Trustee a computer file or
microfiche or written list containing a true and complete list of the
Removal Accounts specifying for each such Account, as of the Removal
Commencement Date, its account number, the aggregate amount of
Receivables outstanding in such Account and the Designated Balance.
(c) On the Removal Commencement Date with respect to any such Account
to be removed, all Collections in respect of such Account thereafter shall be
allocated in accordance with the terms set forth in Section 2.07(c) and such
Account shall be deemed a Removal Account. After the Removal Commencement
Date and upon the written request of the Master Servicer, the Trustee shall
deliver to the Transferor a Reassignment.
SECTION 2.09. Transfer of Ineligible Receivables. The Transferor
----------------------------------
shall transfer to the Trust on each Transfer Date any and all Receivables
arising in any Eligible Accounts that are Ineligible Receivables, provided
--------
that (a) on the Cut-Off Date or, in the case of Receivables arising in
Additional Accounts, on the related Additional Cut-Off Date, and on the
applicable Transfer Date, the Account in which such Receivables arise is an
Eligible Account and (b) the Incremental Subordinated Amount is adjusted in
accordance with the definition of Incremental Subordinated Amount as defined
in the related Supplement.
ARTICLE III
Administration and Servicing
----------------------------
of Receivables
--------------
SECTION 3.01. Acceptance of Appointment and Other Matters Relating
----------------------------------------------------
to the Master Servicer. (a) The Master Servicer shall service and
- ----------------------
administer the Receivables, shall collect payments due under the Receivables
and shall charge-off as uncollectible Receivables, all in accordance with its
customary and usual servicing procedures for servicing wholesale receivables
comparable to the Receivables which the Master Servicer services for its own
account and in accordance with the applicable Floorplan Financing Guidelines.
The Master Servicer shall have full power and authority, acting alone or
through any party properly designated by it hereunder, to do any and all
things in connection with such servicing and administration which it may deem
necessary or desirable. Without limiting the generality of the foregoing and
subject to Section 10.01, the Master Servicer is hereby authorized and
empowered, unless such power and authority is revoked by the Trustee on
account of the occurrence of a Servicing Default pursuant to Section 10.01,
(i) to instruct the Trustee to make withdrawals and payments from the
Collection Account and any Series Account as set forth in this Agreement,
(ii) to instruct the Trustee to take any action required or permitted under
any Enhancement, (iii) to execute and deliver, on behalf of the Trust for the
benefit of the Certificateholders and the other Beneficiaries, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to the
Receivables and, after the delinquency of any Receivable and to the extent
permitted under and in compliance with applicable Requirements of Law, to
commence enforcement proceedings with respect to such Receivables, (iv) to
make any filings, reports, notices, applications, registrations with, and
seek any consents or authorizations from, the Securities and Exchange
Commission and any State securities authority on behalf of the Trust as may
be necessary or advisable to comply with any Federal or State securities laws
or reporting requirement, and (v) to delegate certain of its servicing,
collection, enforcement and administrative duties hereunder with respect to
the Accounts and the Receivables to any Person who agrees to conduct such
duties in accordance with the applicable Floorplan Financing Guidelines and
this Agreement; provided, however, that the Master Servicer shall notify the
-------- -------
Trustee, the Rating Agencies, any Agent and any Enhancement Providers in
writing of any such delegation of its duties which is not in the ordinary
course of its business, that no delegation will relieve the Master Servicer
of its liability and responsibility with respect to such duties and that the
Rating Agency Condition shall have been satisfied with respect to any such
delegation. The Trustee shall furnish the Master Servicer with any powers of
attorney and other documents reasonably necessary or appropriate to enable
the Master Servicer to carry out its servicing and administrative duties
hereunder.
(b) In the event that the Transferor is unable for any reason to
transfer Receivables to the Trust in accordance with the provisions of this
Agreement then, in any such event, the Master Servicer agrees (i) to give
prompt written notice thereof to the Trustee, any Enhancement Providers, any
Agent and each Rating Agency and (ii) that it shall in any such event
allocate after the occurrence of such event, payments on each Account with
respect to the principal balance of such Account first to the oldest
principal balance of such Account, and to have such payments applied as
Collections in accordance with Section 4.02. The parties hereto agree that
Non-Principal Receivables, whenever created, accrued in respect of Principal
Receivables which have been conveyed to the Trust shall continue to be a part
of the Trust notwithstanding any cessation of the transfer of additional
Principal Receivables to the Trust and Collections with respect thereto shall
continue to be allocated and paid in accordance with the terms of this
Agreement.
(c) The Master Servicer shall not, and any Successor Master
Servicer shall not be obligated to, use separate servicing procedures,
offices, employees or accounts for servicing the Receivables from the
procedures, offices, employees and accounts used by the Master Servicer in
connection with servicing other wholesale receivables.
(d) The Master Servicer shall comply with and perform its
servicing obligations with respect to the Accounts and Receivables in
accordance with the applicable Floorplan Financing Agreements relating to the
Accounts and the applicable Floorplan Financing Guidelines, except insofar as
any failure to so comply or perform would not materially and adversely affect
the rights of the Trust or any of the Beneficiaries. Subject to compliance
with all Requirements of Law, the Master Servicer may change the terms and
provisions of any of the Floorplan Financing Agreements or its Floorplan
Financing Guidelines in any respect (including the calculation of the amount
or the timing of charge-offs and the rate of the finance charge assessed
thereon), only if (i) as a result of such change, in the reasonable judgment
of the Master Servicer no Early Amortization Event will occur at any time and
none of the Enhancement Providers, if any, or the Certificateholders shall be
adversely affected, (ii) such change is made applicable to the comparable
segment of wholesale accounts owned or serviced by the Master Servicer which
have characteristics the same as, or substantially similar to, the Accounts
which are the subject of such change and (iii) in the case of a reduction in
the rate of such finance charges, the Master Servicer does not reasonably
expect any such reduction to result in the weighted average of the Reference
Rates applicable to the Receivables (net of the applicable Servicing Fee) for
any Collection Period being less than the weighted average of the sum of the
Certificate Rates (in the case of a Series with a fixed Certificate rate and
a swap agreement, the floating rate payable by the Trust under the swap
agreement) and the Servicing Fee Rates for all outstanding Series for the
related Interest Period (each such term as defined in the related
Supplement). For purposes of clause (iii) of the preceding sentence, so long
as the Reference Rate is in fact based on the prime rate of one or more banks
(which bank or banks may change from time to time), downward fluctuations in
the Reference Rate shall not be deemed to be a reduction in the rate of such
finance charges; provided that a reduction in the margin added to such
Reference Rate to determine the finance charge would be a reduction in such
finance charge.
SECTION 3.02. Servicing Compensation. As full compensation for
----------------------
its servicing activities hereunder and reimbursement for its expenses as set
forth in the immediately following paragraph, the Master Servicer shall be
entitled to receive the Servicing Fee on each Distribution Date on or prior
to the Trust Termination Date payable in arrears. The "Servicing Fee" shall
be the aggregate of the Monthly Servicing Fees specified in the Supplements.
The Servicing Fee shall be payable to the Master Servicer solely to the
extent amounts are available for payment in accordance with the terms of the
Supplements.
The Master Servicer's expenses include the amounts due to the
Trustee pursuant to Section 11.05 and the reasonable fees and disbursements
of independent accountants and all other expenses incurred by the Master
Servicer in connection with its activities hereunder, and including all other
fees and expenses of the Trust not expressly stated herein to be for the
account of the Certificateholders. The Master Servicer shall be required to
pay such expenses for its own account, and shall not be entitled to any
payment therefor other than the Servicing Fee. The Master Servicer will be
solely responsible for all fees and expenses incurred by or on behalf of the
Master Servicer in connection herewith and the Master Servicer will not be
entitled to any fee or other payment from, or claim on, any of the Trust
Assets (other than the Servicing Fee).
SECTION 3.03. Representations, Warranties and Covenants of the
------------------------------------------------
Master Servicer. (a) Ford Credit, as Master Servicer, hereby makes, and any
- ---------------
Successor Master Servicer by its appointment hereunder shall make, on each
Closing Date (and on the date of any such appointment) the following
representations, warranties and covenants:
(i) Organization and Good Standing. Such party is a corporation
------------------------------
duly organized, validly existing and in good standing under the
applicable laws of the state of its incorporation and has, in all
material respects, full corporate power, authority and legal rights to
own its properties and conduct its wholesale receivable servicing
business as such properties are presently owned and as such business is
presently conducted, and to execute, deliver and perform its obligations
under this Agreement and the applicable Supplement.
(ii) Due Qualification. Such party is duly qualified to do
-----------------
business and is in good standing as a foreign corporation (or is exempt
from such requirements) and has obtained all necessary licenses and
approvals in each jurisdiction in which the servicing of the Receivables
as required by this Agreement requires such qualification, except where
the failure to so qualify or obtain licenses or approvals would not have
a material adverse effect on its ability to perform its obligations
hereunder.
(iii) Due Authorization. The execution, delivery, and performance
-----------------
of this Agreement and the applicable Supplement has been duly authorized
by such party by all necessary corporate action on the part thereof.
(iv) Binding Obligation. This Agreement and the applicable
------------------
Supplement constitutes a legal, valid and binding obligation of such
party, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in
effect, affecting the enforcement of creditors' rights and except as
such enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(v) No Violation. The execution and delivery of this Agreement
------------
and the applicable Supplement by such party, the performance of the
transactions contemplated by this agreement and the applicable
Supplement and the fulfillment of the terms hereof and thereof
applicable to such party will not conflict with, violate, result in any
breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a material default
under, any Requirement of Law applicable to such party or any indenture,
contract, agreement, mortgage, deed of trust, or other instrument to
which such party is a party or by which it is bound.
(vi) No Proceedings. There are no proceedings or, to the best
--------------
knowledge of such party, investigations, pending or threatened against
such party before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality seeking to prevent the
issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement and the applicable
Supplement, seeking any determination or ruling that, in the reasonable
judgment of such party, would materially and adversely affect the
performance by such party of its obligations under this Agreement and
the applicable Supplement, or seeking any determination or ruling that
would materially and adversely affect the validity or enforceability of
this Agreement and the applicable Supplement.
(vii) Compliance with Requirements of Law. Such party shall duly
-----------------------------------
satisfy all obligations on its part to be fulfilled under or in
connection with the Receivables and the Accounts, will maintain in
effect all qualifications required under Requirements of Law in order to
service properly the Receivables and the Accounts and will comply in all
material respects with all Requirements of Law in connection with
servicing the Receivables and the Accounts the failure to comply with
which would have a material adverse effect on the interests of
Beneficiaries.
(viii) No Rescission or Cancellation. Such party shall not permit
-----------------------------
any rescission or cancellation of a Receivable except as ordered by a
court of competent jurisdiction or other Governmental Authority.
(ix) Protection of Beneficiaries Rights. Such party shall take no
----------------------------------
action, nor omit to take any action, which would impair the rights of
Beneficiaries in the Receivables nor shall it reschedule, revise or
defer payments due on any Receivable except in accordance with the
applicable Floorplan Financing Guidelines.
(x) Master Servicer Concentration Account. The Master Servicer
-------------------------------------
maintains deposit accounts (collectively, the "Concentration Account")
---------------------
into which it shall deposit all amounts paid by the Dealers under
Floorplan Financing Agreements. The Master Servicer agrees (i) that it
will not change this method of collection without the prior written
consent of any Enhancement Providers and any Agents; (ii) with respect
to amounts deposited into the Concentration Account in respect of a
particular day, that it will not transfer such amounts from the
Concentration Account until the Master Servicer has posted all
Collections in respect of the Receivables for such day and (iii)
concurrently with the transfer of amounts from the Concentration Account
in respect of a particular day, the Master Servicer will make the
deposits and transfers required by the terms of this Agreement for such
day.
(xi) Negative Pledge. Except for the conveyance hereunder to the
---------------
Trustee, the Master Servicer will not sell, pledge, assign or transfer
to any other Person, or grant, create, incur, assume or suffer to exist
any Lien on, any Receivable sold and assigned to the Trust, whether now
existing or hereafter created, or any interest therein, and the Master
Servicer shall defend the rights, title and interest of the Trust in, to
and under any Receivable sold and assigned to the Trust, whether now
existing or hereafter created, against all claims of third parties
claiming through or under the Transferor or the Master Servicer.
(b) Notice of Breach. The representations and warranties set
----------------
forth in this Section 3.03 shall survive the transfer and assignment of the
Receivables to the Trust and the issuance of the Certificates. Upon
discovery by the Transferor, the Master Servicer or the Trustee of a breach
of any of the representations and warranties set forth in this Section 3.03,
the party discovering such breach shall give prompt written notice to the
other parties and to any Enhancement Providers.
(c) Purchase. In the event any representation or warranty under
--------
Section 3.03(a) (vii), (viii) or (ix) is not true and correct in any material
respect as of the date specified therein with respect to any Receivable or
Account and such breach has a material adverse effect on the
Certificateholders' Interest in such Receivable, then, within 30 days (or
such longer period as may be agreed to by the Trustee) of the earlier to
occur of the discovery of any such event by the Transferor or the Master
Servicer, or receipt by the Transferor or the Master Servicer of written
notice of any such event given by the Trustee or any Enhancement Providers,
the Master Servicer shall purchase such Receivable or, in the case of an
untrue representation with respect to an Account, all Receivables in such
Account, on the Determination Date immediately succeeding the expiration of
such 30-day period on the terms and conditions set forth in the next
succeeding paragraph; provided, however, that no such purchase shall be
-------- -------
required to be made with respect to such Receivable if, by the end of such
30-day period (or such longer period as may be agreed to by the Trustee) the
breached representation or warranty shall then be true and correct in all
material respects and any material adverse effect caused thereby shall have
been cured. The Master Servicer shall effect such purchase by depositing in
the Collection Account in immediately available funds an amount equal to the
Purchase Price of such Receivable. Any such deposit of such Purchase Price
into the Collection Account shall be considered a Transfer Deposit Amount and
shall be applied in accordance with the terms of this Agreement.
Upon each such payment of such Purchase Price, the Trust shall
automatically and without further action be deemed to transfer, assign, set
over and otherwise convey to the Master Servicer, without recourse,
representation or warranty, all right, title and interest of the Trust in and
to such Receivables, all monies due or to become due with respect thereto and
all proceeds thereof and the related Security. The Trustee shall execute
such documents and instruments of transfer or assignment and take such other
actions as shall be reasonably requested by the Master Servicer to effect the
conveyance of any such Receivables pursuant to this Section. The obligation
of the Master Servicer to purchase such Receivables, and to make the deposits
required to be made to the Collection Account as provided in the preceding
paragraph, shall constitute the sole remedy respecting the event giving rise
to such obligation available to Certificateholders or the Trustee on behalf
of Certificateholders.
SECTION 3.04. Reports and Records for the Trustee. On or before
-----------------------------------
each Distribution Date, with respect to each outstanding Series, the Master
Servicer shall deliver to any Enhancement Providers, the Rating Agencies, the
Trustee and each Investor Certificateholder a Distribution Date Statement for
such Distribution Date substantially in the form set forth in the related
Supplement.
SECTION 3.05. Annual Master Servicer's Certificate. The Master
------------------------------------
Servicer will deliver to the Rating Agencies, the Trustee, any Agent and any
Enhancement Providers on or before April 30 of each calendar year, beginning
with April 30, 1999, an Officers' Certificate substantially in the form of
Exhibit C stating that (a) a review of the activities of the Master Servicer
during the preceding calendar year and of its performance under this
Agreement was made under the supervision of the officer signing such
certificate and (b) to the best of such officer's knowledge, based on such
review, the Master Servicer has performed in all material respects its
obligations under this Agreement throughout such year, or, if there has been
a material default in the performance of any such obligation, specifying each
such default known to such officer and the nature and status thereof. A copy
of such certificate may be obtained by any Investor Certificateholder by a
request in writing to the Trustee addressed to the Corporate Trust Office.
SECTION 3.06. Annual Independent Public Accountants' Servicing
------------------------------------------------
Report. The Master Servicer shall cause a firm of independent certified
- ------
public accountants, who may also render other services to the Master Servicer
or to the Transferor, to deliver to the Trustee, the Rating Agencies, each
Agent and each Enhancement Provider on or before April 30 of each year,
beginning April 30, 1998, a report addressed to the Board of Directors of the
Master Servicer and to the Trustee, to the effect that such firm has examined
the financial statements of the Master Servicer or, if applicable, the parent
corporation of the Master Servicer, and issued its report thereon and that
such examination: (a) was made in accordance with generally accepted
auditing standards, and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered necessary
in the circumstances, (b) included tests relating to wholesale receivables
(including financing arrangements with automobile dealers to finance their
automobile and light-duty truck inventory) serviced for others in accordance
with generally accepted auditing standards and (c) except as described in the
report, disclosed no exceptions or errors in the records relating to
wholesale receivables (including financing arrangements with automobile
dealers to finance their automobile and light-duty truck inventory) serviced
for others that, in the firm's opinion, generally accepted auditing standards
requires such firm to report. A copy of such report may be obtained by any
Investor Certificateholder by a request in writing to the Trustee addressed
to the Corporate Trust Office.
SECTION 3.07. Tax Treatment. The Transferor has entered into this
-------------
Agreement and the Investor Certificates have been (or will be) issued with
the intention that the Investor Certificates will qualify under applicable
tax law as indebtedness secured by the Receivables. The Transferor, each
Beneficiary and each Certificateholder and Certificate Owner, by the
acceptance of its Certificate or Book-Entry Certificate, as applicable,
agrees to treat the Investor Certificates as indebtedness secured by the
Receivables for United States Federal income taxes, and any other income and
franchise taxes, or any other taxes imposed on or measured by income of any
applicable state, local or foreign jurisdiction.
SECTION 3.08. Notices to Ford Credit. In the event Ford Credit is
----------------------
no longer acting as Master Servicer, any Successor Master Servicer appointed
pursuant to Section 10.02 shall deliver or make available to Ford Credit, as
the case may be, each certificate and report required to be prepared,
forwarded or delivered thereafter pursuant to Sections 3.04, 3.05 or 3.06.
SECTION 3.09. Adjustments. (a) If the Master Servicer adjusts
-----------
downward the amount of any Principal Receivable because of a rebate, refund,
credit adjustment or billing error to a Dealer, or because such Receivable
was created in respect of a Vehicle which was refused or returned by a
Dealer, then, in any such case, the Transferor's Participation Amount will be
automatically reduced by the amount of the adjustment. Furthermore, if
following such a reduction the Transferor's Participation Amount would be
less than the Trust Aggregate Available Subordinated Amount on the
immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following such Determination Date), then the Transferor
shall be required to pay an amount equal to such deficiency (up to the amount
of such adjustment) into the Collection Account on the Business Day on which
such adjustment or reduction occurs (each such payment an "Adjustment
----------
Payment").
- -------
(b) If (i) the Master Servicer makes a deposit into the Collection
Account in respect of a Collection of a Receivable and such Collection was
received by the Master Servicer in the form of a check which is not honored
for any reason or (ii) the Master Servicer makes a mistake with respect to
the amount of any Collection and deposits an amount that is less than or more
than the actual amount of such Collection, the Master Servicer shall
appropriately adjust the amount subsequently deposited into the Collection
Account to reflect such dishonored check or mistake. Any Receivable in
respect of which a dishonored check is received shall be deemed not to have
been paid.
ARTICLE IV
Rights of Certificateholders and
--------------------------------
Allocation and Application of Collections
-----------------------------------------
SECTION 4.01. Rights of Certificateholders. The Investor
----------------------------
Certificates shall represent fractional undivided interests in the Trust,
which, with respect to each Series, shall consist of the right to receive, to
the extent necessary to make the required payments with respect to the
Investor Certificates of such Series at the times and in the amounts
specified in the related Supplement, the portion of Collections allocable to
Investor Certificateholders of such Series pursuant to this Agreement and
such Supplement, funds on deposit in the Collection Account allocable to
Certificateholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in any related Series Account and funds
available pursuant to any related Enhancement (collectively, with respect to
all Series, the "Certificateholders' Interest"), it being understood that the
----------------------------
Investor Certificates of any Series or Class shall not represent any interest
in any Series Account or Enhancement for the benefit of any other Series or
Class. The Transferor's Certificate shall represent the ownership interest
in the remainder of the Trust Assets not allocated pursuant to this Agreement
or any Supplement to the Certificateholders' Interest, including the right to
receive Collections with respect to the Receivables and other amounts at the
times and in the amounts specified in this Agreement or in any Supplement to
be paid to the Transferor on behalf of all holders of the Transferor's
Certificates (the "Transferor's Interest"); provided, however, that the
--------------------- -------- -------
Transferor's Certificates shall not represent any interest in the Collection
Account, any Series Account or any Enhancement, except as specifically
provided in this Agreement or any Supplement.
SECTION 4.02. Establishment of the Collection Account. The Master
---------------------------------------
Servicer, for the benefit of the Certificateholders and the other
Beneficiaries, shall cause to be established and maintained in the name of
the Trust an Eligible Deposit Account bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders and the other Beneficiaries (the "Collection Account").
------------------
The Trustee shall possess all right, title and interest in all funds from
time to time on deposit in, and all Eligible Investments credited to, the
Collection Account and in all proceeds thereof. The Collection Account shall
be under the sole dominion and control of the Trustee for the benefit of the
Certificateholders and the other Beneficiaries. If, at any time, the
Collection Account ceases to be an Eligible Deposit Account, the Master
Servicer shall establish a substitute Eligible Deposit Account as the
Collection Account, instruct the Trustee to transfer any cash and/or any
Eligible Investments to such new Collection Account and, from the date any
such substitute account is established, such account shall be the Collection
Account. Neither the Transferor nor the Master Servicer, nor any person or
entity claiming by, through or under the Transferor or Master Servicer, shall
have any right, title or interest in, or any right to withdraw any amount
from, the Collection Account. Pursuant to the authority granted to the
Master Servicer in Section 3.01, the Master Servicer shall have the power,
revocable by the Trustee, to instruct the Trustee to make withdrawals and
payments from the Collection Account for the purposes of carrying out the
Master Servicer's or Trustee's duties specified in this Agreement.
All Eligible Investments shall be held by the Trustee for the
benefit of the Certificateholders and the other Beneficiaries. Funds on
deposit in the Collection Account shall at the direction of the Master
Servicer be invested by the Trustee solely in Eligible Investments that will
mature so that such funds will be available at the close of business on or
before the Business Day next preceding the following Distribution Date (or on
or before 10:00 a.m. on such following Distribution Date in the case of
Eligible Investments in respect of which the Trustee is the obligor). As of
each Determination Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Collection Account
received on such Determination Date shall be credited to the Collection
Account. Schedule 2, which is hereby incorporated into and made part of this
Agreement, identifies the Collection Account by setting forth the account
number of such account, the account designation of such account and the name
of the Institution with which such account has been established. If a
substitute Collection Account is established pursuant to this Section 4.02,
the Master Servicer shall provide to the Trustee an amended Schedule 2,
setting forth the relevant information for such substitute Collection
Account.
SECTION 4.03. Allocations and Applications of Collections and
-----------------------------------------------
Other Funds. (a) Except as otherwise provided in Section 4.03(b), the
- -----------
Master Servicer shall deposit Collections into the Collection Account as
promptly as possible after the Date of Processing of such Collections, but in
no event later than the second Business Day after such Date of Processing.
(b) Notwithstanding anything in this Agreement to the contrary,
for so long as (i) Ford Credit remains the Master Servicer hereunder, (ii) no
Servicing Default has occurred and is continuing and (iii) (x) Ford Credit is
a wholly owned subsidiary of Ford and Ford Credit maintains a short-term
rating of at least A-1 by Standard & Poor's and P-1 by Moody's (and for five
Business Days following any reduction of either such rating), (y) Ford Credit
arranges for and maintains a letter of credit or other form of Enhancement in
respect of the Master Servicer's obligations to make deposits of collections
on the Receivables in the Collection Account that is acceptable in form and
substance to each Rating Agency and any Agents or (z) Ford Credit otherwise
obtains the Rating Agency confirmations described below, then, subject to any
limitations in the confirmations described below, the Master Servicer need
not make the daily deposits of Collections into the Collection Account as
provided in Section 4.03(a), but may make a single deposit into the
Collection Account in same-day or next-day funds not later than 12:00 noon,
New York City time, on the Business Day immediately preceding the
Distribution Date in a net amount equal to the amount which would have been
on deposit with respect to the immediately preceding Collection Period in the
Collection Account; provided, however, that prior to ceasing daily deposits as
-------- -------
described above the Rating Agency Condition shall have been satisfied.
(c) Subject to Section 4.04, but notwithstanding anything else in
this Agreement to the contrary, with respect to any Collection Period,
whether the Master Servicer is required to make deposits of Collections
pursuant to paragraph (a) or (b) above, (i) the Master Servicer will only be
required to deposit Collections into the Collection Account up to the
aggregate amount of Collections required to be deposited into all Series
Accounts or, without duplication, distributed on the related Distribution
Date to all Investor Certificateholders, to each Agent or to each Enhancement
Provider pursuant to the terms of any Supplement or Enhancement Agreement and
(ii) if at any time prior to such Distribution Date the amount of Collections
deposited in the Collection Account exceeds the amount required to be
deposited pursuant to clause (i) above, the Master Servicer will be permitted
to withdraw the excess from the Collection Account.
(d) Collections of Non-Principal Receivables and Principal
Receivables, Defaulted Receivables and Miscellaneous Payments will be
allocated to each Series from and after the related Series Cut-Off Date as
specified in the related Supplement, and amounts so allocated to any Series
will not, except as specified in the related Supplement, be available to the
Investor Certificateholders of any other Series. Allocations thereof between
the Certificateholders' Interest and the Transferor's Interest, among the
Series in any group and among the Classes in any Series shall be set forth in
the related Supplement or Supplements.
(e) Upon at least ten days' prior written notice to the Master
Servicer, the Trustee and each applicable Rating Agency for any outstanding
Series of Certificates, the Transferor may at any time designate a percentage
of the amount of Collections arising in the Accounts on and after the date of
such designation that would otherwise be classified as Principal Collections
to be reclassified as Non-Principal Collections, provided that such
reclassification will become effective on the date of such designation only
if (i) an Officer's Certificate of the Transferor is delivered to the Trustee
certifying that in the reasonable belief of the Transferor such
reclassification of Collections would not cause an Early Amortization Event
or otherwise have a material adverse effect on the Certificateholders of any
Series, (ii) written notice of such designation shall have been delivered to
Moody's (in any case where Moody's is an applicable Rating Agency) and (iii)
the Rating Agency Condition shall have been satisfied solely with respect to
Standard & Poor's (in any case where Standard & Poor's is the applicable
Rating Agency).
SECTION 4.04. Unallocated Principal Collections. On each
---------------------------------
Distribution Date, (a) the Master Servicer shall allocate Excess Principal
Collections (as described below) to each Series as set forth in the related
Supplement and (b) the Master Servicer shall instruct the Trustee to withdraw
from the Collection Account and pay to the Transferor (i) an amount equal to
the excess, if any, of (x) the aggregate amount for all outstanding Series of
Collections of Principal Receivables which the related Supplements specify
are to be treated as "Excess Principal Collections" in connection with such
Distribution Date over (y) the aggregate amount for all outstanding Series
which the related Supplements specify are "Principal Shortfalls" with respect
to such Distribution Date and, without duplication, (ii) the aggregate amount
for all outstanding Series of that portion of Principal Collections which the
related Supplements specify are to be allocated and paid to the Transferor
with respect to such Distribution Date; provided, however, that, in the case
-------- -------
of clauses (i) and (ii), such amounts shall be paid to the Transferor only if
the Transferor's Participation Amount for such Distribution Date (determined
after giving effect to any Principal Receivables transferred to the Trust on
such date) exceeds the Trust Available Subordinated Amount for the
immediately preceding Determination Date (after giving effect to the
allocations, distributions, withdrawals and deposits to be made on such
Distribution Date). The amount held in the Collection Account as a result of
the proviso in the preceding sentence ("Unallocated Principal Collections")
---------------------------------
shall be paid to the Transferor at the time the Transferor's Participation
Amount exceeds the Trust Available Subordinated Amount for the immediately
preceding Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution Date
immediately following such Determination Date); provided, however, that any
-------- -------
Unallocated Principal Collections on deposit in the Collection Account at any
time during which any Series is in its amortization period, accumulation
period or Early Amortization Period shall be deemed to be "Miscellaneous
Payments" and shall be allocated and distributed in accordance with Section
4.03 and the terms of each Supplement.
ARTICLE V
Distributions and Reports to
----------------------------
Certificateholders
------------------
SECTION 5.01. Distributions and Reports to Certificateholders.
-----------------------------------------------
Distributions shall be made to, and reports shall be provided to,
Certificateholders as set forth in the applicable Supplement.
ARTICLE VI
The Certificates
----------------
SECTION 6.01. The Certificates. The Investor Certificates of any
----------------
Series or Class may be issued in bearer form ("Bearer Certificates") with
-------------------
attached interest coupons and one or more special coupons (collectively, the
"Coupons") pursuant to Section 6.11, or in fully registered form ("Registered
------- ----------
Certificates") and shall be substantially in the form of the exhibits with
- ------------
respect thereto attached to the applicable Supplement. The FCAR Certificate
will be issued in registered form, substantially in the form of Exhibit A,
and shall upon issue, be executed and delivered by the Transferor to the
Trustee for authentication and redelivery as provided in Section 6.02.
Except as otherwise provided in any Supplement, Bearer Certificates shall be
issued in minimum denominations of $5,000, $50,000 and $100,000 and
Registered Certificates shall be issued in minimum denominations of $1,000
and in integral multiples of $1,000 in excess thereof. If specified in any
Supplement, the Investor Certificates of any Series or Class shall be issued
upon initial issuance as a single certificate evidencing the aggregate
original principal amount of such Series or Class as described in Section
6.11. The FCAR Certificate shall be a single certificate and shall initially
represent the entire Transferor's Interest. Each Certificate shall be
executed by manual or facsimile signature on behalf of the Transferor by one
of its duly appointed managers. Certificates bearing the manual or facsimile
signature of the individual who was, at the time when such signature was
affixed, authorized to sign on behalf of the Transferor shall not be rendered
invalid, notwithstanding that such individual ceased to be so authorized
prior to the authentication and delivery of such Certificates or does not
hold such office at the date of such Certificates. No Certificates shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by or on behalf of the
Trustee by the manual signature of a duly authorized signatory, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. Bearer Certificates shall be dated the Series Issuance Date. All
Registered Certificates and Transferor's Certificates shall be dated the date
of their authentication.
SECTION 6.02. Authentication of Certificates. The Trustee shall
------------------------------
authenticate and deliver the Investor Certificates of each Series and Class
that are issued upon original issuance to or upon the order of the Transferor
against payment to the Transferor of the purchase price therefor. The
Trustee shall authenticate and deliver the FCAR Certificate to the Transferor
simultaneously with its delivery of the Investor Certificates of the first
Series to be issued hereunder. If specified in the related Supplement for
any Series or Class, the Trustee shall authenticate and deliver outside the
United States the Global Certificate that is issued upon original issuance
thereof.
SECTION 6.03. New Issuances. (a) The Transferor may from time to time
-------------
direct the Trustee, on behalf of the Trust, to issue one or more new Series
of Investor Certificates pursuant to a Supplement. The Investor Certificates
of all outstanding Series shall be equally and ratably entitled as provided
herein to the benefits of this Agreement without preference, priority or
distinction, all in accordance with the terms and provisions of this
Agreement and the applicable Supplement except, with respect to any Series or
Class, as provided in the related Supplement.
(b) On or before the Series Issuance Date relating to any new Series,
the parties hereto will execute and deliver a Supplement which will specify
the Principal Terms of such new Series. The terms of such Supplement may
modify or amend the terms of this Agreement solely as applied to such new
Series. The obligation of the Trustee to issue the Investor Certificates of
such new Series and to execute and deliver the related Supplement is subject
to the satisfaction of the following conditions:
(i) on or before the fifth Business Day immediately preceding the
Series Issuance Date, the Transferor shall have given the Trustee, the
Master Servicer, each Rating Agency, any Agent and any Enhancement
Provider written notice of such issuance and the Series Issuance Date;
(ii) the Transferor shall have delivered to the Trustee the related
Supplement, in form satisfactory to the Trustee, executed by each party
hereto other than the Trustee;
(iii) the Transferor shall have delivered to the Trustee any related
Enhancement Agreement executed by each of the parties thereto, other
than the Trustee;
(iv) the Rating Agency Condition shall have been satisfied with
respect to such issuance;
(v) such issuance will not result in the occurrence of an Early
Amortization Event and the Transferor shall have delivered to the
Trustee, any Agent and any Enhancement Provider a certificate of one of
its duly appointed managers, dated the Series Issuance Date, to the
effect that the Transferor reasonably believes that such issuance will
not result in the occurrence of an Early Amortization Event and is not
reasonably expected to result in the occurrence of an Early Amortization
Event at any time in the future;
(vi) the Transferor shall have delivered to the Trustee and any
Enhancement Provider a Tax Opinion, dated the Series Issuance Date, with
respect to such issuance; and
(vii) the result obtained by multiplying (x) the Transferor's
Participation Amount by (y) the percentage equivalent of the portion of
the Transferor's Interest represented by the FCAR Certificate, shall not
be less than 2% of the Pool Balance, in each case as of the Series
Issuance Date, and after giving effect to such issuance.
Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and issue to the Transferor the Investor Certificates of such
Series for execution and redelivery to the Trustee for authentication.
(c) The Transferor may surrender the FCAR Certificate to the Trustee in
exchange for a newly issued FCAR Certificate and a second certificate (a
"Supplemental Certificate"), the terms of which shall be defined in a
------------------------
supplement to this Agreement (which Supplement shall be subject to Section
13.01 hereof to the extent that it amends any of the terms of this
Agreement), to be delivered to or upon the order of the Transferor (or the
holder of a Supplemental Certificate, in the case of the transfer or exchange
thereof, as provided below), upon satisfaction of the following conditions:
(i) the result obtained by multiplying (x) the Transferor's
Participation Amount by (y) the percentage equivalent of the portion of
the Transferor's Interest represented by the FCAR Certificate, shall not
be less than 2% of the Pool Balance, in each case as of the date of, and
after giving effect to, such exchange;
(ii) the Rating Agency Condition shall have been satisfied with
respect such exchange (or transfer or exchange as provided below); and
(iii) the Transferor shall have delivered to the Trustee, any Agent
and any Enhancement Provider a Tax Opinion, dated the date of such
exchange (or transfer or exchange as provided below), with respect
thereto.
The FCAR Certificate will at all times be beneficially owned by the
Transferor. Any Supplemental Certificate may be transferred or exchanged
only upon satisfaction of the conditions set forth in clauses (ii) and (iii)
above.
SECTION 6.04. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Trustee shall cause to be kept at the office or agency to be
maintained in accordance with the provisions of Section 11.16 a register (the
"Certificate Register") in which, subject to such reasonable regulations as
--------------------
it may prescribe, a transfer agent and registrar (which shall initially be
the Trustee) (the "Transfer Agent and Registrar") shall provide for the
----------------------------
registration of the Registered Certificates and of transfers and exchanges of
the Registered Certificates as herein provided. The Transfer Agent and
Registrar shall initially be the Trustee and any co-transfer agent and co-
registrar chosen by the Transferor and acceptable to the Trustee. So long as
any Investor Certificates are outstanding, the Transferor shall maintain a
co-transfer agent and co-registrar in New York City. Any reference in this
Agreement to the Transfer Agent and Registrar shall include any co-transfer
agent and co-registrar unless the context requires otherwise.
Subject to paragraph (c) below, upon surrender for registration of
transfer of any Registered Certificate at any office or agency of the
Transfer Agent and Registrar maintained for such purpose, one or more new
Registered Certificates (of the same Series and Class) in authorized
denominations of like aggregate fractional undivided interests in the
Certificateholders' Interest shall be executed, authenticated and delivered,
in the name of the designated transferee or transferees.
At the option of a Registered Certificateholder, Registered Certificates
(of the same Series and Class) may be exchanged for other Registered
Certificates of authorized denominations of like aggregate fractional
undivided interests in the Certificateholders' Interest, upon surrender of
the Registered Certificates to be exchanged at any such office or agency;
Registered Certificates, including Registered Certificates received in
exchange for Bearer Certificates, may not be exchanged for Bearer
Certificates. At the option of the Holder of a Bearer Certificate, subject
to applicable laws and regulations, Bearer Certificates may be exchanged for
other Bearer Certificates or Registered Certificates (of the same Series and
Class) of authorized denominations of like aggregate fractional undivided
interests in the Certificateholders' Interest, upon surrender of the Bearer
Certificates to be exchanged at an office or agency of the Transfer Agent and
Registrar located outside the United States. Each Bearer Certificate
surrendered pursuant to this Section shall have attached thereto all
unmatured Coupons; provided that any Bearer Certificate, so surrendered after
the close of business on the Record Date preceding the relevant payment date
or distribution date after the expected final payment date need not have
attached the Coupon relating to such payment date or distribution date (in
each case, as specified in the applicable Supplement).
The preceding provisions of this Section notwithstanding, the Trustee or
the Transfer Agent and Registrar, as the case may be, shall not be required
to register the transfer of or exchange any Certificate for a period of 15
days preceding the due date for any payment with respect to the Certificate.
Whenever any Investor Certificates are so surrendered for exchange, the
Transferor shall execute, the Trustee shall authenticate and the Transfer
Agent and Registrar shall deliver (in the case of Bearer Certificates,
outside the United States) the Investor Certificates which the Investor
Certificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in a form
satisfactory to the Trustee or the Transfer Agent and Registrar duly executed
by the Investor Certificateholder or the attorney-in-fact thereof duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any such transfer or exchange.
All Investor Certificates (together with any Coupons) surrendered for
registration of transfer and exchange or for payment shall be canceled and
disposed of in a manner satisfactory to the Trustee. The Trustee shall
cancel and destroy any Global Certificate upon its exchange in full for
Definitive Euro-Certificates and shall deliver a certificate of destruction
to the Transferor. Such certificate shall also state that a certificate or
certificates of a Foreign Clearing Agency to the effect referred to in
Section 6.11 was received with respect to each portion of the Global
Certificate exchanged for Definitive Euro-Certificates.
The Transferor shall execute and deliver to the Trustee Bearer
Certificates and Registered Certificates in such amounts and at such times as
are necessary to enable the Trustee to fulfill its responsibilities under
this Agreement and the Certificates.
(b) The Transfer Agent and Registrar will maintain at its expense in
each of the Borough of Manhattan, The City of New York, an office or agency
where Investor Certificates may be surrendered for registration of transfer
or exchange (except that Bearer Certificates may not be surrendered for
exchange at any such office or agency in the United States).
(c)(i) Registration of transfer of Investor Certificates containing a
legend to the effect set forth on Exhibit D-1 shall be effected only if such
transfer is made pursuant to an effective registration statement under the
Act, or is exempt from the registration requirements under the Act. In the
event that registration of a transfer is to be made in reliance upon an
exemption from the registration requirements under the Act, the transferor or
the transferee shall deliver, at its expense, to the Transferor, the Master
Servicer and the Trustee, an investment letter from the transferee,
substantially in the form attached to the applicable Supplement, and no
registration of transfer shall be made until such letter is so delivered.
Investor Certificates issued upon registration or transfer of, or
Investor Certificates issued in exchange for, Investor Certificates bearing
the legend referred to above shall also bear such legend unless the
Transferor, the Master Servicer, the Trustee and the Transfer Agent and
Registrar receive an opinion of counsel, satisfactory to each of them, to the
effect that such legend may be removed.
Whenever an Investor Certificate containing the legend referred to above
is presented to the Transfer Agent and Registrar for registration of
transfer, the Transfer Agent and Registrar shall promptly seek instructions
from the Master Servicer regarding such transfer and shall be entitled to
receive and conclusively rely upon instructions signed by a Servicing Officer
prior to registering any such transfer. The Transferor hereby agrees to
indemnify the Transfer Agent and Registrar and the Trustee and to hold each
of them harmless against any loss, liability or expense incurred without
negligence or bad faith on their part arising out of or in connection with
actions taken or omitted by them in relation to any such instructions
furnished pursuant to this clause (i).
(ii) Registration of transfer of Investor Certificates containing a
legend to the effect set forth on Exhibit D-2 shall be effected only if such
transfer is made to a Person which is not an employee benefit plan, trust or
account, including an individual retirement account, that is subject to ERISA
or that is described in Section 4975(e)(1) of the Code or an entity whose
underlying assets include plan assets by reason of a plan's investment in
such entity (a "Benefit Plan"). By accepting and holding any such Investor
------------
Certificate, an Investor Certificateholder shall be deemed to have
represented and warranted that it is not a Benefit Plan. By acquiring any
interest in a Book-Entry Certificate, a Certificate Owner shall be deemed to
have represented and warranted that it is not a Benefit Plan.
SECTION 6.05. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
(a) any mutilated Certificate (together, in the case of Bearer Certificates,
with all unmatured Coupons (if any) appertaining thereto) is surrendered to
the Transfer Agent and Registrar, or the Transfer Agent and Registrar
receives evidence to its satisfaction of the destruction, loss or theft of
any Certificate and (b) there is delivered to the Transfer Agent and
Registrar and the Trustee such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Trustee that such Certificate has been acquired by a bona fide purchaser, the
Transferor shall execute, the Trustee shall authenticate and the Transfer
Agent and Registrar shall deliver (in the case of Bearer Certificates,
outside the United States), in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
aggregate fractional undivided interest. In connection with the issuance of
any new Certificate under this Section, the Trustee or the Transfer Agent and
Registrar may require the payment by the Certificateholder of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses
of the Trustee and Transfer Agent and Registrar) connected therewith. Any
duplicate Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 6.06. Persons Deemed Owners. The Trustee, the Transfer Agent
---------------------
and Registrar and any agent of any of them may (a) prior to due presentation
of a Registered Certificate for registration of transfer, treat the Person or
Persons in whose name any Registered Certificate is registered as the owner
of such Registered Certificate for the purpose of receiving distributions
pursuant to the terms of the applicable Supplement and for all other purposes
whatsoever, and (b) treat the bearer of a Bearer Certificate or Coupon as the
owner of such Bearer Certificate or Coupon for the purpose of receiving
distributions pursuant to the terms of the applicable Supplement and for all
other purposes whatsoever; and, in any such case, neither the Trustee, the
Transfer Agent and Registrar nor any agent of any of them shall be affected
by any notice to the contrary. Notwithstanding the foregoing, in determining
whether the Holders of the requisite Investor Certificates have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, Certificates owned by the Transferor, the Master Servicer, any
other holder of a Transferor's Certificate or any Affiliate thereof, shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Certificates which a Responsible Officer of the Trustee knows to be so owned
shall be so disregarded. Certificates so owned which have been pledged in
good faith shall not be disregarded and may be regarded as outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so
to act with respect to such Certificates and that the pledgee is not the
Transferor, the Master Servicer, any other holder of a Transferor's
Certificate or any Affiliate thereof.
SECTION 6.07. Access to List of Registered Certificateholders' Names
------------------------------------------------------
and Addresses. The Trustee will furnish or cause to be furnished by the
- -------------
Transfer Agent and Registrar to the Master Servicer, within five business
days after receipt by the Trustee of a request therefor, a list in such form
as the Master Servicer may reasonably require, of the names and addresses of
the Registered Certificateholders. If three or more holders of Investor
Certificates (the "Applicants") apply to the Trustee, and such application
----------
states that the Applicants desire to communicate with other Investor
Certificateholders with respect to their rights under this Agreement or any
Supplement or under the Investor Certificates and is accompanied by a copy of
the communication which such Applicants propose to transmit, then the
Trustee, after having been indemnified to its reasonable satisfaction by such
Applicants for its costs and expenses, shall afford or shall cause the
Transfer Agent and Registrar to afford such Applicants access during normal
business hours to the most recent list of Registered Certificateholders of
such Series or all outstanding Series, as applicable, held by the Trustee,
within five Business Days after the receipt of such application. Such list
shall be as of a date no more than 45 days prior to the date of receipt of
such Applicants' request.
Every Registered Certificateholder, by receiving and holding a
Registered Certificate, agrees with the Trustee that neither the Trustee, the
Transfer Agent and Registrar, nor any of their respective agents, shall be
held accountable by reason of the disclosure of any such information as to
the names and addresses of the Registered Certificateholders hereunder,
regardless of the sources from which such information was derived.
SECTION 6.08. Book-Entry Certificates. Unless otherwise specified in
-----------------------
the related Supplement for any Series or Class, the Investor Certificates,
upon original issuance, shall be issued in the form of one or more
typewritten Investor Certificates representing the Book-Entry Certificates,
to be delivered to the Depository, by, or on behalf of, the Transferor. The
Investor Certificates shall initially be registered on the Certificate
Register in the name of the Depository or its nominee, and no Certificate
Owner will receive a definitive certificate representing such Certificate
Owner's interest in the Investor Certificates, except as provided in Section
6.10. Unless and until definitive, fully registered Investor Certificates
("Definitive Certificates") have been issued to the applicable Certificate
-----------------------
Owners pursuant to Section 6.10 or as otherwise specified in any such
Supplement:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Transferor, the Master Servicer and the Trustee may deal
with the Depository and the Depository Participants for all purposes
(including the making of distributions) as the authorized
representatives of the respective Certificate Owners;
(c) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control; and
(d) the rights of the respective Certificate Owners shall be
exercised only through the Depository and the Depository Participants
and shall be limited to those established by law and agreements between
such Certificate Owners and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 6.10, the
Depository will make book-entry transfers among the Depository
Participants and receive and transmit distributions of principal and
interest on the related Investor Certificates to such Depository
Participants.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Investor
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of Investor Certificates, such direction or consent may be
given by Certificate Owners (acting through the Depository and the Depository
Participants) owning Investor Certificates evidencing the requisite
percentage of principal amount of Investor Certificates.
SECTION 6.09. Notices to Depository. Whenever any notice or other
---------------------
communication is required to be given to Investor Certificateholders of any
Series or Class with respect to which Book-Entry Certificates have been
issued, unless and until Definitive Certificates shall have been issued to
the related Certificate Owners, the Trustee shall give all such notices and
communications to the applicable Depository.
SECTION 6.10. Definitive Certificates. If Book-Entry Certificates have
-----------------------
been issued with respect to any Series or Class and (a) the Transferor
advises the Trustee that the Depository is no longer willing or able to
discharge properly its responsibilities under the Depository Agreement with
respect to such Series or Class and the Trustee or the Transferor is unable
to locate a qualified successor, (b) the Transferor, at its option, advises
the Trustee that it elects to terminate the book-entry system with respect to
such Series or Class through the Depository or (c) after the occurrence of a
Servicing Default, Certificate Owners of such Series or Class evidencing not
less than 50% of the aggregate unpaid principal amount of such Series or
Class advise the Trustee and the Depository through the Depository
Participants that the continuation of a book-entry system with respect to the
Investor Certificates of such Series or Class through the Depository is no
longer in the best interests of the Certificate Owners with respect to such
Certificates, then the Trustee shall notify all Certificate Owners of such
Certificates, through the Depository, of the occurrence of any such event and
of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Trustee of any such Certificates
by the Depository, accompanied by registration instructions from the
Depository for registration, the Trustee shall authenticate and deliver such
Definitive Certificates. Neither the Transferor nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. Upon the
issuance of such Definitive Certificates all references herein to obligations
imposed upon or to be performed by the Depository shall be deemed to be
imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of such Definitive Certificates as Investor Certificateholders
hereunder.
SECTION 6.11. Global Certificate; Exchange Date. (a) If specified in
---------------------------------
the related Supplement for any Series or Class, the Investor Certificates
will initially be issued in the form of a single temporary global Certificate
(the "Global Certificate") in bearer form, without interest coupons, in the
------------------
denomination of the entire aggregate principal amount of such Series or Class
and substantially in the form set forth in the exhibit with respect thereto
attached to the related Supplement. The Global Certificate will be
authenticated by the Trustee upon the same conditions, in substantially the
same manner and with the same effect as the Definitive Certificates. The
Global Certificate may be exchanged as described below for Bearer or
Registered Certificates in definitive form (the "Definitive Euro-
----------------
Certificates").
- ------------
(b) The Manager shall, upon its determination of the date of completion
of the distribution of the Investor Certificates of such Series or Class, so
advise the Trustee, the Transferor, the Common Depositary, and each Foreign
Clearing Agency forthwith. Without unnecessary delay, but in any event not
prior to the Exchange Date, the Transferor will execute and deliver to the
Trustee at its London office or its designated agent outside the United
States definitive Bearer Certificates in an aggregate principal amount equal
to the entire aggregate principal amount of such Series or Class. All Bearer
Certificates so issued and delivered will have Coupons attached. The Global
Certificate may be exchanged for an equal aggregate principal amount of
Definitive Euro-Certificates only on or after the Exchange Date. A United
States institutional investor may exchange the portion of the Global
Certificate beneficially owned by it only for an equal aggregate principal
amount of Registered Certificates bearing the applicable legend set forth in
the form of Registered Certificate attached to the related Supplement and
having a minimum denomination of $500,000, which may be in temporary form if
the Transferor so elects. The Transferor may waive the $500,000 minimum
denomination requirement if it so elects. Upon any demand for exchange for
Definitive Euro-Certificates in accordance with this paragraph, the
Transferor shall cause the Trustee to authenticate and deliver the Definitive
Euro-Certificates to the Holder (x) outside the United States, in the case of
Bearer Certificates, and (y) according to the instructions of the Holder, in
the case of Registered Certificates, but in either case only upon
presentation to the Trustee of a written statement substantially in the form
of Exhibit F-1 with respect to the Global Certificate or portion thereof
being exchanged, signed by a Foreign Clearing Agency and dated on the
Exchange Date or a subsequent date, to the effect that it has received in
writing or by tested telex a certification substantially in the form of (i)
in the case of beneficial ownership of the Global Certificate or a portion
thereof being exchanged by a United States institutional investor pursuant to
the second preceding sentence, the certificate in the form of Exhibit F-2
signed by the Manager which sold the relevant Certificates or (ii) in all
other cases, the certificate in the form of Exhibit F-3, the certificate
referred to in this clause (ii) being dated on the earlier of the first
actual payment of interest in respect of such Certificates and the date of
the delivery of such Certificate in definitive form. Upon receipt of such
certification, the Trustee shall cause the Global Certificate to be endorsed
in accordance with paragraph (d) below. Any exchange as provided in this
Section shall be made free of charge to the holders and the beneficial owners
of the Global Certificate and to the beneficial owners of the Definitive
Euro-Certificates issued in exchange, except that a person receiving
Definitive Euro-Certificates must bear the cost of insurance, postage,
transportation and the like in the event that such person does not receive
such Definitive Euro-Certificates in person at the offices of a Foreign
Clearing Agency.
(c) The delivery to the Trustee by a Foreign Clearing Agency of any
written statement referred to above may be relied upon by the Transferor and
the Trustee as conclusive evidence that a corresponding certification or
certifications has or have been delivered to such Foreign Clearing Agency
pursuant to the terms of this Agreement.
(d) Upon any such exchange of all or a portion of the Global
Certificate for a Definitive Euro-Certificate or Certificates, such Global
Certificate shall be endorsed by or on behalf of the Trustee to reflect the
reduction of its principal amount by an amount equal to the aggregate
principal amount of such Definitive Euro-Certificate or Certificates. Until
so exchanged in full, such Global Certificate shall in all respects be
entitled to the same benefits under this Agreement as Definitive
Euro-Certificates authenticated and delivered hereunder except that the
beneficial owners of such Global Certificate shall not be entitled to receive
payments of interest on the Certificates until they have exchanged their
beneficial interests in such Global Certificate for Definitive
Euro-Certificates.
SECTION 6.12. Meetings of Certificateholders. (a) If at the time any
------------------------------
Bearer Certificates are issued and outstanding with respect to any Series or
Class to which any meeting described below relates, the Master Servicer or
the Trustee may at any time call a meeting of Investor Certificateholders of
any Series or Class or of all Series, to be held at such time and at such
place as the Master Servicer or the Trustee, as the case may be, shall
determine, for the purpose of approving a modification of or amendment to, or
obtaining a waiver of any covenant or condition set forth in, this Agreement,
any Supplement or the Investor Certificates or of taking any other action
permitted to be taken by Investor Certificateholders hereunder or under any
Supplement. Notice of any meeting of Investor Certificateholders, setting
forth the time and place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be given in accordance with
Section 13.05, the first mailing and publication to be not less than 20 nor
more than 180 days prior to the date fixed for the meeting. To be entitled
to vote at any meeting of Investor Certificateholders a person shall be (i) a
Holder of one or more Investor Certificates of the applicable Series or Class
or (ii) a person appointed by an instrument in writing as proxy by the Holder
of one or more such Investor Certificates. The only persons who shall be
entitled to be present or to speak at any meeting of Investor
Certificateholders shall be the persons entitled to vote at such meeting and
their counsel and any representatives of the Transferor, the Master Servicer
and the Trustee and their respective counsel.
(b) At a meeting of Investor Certificateholders, persons entitled to
vote Investor Certificates evidencing a majority of the aggregate unpaid
principal amount of the applicable Series or Class or all outstanding Series,
as the case may be, shall constitute a quorum. No business shall be
transacted in the absence of a quorum, unless a quorum is present when the
meeting is called to order. In the absence of a quorum at any such meeting,
the meeting may be adjourned for a period of not less than 10 days; in the
absence of a quorum at any such adjourned meeting, such adjourned meeting may
be further adjourned for a period of not less than 10 days; at the
reconvening of any meeting further adjourned for lack of a quorum, the
persons entitled to vote Investor Certificates evidencing at least 25% of the
aggregate unpaid principal amount of the applicable Series or Class or all
outstanding Series, as the case may be, shall constitute a quorum for the
taking of any action set forth in the notice of the original meeting. Notice
of the reconvening of any adjourned meeting shall be given as provided above
except that such notice must be given not less than five days prior to the
date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage of
the aggregate principal amount of the outstanding applicable Investor
Certificates which shall constitute a quorum.
(c) Any Investor Certificateholder who has executed an instrument in
writing appointing a person as proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided that
such Investor Certificateholder shall be considered as present or voting only
with respect to the matters covered by such instrument in writing. Subject
to the provisions of Section 13.01, any resolution passed or decision taken
at any meeting of Investor Certificateholders duly held in accordance with
this Section shall be binding on all Investor Certificateholders whether or
not present or represented at the meeting.
(d) The holding of Bearer Certificates shall be proved by the
production of such Bearer Certificates or by a certificate, satisfactory to
the Master Servicer, executed by any bank, trust company or recognized
securities dealer, wherever situated, satisfactory to the Master Servicer.
Each such certificate shall be dated and shall state that on the date thereof
a Bearer Certificate bearing a specified serial number was deposited with or
exhibited to such bank, trust company or recognized securities dealer by the
person named in such certificate. Any such certificate may be issued in
respect of one or more Bearer Certificates specified therein. The holding by
the person named in any such certificate of any Bearer Certificate specified
therein shall be presumed to continue for a period of one year from the date
of such certificate unless at the time of any determination of such holding
(i) another certificate bearing a later date issued in respect of the same
Bearer Certificate shall be produced, (ii) the Bearer Certificate specified
in such certificate shall be produced by some other person or (iii) the
Bearer Certificate specified in such certificate shall have ceased to be
outstanding. The appointment of any proxy shall be proved by having the
signature of the person executing the proxy guaranteed by any bank, trust
company or recognized securities dealer satisfactory to the Trustee.
(e) The Trustee shall appoint a temporary chairman of the meeting. A
permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the holders of Investor Certificates evidencing a majority of the
aggregate unpaid principal amount of Investor Certificates of the applicable
Series or Class or all outstanding Series, as the case may be, represented at
the meeting. No vote shall be cast or counted at any meeting in respect of
any Investors Certificate challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The chairman of the meeting
shall have no right to vote except as an Investor Certificateholder or proxy.
Any meeting of Investor Certificateholders duly called at which a quorum is
present may be adjourned from time to time, and the meeting may be held as so
adjourned without further notice.
(f) The vote upon any resolution submitted to any meeting of Investor
Certificateholders shall be by written ballot on which shall be subscribed
the signatures of Investor Certificateholders or proxies and on which shall
be inscribed the serial number or numbers of the Investor Certificates held
or represented by them. The permanent chairman of the meeting shall appoint
two inspectors of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of
Investor Certificateholders shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one
or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was published as provided
above. The record shall be signed and verified by the permanent chairman and
secretary of the meeting and one of the duplicates shall be delivered to the
Master Servicer and the other to the Trustee to be preserved by the Trustee,
the latter to have attached thereto the ballots voted at the meeting. Any
record so signed and verified shall be conclusive evidence of the matters
therein stated.
ARTICLE VII
Other Matters Relating
----------------------
to the Transferor
-----------------
SECTION 7.01. Liability of the Transferor. The Transferor shall
---------------------------
be liable for all obligations, covenants, representations and warranties of
the Transferor arising under or related to this Agreement. Except as
provided in the preceding sentence, the Transferor shall be liable only to
the extent of the obligations specifically undertaken by it in its capacity
as Transferor hereunder.
SECTION 7.02. Limitation on Liability of the Transferor. Subject to
-----------------------------------------
Sections 7.01 and 7.03, neither the Transferor nor any of the directors,
members, managers, officers, employees or agents of the Transferor in its
capacity as Transferor shall be under any liability to the Trust, the
Trustee, the Certificateholders or any other Person for any action taken or
for refraining from the taking of any action in the capacity as Transferor
pursuant to this Agreement whether arising from express or implied duties
under this Agreement; provided, however, that this provision shall not
-------- -------
protect the Transferor or any such person against any liability which would
otherwise be imposed by reason of wilful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Transferor and any director, member,
manager, officer, employee or agent of the Transferor may rely in good faith
on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder.
SECTION 7.03. Transferor Indemnification of the Trust and the Trustee.
-------------------------------------------------------
The Transferor shall indemnify and hold harmless the Trust, for the benefit
of the Certificateholders and the other Beneficiaries, and the Trustee from
and against any loss, liability, expense, damage or injury suffered or
sustained by reason of any acts, omissions or alleged acts or omissions
arising out of activities of the Trust or the Trustee pursuant to this
Agreement, including any judgment, award, settlement, reasonable attorneys'
fees and other costs or expenses incurred in connection with the defense of
any actual or threatened action, proceeding or claim; provided, however, that
-------- -------
the Transferor shall not indemnify the Trust or the Trustee if such acts,
omissions or alleged acts or omissions constitute fraud, gross negligence,
breach of fiduciary duty or wilful misconduct by the Trustee; and provided
--------
further that the Transferor shall not indemnify the Trust, Trustee or the
- -------
Certificateholders or any other Beneficiaries for any liabilities, cost or
expense of the Trust with respect to any action taken by the Trustee at the
request of any such Certificateholders or other Beneficiaries to the extent
the Trustee is fully indemnified by such Certificateholders or other
Beneficiaries with respect to such action or with respect to any Federal,
state or local income or franchise taxes (or any interest or penalties with
respect thereto) required to be paid by the Trust or any Certificateholder or
other Beneficiary in connection herewith to any taxing authority. Subject to
Section 7.01, any indemnification pursuant to this Section shall only be from
(i) the excess of the Transferor's Interest for any date of determination
over the Required Participation Amount as of such date and (ii) any other
assets of the Transferor not pledged to third parties or otherwise encumbered
in a manner permitted by the Transferor's Certificate of Formation and shall
only be made after payment in full of any amounts that the Transferor is
obligated to deposit in the Collection Account pursuant to this Agreement.
Any indemnification under this Article VII shall survive the termination of
this Agreement.
ARTICLE VIII
Other Matters Relating
----------------------
to the Master Servicer
----------------------
SECTION 8.01. Liability of the Master Servicer. The Master Servicer
--------------------------------
shall be liable under this Article VIII only to the extent of the obligations
specifically undertaken by the Master Servicer in its capacity as Master
Servicer.
SECTION 8.02. Merger or Consolidation of, or Assumption of, the
-------------------------------------------------
Obligations of the Master Servicer. The Master Servicer shall not
- ----------------------------------
consolidate with or merge into any other corporation or convey or transfer
its properties and assets substantially as an entirety to any Person, unless:
(a) the corporation formed by such consolidation or into which the
Master Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Master Servicer substantially
as an entirety shall be a corporation organized and existing under the
laws of the United States of America or any State or the District of
Columbia and, if the Master Servicer is not the surviving entity, such
corporation shall assume, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, the
performance of every covenant and obligation of the Master Servicer
hereunder; and
(b) the Master Servicer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer comply with this Section
8.02 and that all conditions precedent herein provided for relating to
such transaction have been complied with.
SECTION 8.03. Limitation on Liability of the Master Servicer and
--------------------------------------------------
Others. Except as provided in Section 8.04, neither the Master Servicer nor
- ------
any of the directors or officers or employees or agents of the Master
Servicer, shall be under any liability to the Trust, the Trustee, the
Certificateholders or any other Person for any action taken or for refraining
from the taking of any action in its capacity as Master Servicer pursuant to
this Agreement; provided, however, that this provision shall not protect the
-------- -------
Master Servicer or any such person against any liability which would
otherwise be imposed by reason of wilful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Master Servicer and any director or
officer or employee or agent of the Master Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Master Servicer shall
not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Receivables in
accordance with this Agreement which in its reasonable opinion may involve it
in any expense or liability.
SECTION 8.04. Master Servicer Indemnification of the Trust and the
----------------------------------------------------
Trustee. The Master Servicer shall indemnify and hold harmless the Trust,
- -------
for the benefit of the Certificateholders and the other Beneficiaries, and
the Trustee, from and against any loss, liability, expense, damage or injury
suffered or sustained by reason of any acts, omissions or alleged acts or
omissions arising out of activities of the Master Servicer, the Trust or the
Trustee pursuant to this Agreement, including any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred
in connection with the defense of any actual or threatened action, proceeding
or claim; provided, however, that the Master Servicer shall not indemnify the
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Trust or the Trustee if such acts, omissions or alleged acts or omissions
constitute fraud, gross negligence, breach of fiduciary duty or wilful
misconduct by the Trustee; and provided further that the Master Servicer
-------- -------
shall not indemnify the Trust, the Trustee or the Certificateholders or the
other Beneficiaries for any liabilities, cost or expense of the Trust with
respect to any action taken by the Trustee at the request of the
Certificateholders or any other Beneficiaries to the extent the Trustee is
fully indemnified by such Certificateholders or other Beneficiaries with
respect to such action or with respect to any Federal, state or local income
or franchise taxes (or any interest or penalties with respect thereto)
required to be paid by the Trust or the Certificateholders or the other
Beneficiaries in connection herewith to any taxing authority. Any
indemnification under this Article VIII shall survive the termination of this
Agreement and the resignation and removal of the Trustee.
SECTION 8.05. The Master Servicer Not to Resign. The Master Servicer
---------------------------------
shall not resign from the obligations and duties hereby imposed on it except
upon determination that (a) the performance of its duties hereunder is no
longer permissible under applicable law and (b) there is no reasonable action
which the Master Servicer could take to make the performance of its duties
hereunder permissible under applicable law. Any such determination
permitting the resignation of the Master Servicer shall be evidenced as to
clause (a) above by an Opinion of Counsel to such effect delivered to the
Trustee. No such resignation shall become effective until the Trustee or a
Successor Master Servicer shall have assumed the responsibilities and
obligations of the Master Servicer in accordance with Section 10.02 hereof.
If the Trustee is unable within 120 days of the date of such determination to
appoint a Successor Master Servicer, the Trustee shall serve as Successor
Master Servicer hereunder.
SECTION 8.06. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
the Receivables. The Master Servicer shall provide to the Trustee access to
- ---------------
the documentation regarding the Accounts and the Receivables in such cases
where the Trustee is required in connection with the enforcement of the
rights of the Certificateholders, or by applicable statutes or regulations to
review such documentation, such access being afforded without charge but only
(a) upon reasonable request, (b) during normal business hours, (c) subject to
the Master Servicer's normal security and confidentiality procedures and (d)
at offices designated by the Master Servicer. Nothing in this Section 8.06
shall derogate from the obligation of the Transferor, the Trustee or the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Dealers and the failure of the Master Servicer to
provide access as provided in this Section 8.06 as a result of such
obligation shall not constitute a breach of this Section 8.06.
SECTION 8.07. Delegation of Duties. Subject to Section 3.01, in the
--------------------
ordinary course of business, the Master Servicer may at any time delegate any
duties hereunder to any Person who agrees to conduct such duties in
accordance with the Floorplan Financing Guidelines and this Agreement. The
Master Servicer shall give prompt written notice of any such delegation of a
material function to the Rating Agencies, any Agent and any Enhancement
Providers. Such delegation shall not relieve the Master Servicer of its
liability and responsibility with respect to such duties, and shall not
constitute a resignation within the meaning of Section 8.05 and written
notice shall have been delivered to each applicable Rating Agency with
respect to such delegation prior to such delegation.
SECTION 8.08. Examination of Records. The Transferor and the Master
----------------------
Servicer shall indicate generally in its computer files or other records that
the Receivables arising in the Accounts have been conveyed to the Trust
pursuant to this Agreement for the benefit of the Certificateholders and the
other Beneficiaries. The Transferor and the Master Servicer shall, prior to
the sale or transfer to a third party of any receivable held in its custody,
examine its computer and other records to determine that such receivable is
not a Receivable.
SECTION 8.09. Additional Expenses. The Master Servicer covenants and
-------------------
agrees to pay from time to time such reasonable costs, fees and expenses as
may be incurred by third parties designated by the Transferor in connection
with the provisions of services directly or indirectly to the Trust or
otherwise in connection with the facilitation of an offering of the
Certificates of one or more Classes issued hereunder, subject in each case to
written notice having been delivered to each applicable Rating Agency prior
to the incurrence of such expense by the Master Servicer.
ARTICLE IX
Early Amortization Events
-------------------------
SECTION 9.01. Early Amortization Events. If any one of the following
-------------------------
events shall occur:
(a) a failure by the Transferor to convey Receivables in
Additional Accounts to the Trust within five Business Days after the day
on which it is required to convey such Receivables pursuant to this
Agreement;
(b) the Transferor or the Seller shall file a petition commencing
a voluntary case under any chapter of the Federal bankruptcy laws; or
the Transferor or the Seller shall file a petition or answer or consent
seeking reorganization, arrangement, adjustment, or composition under
any other similar applicable Federal law, or shall consent to the filing
of any such petition, answer, or consent; or the Transferor or the
Seller shall appoint, or consent to the appointment of, a custodian,
receiver, liquidator, trustee, assignee, sequestrator or other similar
official in bankruptcy or insolvency of it or of any substantial part of
its property; or the Transferor or the Seller shall make an assignment
for the benefit of creditors, or shall admit in writing its inability to
pay its debts generally as they become due;
(c) any order for relief against the Transferor or the Seller
shall have been entered by a court having jurisdiction in the premises
under any chapter of the Federal bankruptcy laws, and such order shall
have continued undischarged or unstayed for a period of 60 days; or a
decree or order by a court having jurisdiction in the premises shall
have been entered approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of the
Transferor or the Seller under any other similar applicable Federal law,
and such decree or order shall have continued undischarged or unstayed
for a period of 120 days; or a decree or order of a court having
jurisdiction in the premises for the appointment of a custodian,
receiver, liquidator, trustee, assignee, sequestrator, or other similar
official in bankruptcy or insolvency of the Transferor or the Seller or
of any substantial part of its property or for the winding up or
liquidation of its affairs, shall have been entered, and such decree or
order shall have remained in force undischarged or unstayed for a period
of 120 days;
(d) Ford shall file a petition commencing a voluntary case under
any chapter of the Federal bankruptcy laws; or Ford shall file a
petition or answer or consent seeking reorganization, arrangement,
adjustment, or composition under any other similar applicable Federal
law, or shall consent to the filing of any such petition, answer, or
consent; or Ford shall appoint, or consent to the appointment of, a
custodian, receiver, liquidator, trustee, assignee, sequestrator or
other similar official in bankruptcy or insolvency of it or of any
substantial part of its property; or Ford shall make an assignment for
the benefit of creditors, or shall admit in writing its inability to pay
its debts generally as they become due;
(e) any order for relief against Ford shall have been entered by a
court having jurisdiction in the premises under any chapter of the
Federal bankruptcy laws, and such order shall have continued
undischarged or unstayed for a period of 60 days; or a decree or order
by a court having jurisdiction in the premises shall have been entered
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of Ford under any other similar
applicable Federal law, and such decree or order shall have continued
undischarged or unstayed for period of 120 days; or a decree or order of
a court having jurisdiction in the premises for the appointment of a
custodian, receiver, liquidator, trustee, assignee, sequestrator, or
other similar official in bankruptcy or insolvency of Ford or of any
substantial part of its property, or for the winding up or liquidation
of its affairs, shall have been entered, and such decree or order shall
have remained in force undischarged or unstayed for a period of 120
days;
(f) failure on the part of the Transferor, the Master Servicer or
the Seller, as applicable, (i) to make any payment or deposit (including
any Transfer Deposit Amount or Adjustment Payment) required by the terms
of this Agreement or the applicable Receivables Purchase Agreement on or
before the date occurring two Business Days after the date such payment
or deposit is required to be made herein, or (ii) with respect to any
Series, to deliver a Distribution Date Statement within five Business
Days of the day such item is due to be delivered under this Agreement,
or (iii) duly to observe or perform in any material respect the covenant
of the Transferor set forth in Section 2.06(a) or (iv) duly to observe
or perform in any material respect any other covenants or agreements of
the Transferor or the Master Servicer, as the case may be, set forth in
this Agreement or the Receivables Purchase Agreement, which failure in
the case of this clause (iv) continues unremedied for a period of 45
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Transferor by the
Trustee or any Enhancement Provider;
(g) any representation or warranty made by the Seller in the
Receivables Purchase Agreement or the Transferor in this Agreement or
any information contained in a computer file or microfiche or written
list required to be delivered by the Transferor pursuant to Section
2.01, 2.05, 2.07 or 2.08, (i) shall prove to have been incorrect in any
material respect when made or when delivered, and shall continue to be
incorrect in any material respect for a period of 60 days after the date
on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Transferor by the Trustee and
(ii) as a result of such incorrectness the interests of the Holders of
the Investor Certificates are materially and adversely affected;
provided, however, that an Early Amortization Event shall not be deemed
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to have occurred under this paragraph if the Transferor has repurchased
the related Receivable or all such Receivables, if applicable, during
such period in accordance with the provisions of this Agreement; or
(h) the Trust or the Transferor shall become an "investment
company" within the meaning of the Investment Company Act;
then, subject to applicable law, and after the applicable grace period, if
any, an amortization event (an "Early Amortization Event") shall occur
------------------------
without any notice or other action on the part of the Trustee, any Agent, the
Certificateholders or any other Beneficiary, immediately upon the occurrence
of such event.
ARTICLE X
Servicing Defaults
------------------
SECTION 10.01. Servicing Defaults. If any one of the following events
------------------
(a "Servicing Default") shall occur and be continuing with respect to the
-----------------
Servicer:
(a) any failure by the Master Servicer to make any payment,
transfer or deposit or to give instructions or to give notice to the
Trustee to make such payment, transfer or deposit or to give notice to
the Trustee as to any action to be taken under any Enhancement Agreement
on or before the date occurring five days after the date such payment,
transfer or deposit or such instruction or notice is required to be made
or given, as the case may be, under the terms of this Agreement;
(b) failure on the part of the Master Servicer duly to observe or
perform any other covenants or agreements of the Master Servicer set
forth in this Agreement which has a material adverse effect on the
Investor Certificateholders of any Series, which continues unremedied
for a period of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Master Servicer by the Trustee; or the Master Servicer shall delegate
its duties under this Agreement, except as permitted by Sections 3.01
and 8.07;
(c) any representation, warranty or certification made by the
Master Servicer in this Agreement or in any certificate delivered
pursuant to this Agreement shall prove to have been incorrect when made,
which has a material adverse effect on the rights of the Investor
Certificateholders of any Series and which material adverse effect
continues for a period of 60 days after the date on which written notice
thereof, requiring the same to be remedied, shall have been given to the
Master Servicer by the Trustee;
(d) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator or other similar official in any
bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Master Servicer
or of or relating to all or substantially all of its property, or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator or
receiver or liquidator or other similar official in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such decree or order
shall have remained in force undischarged or unstayed; or the Master
Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
bankruptcy, insolvency or reorganization statute, make any assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations; then, in the event of any Servicing Default, so long as the
Servicing Default shall not have been remedied, the Trustee, by notice
then given in writing to the Master Servicer (a "Termination Notice"),
------------------
may terminate all but not less than all of the rights and obligations
(other than its obligations that have accrued up to the time of such
termination) of the Master Servicer as Master Servicer under this
Agreement and in and to the Receivables and the proceeds thereof. After
receipt by the Master Servicer of a Termination Notice, and on the date
that a Successor Master Servicer shall have been appointed by the
Trustee pursuant to Section 10.02, all authority and power of the Master
Servicer under this Agreement shall pass to and be vested in a Successor
Master Servicer (a "Servicing Transfer") and, without limitation, the
------------------
Trustee is hereby authorized and empowered (upon the failure of the
Master Servicer to cooperate) to execute and deliver, on behalf of the
Master Servicer, as attorney-in-fact or otherwise, all documents and
other instruments upon the failure of the Master Servicer to execute or
deliver such documents or instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of
such Servicing Transfer. The Master Servicer agrees to cooperate with
the Trustee and such Successor Master Servicer in effecting the
termination of the responsibilities and rights of the Master Servicer to
conduct servicing hereunder, including the transfer to such Successor
Master Servicer of all authority of the Master Servicer to service the
Receivables provided for under this Agreement, including all authority
over all Collections which shall on the date of transfer be held by the
Master Servicer for deposit, or which have been deposited by the Master
Servicer, in the Collection Account, or which shall thereafter be
received with respect to the Receivables, and in assisting the Successor
Master Servicer. The Master Servicer shall promptly transfer its
electronic records relating to the Receivables to the Successor Master
Servicer in such electronic form as the Successor Master Servicer may
reasonably request and shall promptly transfer to the Successor Master
Servicer all other records, correspondence and documents necessary for
the continued servicing of the Receivables in the manner and at such
times as the Successor Master Servicer shall reasonably request. To the
extent that compliance with this Section 10.01 shall require the Master
Servicer to disclose to the Successor Master Servicer information of any
kind which the Master Servicer reasonably deems to be confidential, the
Successor Master Servicer shall be required to enter into such customary
licensing and confidentiality agreements as the Master Servicer shall
deem necessary to protect its interest.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 10.01(a) for a period of 10 Business Days or under Section
10.01(b) or (c) for a period of 60 Business Days, shall not constitute a
Servicing Default if such delay or failure could not be prevented by the
exercise of reasonable diligence by the Master Servicer and such delay
or failure was caused by an act of God or the public enemy, acts of
declared or undeclared war, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes, earthquakes, floods
or similar causes. The preceding sentence shall not relieve the Master
Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of this
Agreement and the Master Servicer shall provide the Trustee, any Agents,
any Enhancement Providers, the Transferor and the Certificateholders
with an Officers' Certificate giving prompt notice of such failure or
delay by it, together with a description of its efforts so to perform
its obligations. The Master Servicer shall immediately notify the
Trustee in writing of any Servicing Default.
SECTION 10.02. Trustee to Act; Appointment of Successor. (a) On
----------------------------------------
and after the receipt by the Master Servicer of a Termination Notice pursuant
to Section 10.01, the Master Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Termination
Notice or otherwise specified by the Trustee in writing or, if no such date
is specified in such Termination Notice, or otherwise specified by the
Trustee, until a date mutually agreed upon by the Master Servicer and
Trustee. The Trustee shall as promptly as possible after the giving of a
Termination Notice appoint an Eligible Master Servicer as a successor
servicer (the "Successor Servicer"), subject to the consent of any
------------------
Enhancement Providers and any Agents, which consent shall not be unreasonably
withheld, and such Successor Master Servicer shall accept its appointment by
a written assumption in a form acceptable to the Trustee. In the event that
a Successor Master Servicer has not been appointed or has not accepted its
appointment at the time when the Master Servicer ceases to act as Master
Servicer, the Trustee without further action shall automatically be appointed
the Successor Master Servicer. The Trustee may delegate any of its servicing
obligations to an affiliate or agent in accordance with Sections 3.01 and
8.07. Notwithstanding the above, the Trustee shall, if it is legally unable
so to act, 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 wholesale receivables as the
Successor Master Servicer hereunder. The Trustee shall immediately give
notice to the Rating Agencies, any Enhancement Providers, any Agents and the
Certificateholders upon the appointment of a Successor, any Agents Master
Servicer.
(b) Upon its appointment, the Successor Master Servicer shall be the
successor in all respects to the Master Servicer with respect to servicing
functions under this Agreement and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Master Servicer by the terms and provisions hereof (except that the Successor
Master Servicer shall not be liable for any liabilities incurred by the
predecessor Servicer), and all references in this Agreement to the Master
Servicer shall be deemed to refer to the Successor Master Servicer. Any
Successor Master Servicer, by its acceptance of its appointment, will
automatically agree to be bound by the terms and provisions of any
Enhancement Agreement.
(c) In connection with any Termination Notice, the Trustee will review
any bids which it obtains from Eligible Servicers and shall be permitted to
appoint any Eligible Master Servicer submitting such a bid as a Successor
Master Servicer for servicing compensation not in excess of the Servicing Fee
(provided that if all such bids exceed the Servicing Fee the Transferor at
its own expense shall pay when due the amount of any compensation in excess
of the Servicing Fee); provided, however, that the Transferor shall be
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responsible for payment of the Transferor's portion of the Servicing Fee as
determined pursuant to this Agreement and all other amounts in excess of the
Investors' Servicing Fee, and that no such monthly compensation paid out of
Collections shall be in excess of the Investors' Servicing Fee permitted to
the Master Servicer. The holders of the Transferor's Certificates agree that
if Ford Credit (or any Successor Servicer) is terminated as Master Servicer
hereunder, the portion of Collections to be paid to the Transferor shall be
reduced by an amount sufficient to pay Transferor's share of the compensation
of the Successor Master Servicer.
(d) All authority and power granted to the Successor Master Servicer
under this Agreement shall automatically cease and terminate upon termination
of the Trust pursuant to Section 12.01, and shall pass to and be vested in
the Transferor and, without limitation, the Transferor is hereby authorized
and empowered to execute and deliver, on behalf of the Successor Master
Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights. The
Successor Master Servicer agrees to cooperate with the Transferor in
effecting the termination of the responsibilities and rights of the Successor
Master Servicer to conduct servicing on the Receivables. The Successor
Master Servicer shall transfer its electronic records relating to the
Receivables to the Transferor in such electronic form as the Transferor may
reasonably request and shall transfer all other records, correspondence and
documents to the Transferor in the manner and at such times as the Transferor
shall reasonably request. To the extent that compliance with this Section
10.02 shall require the Successor Master Servicer to disclose to the
Transferor information of any kind which the Successor Master Servicer deems
to be confidential, the Transferor shall be required to enter into such
customary licensing and confidentiality agreements as the Successor Master
Servicer shall deem necessary to protect its interests.
ARTICLE XI
The Trustee
-----------
SECTION 11.01. Duties of Trustee. (a) The Trustee, prior to the
-----------------
occurrence of a Servicing Default of which it has knowledge and after the
curing of all Servicing Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in
this Agreement. If a Servicing Default to the knowledge of a Responsible
Officer of the Trustee has occurred (which has not been cured or waived), the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they substantially conform to the requirements of this Agreement.
(c) Subject to Section 11.01(a), no provision of this Agreement shall
be construed to relieve the Trustee from liability for its own grossly
negligent action, its own grossly negligent failure to act or its own wilful
misconduct; provided, however, that:
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(i) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be charged with knowledge of any
Servicing Default or the failure by the Master Servicer to comply with
the obligations of the Master Servicer referred to in Section 10.01(a)
and (b) unless a Responsible Officer of the Trustee obtains actual
knowledge of such failure; and
(iii) the Trustee shall not be charged with knowledge of an Early
Amortization Event unless a Responsible Officer of the Trustee obtains
actual knowledge thereof.
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers, if there
is reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it, and none of the provisions contained in this Agreement shall in any
event require the Trustee to perform, or be responsible for the manner of
performance of, any obligations of the Master Servicer under this Agreement
except during such time, if any, as the Trustee shall be the successor to,
and be vested with the rights, duties, powers and privileges of, the Master
Servicer in accordance with the terms of this Agreement. Notwithstanding the
prior sentence, the Trustee when acting as successor Master Servicer, is
still entitled to indemnification under Sections 7.03 and 8.04.
(e) Except as expressly provided in this Agreement, the Trustee shall
have no power to vary the corpus of the Trust including the power to (i)
accept any substitute obligation for a Receivable initially assigned to the
Trust under Section 2.01 or 2.05, (ii) add any other investment, obligation
or security to the Trust or (iii) withdraw from the Trust any Receivables.
(f) In the event that the Transfer Agent and Registrar shall fail to
perform any obligation, duty or agreement in the manner or on the day
required to be performed by the Transfer Agent and Registrar, as the case may
be, under this Agreement, the Trustee shall be obligated promptly upon the
actual knowledge of a Responsible Officer of the Trustee to perform such
obligation, duty or agreement in the manner so required.
(g) If the Transferor has agreed to transfer any of its wholesale
receivables (other than the Receivables) to another Person, then upon the
written request of the Transferor, the Trustee will enter into such inter-
creditor agreements with the transferee of such receivables as are customary
and necessary to identify separately the rights of the Trust and such other
Person in the Transferor's wholesale receivables; provided, however, that the
-------- -------
Trustee shall not be required to enter into any inter-creditor agreement
which could, in the sole opinion of the Trustee, adversely affect the
interests of the Investor Certificateholders or the Trustee and, upon the
request of the Trustee, the Transferor will deliver an Opinion of Counsel on
any matters relating to such inter-creditor agreement, reasonably requested
by the Trustee.
(h) Notwithstanding any other provision contained herein, the Trustee
is not acting as, and shall not be deemed to be, a fiduciary for any
Enhancement Provider in its capacity as such or as a Beneficiary, and the
Trustee's sole responsibility with respect to said parties shall be to
perform those duties with respect to said parties as are specifically set
forth herein and no implied duties or obligations shall be read into this
Agreement against the Trustee with respect to any such party.
SECTION 11.02. Certain Matters Affecting the Trustee. Except as
-------------------------------------
otherwise provided in Section 11.01:
(a) the Trustee may rely on and shall be protected in acting on,
or in refraining from acting in accord with, any resolution, Officers'
Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented to it pursuant to this Agreement by
the proper party or parties;
(b) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(c) the 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 hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders, pursuant
to the provisions of this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby;
(d) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into
the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document;
(f) the 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, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent, attorney
or custodian appointed with due care by it hereunder; and
(g) except as may be required by Section 11.01(a) hereof, the
Trustee shall not be required to make any initial or periodic
examination of any documents or records related to the Receivables or
the Accounts for the purpose of establishing the presence or absence of
defects, the compliance by the Transferor with its representations and
warranties or for any other purpose.
SECTION 11.03. Trustee Not Liable for Recitals in Certificates. The
-----------------------------------------------
Trustee assumes no responsibility for the correctness of the recitals
contained herein and in the Certificates (other than the certificate of
authentication on the Certificates). Except as set forth in Section 11.14,
the Trustee makes no representations as to the validity or sufficiency of
this Agreement or of the Certificates (other than the certificate of
authentication on the Certificates) or of any Receivable or related document
or any security interest of the Trust therein. The Trustee shall not be
accountable for the use or application by the Transferor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Transferor in respect of the Receivables
or deposited in or withdrawn from the Collection Account or any Series
Account.
SECTION 11.04. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Investor
Certificates with the same rights as it would have if it were not the
Trustee.
SECTION 11.05. The Master Servicer to Pay Trustee's Fees and Expenses.
------------------------------------------------------
The Master Servicer covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to receive, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by
it in the execution of the trust hereby created and in the exercise and
performance of any of the power and duties hereunder of the Trustee, and,
subject to Section 8.04, the Master Servicer will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement (including the reasonable fees and expenses of
its agents, any co-trustee and counsel) except any such expense, disbursement
or advance as may arise from its gross negligence or bad faith and except as
provided in the second following sentence. The Master Servicer's covenants
to pay the expenses, disbursements and advances provided for in the preceding
sentence shall survive the termination of this Agreement. If the Trustee is
appointed Successor Master Servicer pursuant to Section 10.02, the provisions
of this Section 11.05 shall not apply to expenses, disbursements and advances
made or incurred by the Trustee in its capacity as Successor Master Servicer,
which shall be covered out of the Servicing Fee; provided, however, if such
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expenses, disbursements and advances incurred by the Trustee are in amount in
excess of the Servicing Fee, such excess amount shall be paid in full to the
Trustee by Ford Credit. To the extent, if any, that any federal, state or
local taxes are payable by the Trust, such taxes shall be payable solely out
of Trust Assets and not out of the personal assets of the Trustee.
SECTION 11.06. Eligibility Requirements for Trustee. The Trustee
------------------------------------
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or any state thereof
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or state authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then, for the purpose of this Section 11.06, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 11.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 11.07.
SECTION 11.07. Resignation or Removal of Trustee. (a) The Trustee may
---------------------------------
at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Transferor and the Master Servicer. Upon
receiving such notice of resignation, the Transferor shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 11.06 hereof and shall fail to resign after
written request therefor by the Master Servicer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or if a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation
or liquidation, then the Master Servicer may remove the Trustee and promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 11.08 hereof.
SECTION 11.08. Successor Trustee. (a) Any successor trustee appointed
-----------------
as provided in Section 11.07 hereof shall execute, acknowledge and deliver to
the Transferor and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor hereunder,
with like effect as if originally named as Trustee herein. The predecessor
Trustee shall deliver to the successor trustee all documents or copies
thereof, at the expense of the Master Servicer, and statements held by it
hereunder; and the Transferor and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor
trustee all such rights, power, duties and obligations. The Master Servicer
shall immediately give notice to each Rating Agency and the
Certificateholders upon the appointment of a successor trustee.
(b) No successor trustee shall accept appointment as provided in this
Section 11.08 unless at the time of such acceptance such successor trustee
shall be eligible under the provisions of Section 11.06 hereof.
SECTION 11.09. Merger or Consolidation of Trustee. Any Person into
----------------------------------
which the 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 Trustee shall be a party, or any Person succeeding
to the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.06 hereof, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 11.10. Appointment of Co-Trustee or Separate Trustee. (a)
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust may at the time be located, the 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 co-trustees, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such
Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section 11.10, such powers, duties,
obligations, rights and trusts as the 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 11.06 and
no notice to Certificateholders of the appointment of any co-trustee or
separate trustee shall be required under Section 11.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Master Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the 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 XI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed
with the Trustee and a copy thereof given to the Master Servicer.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 11.11. Tax Returns. In the event the Trust shall be required
-----------
to file tax returns, the Master Servicer shall prepare, or shall cause to be
prepared, and shall deliver, or shall cause to be delivered, to the Trustee
no later than five days immediately preceding any applicable due date and the
Trustee shall execute, to the extent it is the appropriate person to so
execute, file any such tax returns to be filed by the Trust. The Master
Servicer in accordance with the terms of the Supplements shall also prepare
or shall cause to be prepared all tax information required by law to be
distributed to the Investor Certificateholders. The Trustee will distribute
or cause to be distributed such information to the Investor
Certificateholders. The Master Servicer, upon request, will furnish the
Trustee with all such information known to the Master Servicer as may be
reasonably required in connection with the preparation of all tax returns of
the Trust or in connection with the distribution of tax information to the
Investor Certificateholders.
SECTION 11.12. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates. All rights of action and claims under this Agreement or the
- ------------
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Certificateholders in respect
of which such judgment has been obtained.
SECTION 11.13. Suits for Enforcement. If a Servicing Default shall
---------------------
occur and be continuing, the Trustee, in its discretion may, subject to the
provisions of Section 10.01, proceed to protect and enforce its rights and
the rights of the Certificateholders under this Agreement by suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in
aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy as the Trustee,
being advised by counsel, shall deem most effectual to protect and enforce
any of the rights of the Trustee or the Certificateholders. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Certificateholder any plan of
reorganization, arrangement, adjustment or composition affecting the
Certificates or the rights of any Holder thereof, or authorize the Trustee to
vote in respect of the claim of any Certificateholder in any such proceeding.
SECTION 11.14. Representations and Warranties of Trustee. The Trustee
-----------------------------------------
represents and warrants that:
(i) the Trustee is a corporation organized, existing and in good
standing under the laws of the State of New York;
(ii) the Trustee has full power, authority and right to execute,
deliver and perform this Agreement and each Supplement, and has taken
all necessary action to authorize the execution, delivery and
performance by it of this Agreement and each Supplement; and
(iii) this Agreement and each Supplement has been, or will be, as
applicable, duly executed and delivered by the Trustee.
SECTION 11.15. Maintenance of Office or Agency. The Trustee will
-------------------------------
maintain at its expense in the Borough of Manhattan, The City of New York, an
office or offices or agency or agencies where notices and demands to or upon
the Trustee in respect of the Certificates and this Agreement may be served.
The Trustee initially designates its Corporate Trust Office as its office for
such purposes in New York. The Trustee will give prompt written notice to
the Master Servicer and to Holders of the Certificates of any change in the
location of the Certificate Register or any such office or agency.
ARTICLE XII
Termination
-----------
SECTION 12.01. Termination of Trust. The Trust and the respective
--------------------
obligations and responsibilities of the Transferor, the Master Servicer and
the Trustee created hereby (other than the obligation of the Trustee to make
payments to Investor Certificateholders as hereafter set forth) shall
terminate, except with respect to the duties described in Sections 7.03, 8.04
and 12.02(b), upon the earlier of (i) September 30, 2018 (the "Final Maturity
--------------
Date") and (ii) the day following the Distribution Date on which the Invested
- ----
Amount for all Series is zero (the "Trust Termination Date"). The Master
----------------------
Servicer will give the Rating Agencies prompt notice of the termination of
the Trust.
SECTION 12.02. Final Distribution. (a) The Master Servicer shall give
------------------
the Trustee at least 30 days prior notice of the Distribution Date on which
the Investor Certificateholders of any Series or Class may surrender their
Investor Certificates for payment of the final distribution on and
cancellation of such Investor Certificates (or, in the event of a final
distribution resulting from the application of Section 2.03 or 9.01, notice
of such Distribution Date promptly after the Master Servicer has determined
that a final distribution will occur, if such determination is made less than
30 days prior to such Distribution Date). Such notice shall be accompanied
by an Officer's Certificate setting forth the information specified in
Section 3.05 covering the period during the then-current calendar year
through the date of such notice. Not later than the fifth day of the month
in which the final distribution in respect of such Series or Class is payable
to Investor Certificateholders, the Trustee shall provide notice to Investor
Certificateholders of such Series or Class specifying (i) the date upon which
final payment of such Series or Class will be made upon presentation and
surrender of Investor Certificates of such Series or Class at the office or
offices therein designated, (ii) the amount of any such final payment and
(iii) that the Record Date otherwise applicable to such payment date is not
applicable, payments being made only upon presentation and surrender of such
Investor Certificates at the office or offices therein specified (which, in
the case of Bearer Certificate, shall be outside the United States). The
Trustee shall give such notice to the Transfer Agent and Registrar and the
Rating Agencies at the time such notice is given to Investor
Certificateholders.
(b) Notwithstanding a final distribution to the Investor
Certificateholders of any Series or Class (or the termination of the Trust),
except as otherwise provided in this paragraph, all funds then on deposit in
the Collection Account and any Series Account allocated to such Investor
Certificateholders shall continue to be held in trust for the benefit of such
Investor Certificateholders and the Trustee shall pay such funds to such
Investor Certificateholders upon surrender of their Investor Certificates
(and any excess shall be paid in accordance with the terms of any Enhancement
Agreement). In the event that all such Investor Certificateholders shall not
surrender their Investor Certificates for cancellation within six months
after the date specified in the notice from the Trustee described in
paragraph (a), the Trustee shall give a second notice to the remaining such
Investor Certificateholders to surrender their Investor Certificates for
cancellation and receive the final distribution with respect thereto (which
surrender and payment, in the case of Bearer Certificates, shall be outside
the United States). If within one year after the second notice all such
Investor Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining such Investor Certificateholders
concerning surrender of their Investor Certificates, and the cost thereof
shall be paid out of the funds in the Collection Account or any Series
Account held for the benefit of such Investor Certificateholders. The
Trustee shall pay to the Transferor any monies held by it for the payment of
principal or interest that remain unclaimed for two years. After payment to
the Transferor, Investor Certificateholders entitled to the money must look
to the Transferor for payment as general creditors unless an applicable
abandoned property law designates another Person.
(c) In the event that the Invested Amount with respect to any Series is
greater than zero on its Termination Date (after giving effect to deposits
and distributions otherwise to be made on such Termination Date), the Trustee
will sell or cause to be sold on such Termination Date Receivables (or
interests therein) in an amount equal to the sum of (i) 110% of the Invested
Amount with respect to such Series on such Termination Date (after giving
effect to such deposits and distributions) and (ii) the Aggregate Available
Subordinated Amount with respect to such Series on the preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Distribution Date following such
Determination Date); provided, however, that in no event shall such amount
-------- -------
exceed such Series' Allocation Percentage (as defined in the Series
Supplements and for the Collection Period in which such Termination Date
occurs) of Receivables on such Termination Date. The proceeds (the
"Termination Proceeds") from such sale shall be immediately deposited into
--------------------
the Collection Account for the benefit of the Investor Certificateholders of
such Series. The Termination Proceeds shall be allocated and distributed to
the Investor Certificateholders of such Series in accordance with the terms
of the applicable Supplement.
SECTION 12.03. Transferor's Termination Rights. Upon the termination
-------------------------------
of the Trust pursuant to Section 12.01 and the surrender of the Transferor's
Certificates, the Trustee shall sell, assign and convey to the Transferor or
its designee, without recourse, representation or warranty, all right, title
and interest of the Trust in the Receivables, whether then existing or
thereafter created, all Related Security with respect thereto, all monies due
or to become due and all amounts received with respect thereto and all
proceeds thereof, except for amounts held by the Trustee pursuant to Section
12.02(b), and all of the Transferor's rights, remedies, powers and privileges
with respect to such Receivables under the Receivables Purchase Agreements.
The Trustee shall execute and deliver such instruments of transfer and
assignment, in each case without recourse, as shall be reasonably requested
by the Transferor to vest in the Transferor or its designee all right, title
and interest which the Trust had in all such property.
ARTICLE XIII
Miscellaneous Provisions
------------------------
SECTION 13.01. Amendment. (a) This Agreement or any Supplement may be
---------
amended from time to time (including in connection with the issuance of a
Supplemental Certificate) by the Master Servicer, the Transferor and the
Trustee without the consent of any of the Certificateholders, provided that
such action shall not adversely affect in any material respect the interests
of any Investor Certificateholder. The absence of such materially adverse
effect may be evidenced by (i) satisfaction of the Rating Agency Condition
with respect to the affected Investor Certificates in connection with such
amendment or (ii) an Opinion of Counsel for the Transferor, addressed and
delivered to the Trustee. Notwithstanding anything contained herein to the
contrary, the Trustee, with the consent of any Enhancement Providers, may at
any time and from time to time amend, modify or supplement the form of
Distribution Date Statement.
(b) This Agreement or any Supplement may also be amended from time to
time (including in connection with the issuance of a Supplemental
Certificate) by the Master Servicer, the Transferor and the Trustee, with the
consent of the Holders of Investor Certificates evidencing not less than
66-2/3% of the aggregate unpaid principal amount of the Investor Certificates
of all adversely affected Series, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Agreement or any Supplement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i)
-------- -------
reduce in any manner the amount of or delay the timing of any distributions
to be made to Investor Certificateholders or deposits of amounts to be so
distributed or the amount available under any Enhancement without the consent
of each affected Investor Certificateholder, (ii) change the definition of or
the manner of calculating the interest of any Investor Certificateholder
without the consent of each affected Investor Certificateholder, (iii) reduce
the aforesaid percentage required to consent to any such amendment without
the consent of each Investor Certificateholder or (iv) adversely affect the
rating of any Series or Class by any Rating Agency without the consent of the
Holders of Investor Certificates of such Series or Class evidencing not less
than 66-2/3% of the aggregate unpaid principal amount of the Investor
Certificates of such Series or Class. Any amendment to be effected pursuant
to this paragraph shall be deemed to adversely affect all outstanding Series,
other than any Series with respect to which such action shall not, as
evidenced by an Opinion of Counsel for the Transferor, addressed and
delivered to the Trustee, adversely affect in any material respect the
interests of any Investor Certificateholder of such Series. The Trustee may,
but shall not be obligated to, enter into any such amendment which affects
the Trustee's rights, duties or immunities under this Agreement or otherwise.
(c) Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to paragraph (a)), the Trustee shall
furnish notification of the substance of such amendment to each Investor
Certificateholder, and the Master Servicer shall furnish notification of the
substance of such amendment to each Rating Agency, each Agent and each
Enhancement Provider.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Investor
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
(e) Notwithstanding anything in this Section to the contrary, no
amendment may be made to this Agreement or any Supplement which would
adversely affect in any material respect the interests of any Enhancement
Provider without the consent of such Enhancement Provider.
(f) Any Supplement executed in accordance with the provisions of
Section 6.03 shall not be considered an amendment to this Agreement for the
purposes of this Section.
SECTION 13.02. Protection of Right, Title and Interest to Trust. (a)
------------------------------------------------
The Master Servicer shall cause this Agreement, all amendments hereto and/or
all financing statements and continuation statements and any other necessary
documents covering the Certificateholders' and the Trustee's right, title,
and interest in and to the Trust to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in
such manner and in such places as may be required by law to preserve and
protect the right, title and interest of the Certificateholders and the
Trustee hereunder to all property comprising the Trust. The Master Servicer
shall deliver to the Trustee file-stamped copies of, or filing receipts for,
any document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing. The Transferor
shall cooperate fully with the Master Servicer in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this Section 13.02(a).
(b) Within 30 days after the Transferor or the Master Servicer makes
any change in its name, identity or corporate structure which would make any
financing statement or continuation statement filed in accordance with
Section 13.02(a) seriously misleading within the meaning of Section 9-402(7)
of the UCC as in effect in Michigan or any other applicable jurisdiction the
Transferor shall give the Trustee and any Agent notice of any such change and
shall file such financing statements or amendments as may be necessary to
continue the perfection of the Trust's security interest in the Receivables
and the proceeds thereof.
(c) The Transferor and the Master Servicer will give the Trustee and
any Agent prompt written notice of any relocation of any office from which it
services Receivables or keeps records concerning the Receivables or of its
principal executive office and whether, 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 file such financing statements or amendments as
may be necessary to perfect or to continue the perfection of the Trust's
security interest in the Receivables and the proceeds thereof. The
Transferor and the Master Servicer shall at all times maintain each office
from which it services Receivables and its principal executive officer within
the United States of America.
(d) The Master Servicer will deliver to the Trustee, any Agent and any
Enhancement Provider: (i) upon the execution and delivery of each amendment
of this Agreement or any Supplement, an Opinion of Counsel to the effect
specified in Exhibit G-1; (ii) on each Addition Date on which any Additional
Accounts are to be included as the Accounts pursuant to Section 2.05(a) or
(b), an Opinion of Counsel substantially in the form of Exhibit G-2; and
(iii) on or before April 30 of each year, beginning with April 30, 1997, an
Opinion of Counsel substantially in the form of Exhibit G-2.
SECTION 13.03. Limitation on Rights of Certificateholders. (a) The
------------------------------------------
death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust, nor shall such death or incapacity entitle such
Certificateholders' legal representatives or heirs to claim an accounting or
to take any action or commence any proceeding in any court for a partition or
winding-up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) No Investor Certificateholder shall have any right to vote (except
as expressly provided in this Agreement) or in any manner otherwise control
the operation and management of the Trust, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Investor
Certificateholders from time to time as partners or members of an
association, nor shall any Investor Certificateholder be under any liability
to any third person by reason of any action taken by the parties to this
Agreement pursuant to any provision hereof.
(c) No Investor Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Investor Certificateholder previously shall have made, and unless the Holders
of Investor Certificates evidencing more than 50% of the aggregate unpaid
principal amount of all Investor Certificates (or, with respect to any such
action, suit or proceeding that does not relate to all Series, 50% of the
aggregate unpaid principal amount of the Investor Certificates of all Series
to which such action, suit or proceeding relates) shall have made, a request
to the Trustee to institute such action, suit or proceeding in its own name
as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after such request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Investor Certificateholder with every other
Investor Certificateholder and the Trustee, that no one or more Investor
Certificateholders shall have any right in any manner whatever by virtue or
by availing itself or themselves of any provisions of this Agreement to
affect, disturb or prejudice the rights of the holders of any other of the
Investor Certificates, or to obtain or seek to obtain priority over or
preference to any other such Investor Certificateholder, or to enforce any
right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Investor Certificateholders except
as otherwise expressly provided in this Agreement. For the protection and
enforcement of the provisions of this Section, each and every Investor
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 13.04. No Petition. The Master Servicer, Ford Credit (if it is
-----------
no longer the Master Servicer) and the Trustee, by entering into this
Agreement, each Investor Certificateholder, by accepting an Investor
Certificate, each holder of a Supplemental Certificate by accepting a
Supplemental Certificate and any Successor Master Servicer and each other
Beneficiary, by accepting the benefits of this Agreement, hereby covenants
and agrees that they will not at any time institute against FCAR any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law.
SECTION 13.05. 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.
SECTION 13.06. Notices. (a) All demands, notices, instructions,
-------
directions and communications (collectively, "Notices") under this Agreement
-------
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to (i)
in the case of FCAR, The American Road, Dearborn, Michigan 48121, Attention:
Secretary, (ii) in the case of Ford Credit, The American Road, Dearborn,
Michigan 48121, Attention: Secretary, and (iii) in the case of the Trustee,
450 West 33rd Street, New York, New York, 10001, Attention: Corporate Trust
Department; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party.
(b) Any Notice required or permitted to be given to a Holder of
Registered Certificates shall be given by first-class mail, postage prepaid,
at the address of such Holder as shown in the Certificate Register. No
Notice shall be required to be mailed to a Holder of Bearer Certificates or
Coupons but shall be given as provided below. Any Notice so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been duly given, whether or not the Investor Certificateholder receives such
Notice. In addition, in the case of any Series or Class with respect to
which any Bearer Certificates are outstanding, any Notice required or
permitted to be given to Investor Certificateholders of such Series or Class
shall be published in an Authorized Newspaper within the time period
prescribed in this Agreement.
SECTION 13.07. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be 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 rights of the Certificateholders.
SECTION 13.08. Assignment. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Section 8.02, this Agreement may not
be assigned by the Master Servicer.
SECTION 13.09. Certificates Nonassessable and Fully Paid. It is the
-----------------------------------------
intention of the parties to this Agreement that the Investor
Certificateholders shall not be personally liable for obligations of the
Trust, that the interests in the Trust represented by the Investor
Certificates shall be nonassessable for any losses or expenses of the Trust
or for any reason whatsoever and that Investor Certificates upon
authentication thereof by the Trustee are and shall be deemed fully paid.
SECTION 13.10. Further Assurances. The Transferor and the Master
------------------
Servicer agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested by
the Trustee more fully to effect the purposes of this Agreement, including
the execution of any financing statements or continuation statements relating
to the Receivables for filing under the provisions of the UCC of any
applicable jurisdiction.
SECTION 13.11. No Waiver; Cumulative Remedies. No failure to exercise
------------------------------
and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and
privileges provided under this Agreement are cumulative and not exhaustive of
any rights, remedies, powers and privileges provided by law.
SECTION 13.12. Counterparts. This Agreement may be executed in two or
------------
more counterparts (and by different parties on separate counterparts), each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
SECTION 13.13. Third-Party Beneficiaries. This Agreement will inure to
-------------------------
the benefit of and be binding upon the parties hereto, the Certificateholders
and the other Beneficiaries and their respective successors and permitted
assigns. Except as otherwise expressly provided in this Agreement, no other
Person will have any right or obligation hereunder.
SECTION 13.14. Actions by Certificateholders. Any request, demand,
-----------------------------
authorization, direction, notice, consent, waiver or other act by a
Certificateholder shall bind such Certificateholder and every subsequent
holder of any Certificate issued upon the registration of transfer of the
Certificates of such Certificateholder or in exchange therefor or in lieu
thereof in respect of anything done or omitted to be done by the Trustee or
the Master Servicer in reliance thereon, whether or not notation of such
action is made upon any such Certificate.
SECTION 13.15. Rule 144A Information. For so long as any of the
---------------------
Investor Certificates of any Series or Class are "restricted securities"
within the meaning of Rule 144(a)(3) under the Act, each of the Transferor,
the Trustee, the Master Servicer and any Enhancement Providers agree to
cooperate with each other to provide to any Investor Certificateholders of
such Series or Class and to any prospective purchaser of Investor
Certificates designated by such an Investor Certificateholder, upon the
request of such Investor Certificateholder or prospective purchaser, any
information required to be provided to such holder or prospective purchaser
to satisfy the condition set forth in Rule 144A(d)(4) under the Act.
SECTION 13.16. Action by Trustee. Upon any application or request by
-----------------
the Transferor or Master Servicer to the Trustee to take any action under any
provision under this Agreement, the Transferor or Master Servicer, as the
case may be, shall furnish to the Trustee an Officer's Certificate stating
that all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such Counsel all such conditions
precedent, if any, have been complied with. The Trustee shall be entitled to
conclusively rely on the Officer's Certificate or the Opinion of Counsel, as
the case may be, as authority for any action undertaken in connection
therewith.
SECTION 13.17. Merger and Integration. Except as specifically stated
----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 13.18. Headings. The headings herein are for purposes of
--------
reference only and shall not otherwise affect the meaning or interpretation
or any provision hereof.
IN WITNESS WHEREOF, the Transferor, the Master Servicer and the
Trustee have caused this Pooling and Servicing Agreement to be duly executed
by their respective officers as of the day and year first above written.
FORD CREDIT AUTO RECEIVABLES LLC,
Transferor,
By: /s/
------------------------------
Name:
Title:
FORD MOTOR CREDIT COMPANY,
Master Servicer,
By: /s/
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
Trustee,
By: /s/
------------------------------
Name:
Title:
=============================================================================
FORD CREDIT AUTO RECEIVABLES LLC
Transferor
FORD MOTOR CREDIT COMPANY
Master Servicer
and
THE CHASE MANHATTAN BANK
Trustee
---------------------------------------
SERIES (_) SUPPLEMENT
Dated as of (_)
to
POOLING AND SERVICING AGREEMENT
Dated as of September 30, 1997
---------------------------------------
$ (_)
FORD CREDIT AUTO LOAN MASTER TRUST II
SERIES (_)
(FLOATING RATE) (FIXED RATE)
=============================================================================
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
Creation of the Series (_) Certificates
SECTION 1.01. Designation . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Definitions
SECTION 2.01. Definitions . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE III
Servicing Fee
SECTION 3.01. Servicing Compensation . . . . . . . . . . . . . . . 16
ARTICLE IV
Rights of Series (_) Certificateholder and
Allocation and Application of Collections
SECTION 4.01. Allocations . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.02. Monthly Interest . . . . . . . . . . . . . . . . . . 19
SECTION 4.03. Determination of Monthly Principal . . . . . . . . . 19
SECTION 4.04. Establishment of Reserve Fund and
Funding Accounts . . . . . . . . . . . . . . . . . . 19
SECTION 4.05. Deficiency Amount . . . . . . . . . . . . . . . . . . 23
SECTION 4.06. Application of Investor Non-Principal
Collections, Investment Proceeds, Net
Trust Swap Receipts and Available
Investor Principal Collections . . . . . . . . . . . 24
SECTION 4.07. Distributions to the Series (_)
Certificateholder . . . . . . . . . . . . . . . . . . 26
SECTION 4.08. Application of Reserve Fund and
Available Subordinated Amount . . . . . . . . . . . . 27
SECTION 4.09. Investor Charge-Offs . . . . . . . . . . . . . . . . 30
SECTION 4.10. Excess Servicing . . . . . . . . . . . . . . . . . . 30
SECTION 4.11. Excess Principal Collections . . . . . . . . . . . . 30
SECTION 4.12. Asset Composition Event . . . . . . . . . . . . . . . 31
SECTION 4.13. Excess Funding Account . . . . . . . . . . . . . . . 31
ARTICLE V
Distributions and Reports to the
Series (_) Certificateholder
SECTION 5.01. Distributions . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.02. Reports and Statements to Series (_)
Certificateholder; Other Reports . . . . . . . . . . 34
SECTION 5.03. (Determination of Three-Month LIBOR) . . . . . . . . 35
SECTION 5.04. (Determination of One-Month LIBOR) . . . . . . . . . 36
ARTICLE VI
The Series (_) Certificates
SECTION 6.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VII
Amortization Events
SECTION 7.01. Additional Amortization Events . . . . . . . . . . . 37
ARTICLE VIII
Optional Repurchase
SECTION 8.01. Optional Repurchase . . . . . . . . . . . . . . . . . 39
ARTICLE IX
Final Distributions
SECTION 9.01. Sale of Certificateholders' Interest Pursuant to
Section 2.03 of the Agreement; Distributions
Pursuant to Section 8.01 of the Series Supplement or
Section 2.03 or 12.02(c) of the Agreement . . . . . . 39
ARTICLE X
Miscellaneous Provisions
SECTION 10.01. Execution and Delivery of the Interest
Rate Swap . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.02. Ratification of Agreement . . . . . . . . . . . . . . 40
SECTION 10.03. Counterparts . . . . . . . . . . . . . . . . . . . . 40
SECTION 10.04. Governing Law . . . . . . . . . . . . . . . . . . . . 41
EXHIBITS
Exhibit A-1 Form of Temporary Global Certificate
Exhibit A-2 Form of Permanent Global Certificate
Exhibit A-3 Form of Definitive Bearer Certificate
Exhibit B-1 Form of Distribution Date Statement for the Trustee
Exhibit B-2 Form of Distribution Date Statement for Persons other
than the Trustee
Exhibit C Form of Coupon
Exhibit D Form of Interest Rate Swap
Schedule 1 List of Series (_) Accounts
SERIES (_) SUPPLEMENT dated as of (_) (the "Series Supplement"),
among FORD CREDIT AUTO RECEIVABLES LLC, a Delaware limited liability company,
as Transferor, FORD MOTOR CREDIT COMPANY, a Delaware corporation, as Master
Servicer, and THE CHASE MANHATTAN BANK, a New York banking corporation, as
Trustee.
Pursuant to Section 6.03 of the Pooling and Servicing Agreement
dated as of September 30, 1997 (as amended and supplemented, the
-------------
"Agreement"), among the Transferor, the Master Servicer and the Trustee, the
Transferor may from time to time direct the Trustee to issue, on behalf of
the Trust, one or more new Series of Investor Certificates representing
fractional undivided interests in the Trust. The Principal Terms of any new
Series are to be set forth in a Supplement to the Agreement.
Pursuant to this Series Supplement, the Transferor and the Trustee
shall create a new Series of Investor Certificates and specify the Principal
Terms thereof.
ARTICLE I
Creation of the Series (_) Certificates
---------------------------------------
SECTION 1.01. Designation. (a) There is hereby created a Series
-----------
of Investor Certificates to be issued pursuant to the Agreement and this
Series Supplement to be known as the "Series (_) (Floating Rate) (Fixed Rate)
Auto Loan Asset Backed 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
Agreement, the terms and provisions of this Series Supplement shall govern.
ARTICLE II
Definitions
-----------
SECTION 2.01. Definitions. (a) Whenever used in this Series
-----------
Supplement the following words and phrases shall have the following meanings.
All other capitalized terms used herein shall have the meanings ascribed to
them in the Agreement.
"Accumulation Period" shall mean, unless an Early Amortization
-------------------
Event shall have occurred prior thereto (other than an Early Amortization
Event which has resulted in an Early Amortization Period which has ended as
described in clause (c) of the definition thereof), the period commencing on
the Accumulation Period Commencement Date and ending upon the first to occur
of (a) the commencement of an Early Amortization Period or (b) the Expected
Final Payment Date.
"Accumulation Period Commencement Date" shall mean the date which
-------------------------------------
is, with respect to an Accumulation Period Length of (i) one calendar month,
the first day of the (_____) Collection Period, (ii) two calendar months, the
first day of the (_____) Collection Period, (iii) three calendar months, the
first day of the (_____) Collection Period, (iv) four calendar months, the
first day of the (_____) Collection Period and (v) five calendar months, the
first day of the (_____) Collection Period; provided, however, that the
-------- -------
Accumulation Period Commencement Date shall be (x) (______) if, prior to such
date, any other outstanding Series of Investor Certificates shall have
entered into an early amortization period or (y) in the case of an
Accumulation Period Length of less than five months, the earlier of (A) the
date an early amortization period has commenced with respect to any other
outstanding Series of Investor Certificates and (B) the Accumulation Period
Commencement Date as determined above.
"Accumulation Period Determination Date" shall mean the
--------------------------------------------
Distribution Date designated by the Master Servicer, but no earlier then the
Distribution Date occurring in (_____).
"Accumulation Period Length" shall mean, as determined by the
--------------------------
Master Servicer on the Accumulation Period Determination Date, a period of
not less than one calendar month nor more than five calendar months, equal to
the product (rounded upwards to the nearest whole number) of (i) five (or
such lesser number as may be determined by the Master Servicer to be
appropriate in light of the current payment information regarding the
Receivables) multiplied by (ii) a fraction, the numerator of which is the
Invested Amount as of such Accumulation Period Determination Date (after
giving effect to all changes therein on such date) and the denominator of
which is equal to the sum of such Invested Amount and the Outstanding Series
Invested Amount as of such Accumulation Period Determination Date (after
giving effect to all changes therein on such date).
"Additional Early Amortization Event" shall have the meaning
--------------------------------------
specified in Section 7.01.
"Additional Interest" shall have the meaning specified in Section
-------------------
4.02(a).
("Adjustment Date" shall mean the second LIBOR Business Day
----------------
preceding each Quarterly Payment Date, Special Payment Date or Distribution
Date, as applicable.)
"Aggregate Available Subordinated Amount" shall mean the sum of the
---------------------------------------
Available Subordinated Amount and the Swap Available Subordinated Amount.
"Allocable Miscellaneous Payments" shall mean, with respect to any
--------------------------------
Distribution Date, the product of (a) the Series (_) Allocation Percentage
for the related Collection Period and (b) Miscellaneous Payments with respect
to the related Collection Period.
"Asset Composition Event" shall have the meaning specified in
-----------------------
Section 4.12.
"Asset Correction Amount" shall have the meaning specified in
-----------------------
Section 4.12.
"Available Investor Principal Collections" shall mean, with respect
----------------------------------------
to any Distribution Date, the sum of (a) an amount equal to Investor
Principal Collections for such Distribution Date, (b) Allocable Miscellaneous
Payments with respect to such Distribution Date, (c) Series (_) Excess
Principal Collections on deposit in the Collection Account for such
Distribution Date and (d) on the Termination Date, any funds in the Reserve
Fund after giving effect to Section 4.08.
"Available Transferor's Collections" shall mean, with respect to
----------------------------------
any Deposit Date, the sum of (a) the Available Transferor's Non-Principal
Collections for such Deposit Date and (b) the Available Transferor's
Principal Collections for such Deposit Date; provided, however, that the
-------- -------
Available Transferor's Collections shall be zero for any Collection Period
with respect to which the Available Subordinated Amount is zero on the
Determination Date immediately following the end of such Collection Period.
"Available Transferor's Non-Principal Collections" shall mean, with
------------------------------------------------
respect to any Deposit Date, an amount equal to the result obtained by
multiplying (a) the excess of (i) the Transferor's Percentage for the related
Collection Period over (ii) the Excess Transferor's Percentage for such
Collection Period by (b) Non-Principal Collections for such Deposit Date.
"Available Transferor's Principal Collections" shall mean, with
---------------------------------------------
respect to any Deposit Date, an amount equal to the result obtained by
multiplying (a) the excess of (i) the Transferor's Percentage for the related
Collection Period over (ii) the Excess Transferor's Percentage for such
Collection Period by (b) Principal Collections for such Deposit Date.
"Available Subordinated Amount" for the first Determination Date
-----------------------------
shall mean an amount equal to the Required Subordinated Amount. The
Available Subordinated Amount for any subsequent Determination Date shall
mean an amount equal to the sum of
(i) the lesser of (x) the Available Subordinated Amount for the
preceding Determination Date, minus (A) the Required Subordination Draw
-----
Amount with respect to the preceding Distribution Date to the extent
provided in Section 4.08, minus (B) withdrawals from the Reserve Fund
-----
pursuant to Section 4.08 on the preceding Distribution Date to make
distributions pursuant to Section 4.06(a)(iv) (but excluding any other
withdrawals from the Reserve Fund), plus (C) the portion of Excess
----
Servicing for such preceding Distribution Date distributed to the
Transferor pursuant to Section 4.10(c), minus (D) the Incremental
-----
Subordinated Amount for such preceding Determination Date, plus (E) the
----
Incremental Subordinated Amount for the current Determination Date and
(y) the Required Subordinated Amount;
plus (ii) the Subordinated Percentage of funds withdrawn from the
----
Excess Funding Account since the prior Distribution Date and to be
withdrawn from the Excess Funding Account up to and including the
succeeding Distribution Date and paid to the Transferor or allocated to
one or more Series;
minus (iii) the Subordinated Percentage of funds deposited in the
-----
Excess Funding Account since the prior Distribution Date and to be
deposited into the Excess Funding Account up to and including the
succeeding Distribution Date; and
plus (iv) the amount of any optional increase in the Available
----
Subordinated Amount exercised by FCAR pursuant to Section 4.08(f)
hereto;
provided, however, that once the Accumulation Period or any Early
- -------- -------
Amortization Period (other than an Early Amortization Period (as defined in
the Agreement) which has ended as described in clause (c) of the definition
thereof) shall have commenced, the Required Subordinated Amount shall be
calculated based on the Invested Amount as of the close of business on the
day preceding such Accumulation Period or Early Amortization Period.
"Bearer Certificates" shall have the meaning specified in Section
-------------------
6.01.
("Calculation Agent" shall mean the Trustee or any other
------------------
Calculation Agent selected by the Transferor which is reasonably acceptable
to the Trustee.)
"Certificateholder's Monthly Servicing Fee" shall have the meaning
-----------------------------------------
specified in Section 3.01.
"Certificate Rate" shall mean (__)% with respect to the first
----------------
Interest Period and for any subsequent Interest Period, (Three-Month LIBOR
determined on the related Adjustment Date plus (__) basis points (0.(_)%));
----
provided, however, for any Interest Period occurring after an Early
- -------- -------
Amortization Event and prior to the recommencement, if any, of the Revolving
Period, the Certificate Interest Rate will be (One-Month LIBOR determined on
the related Adjustment Date plus (_) basis points (0.(_)%)).
"Closing Date" shall mean (__________).
------------
"Controlled Amortization Amount" shall mean the quotient obtained
------------------------------
obtained by dividing the Invested Amount as of the Accumulation Period
Determination Date (after giving effect to any changes therein on such date)
by the Accumulation Period Length.
"Controlled Distribution Amount" shall mean, for any Distribution
------------------------------
Date with respect to the Accumulation Period, the excess, if any, of (i) the
product of the Controlled Amortization Amount and the number of Distribution
Dates with respect to the Accumulation Period through and including such
Distribution Date over (ii) the sum of amounts on deposit in the Excess
Funding Account and the Principal Funding Account, in each case before giving
effect to any withdrawals from or deposits to such accounts on such
Distribution Date.
"Coupons" shall have the meaning specified in Section 6.01.
-------
"Custodian" shall mean (______).
---------
"Deficiency Amount" shall have the meaning specified in Section
-----------------
4.05.
"Early Amortization Event" shall mean any Early Amortization Event
------------------------
specified in Section 9.01 of the Agreement, together with any Additional
Early Amortization Event specified in Section 7.01 of this Series Supplement.
"Early Amortization Period" shall mean an Early Amortization Period
-------------------------
with respect to Series (_).
"Excess Principal Collections" shall mean the amounts equal to the
----------------------------
balances referred to as such in Sections 4.06(b)(ii) and 4.06(c)(ii).
"Excess Reserve Fund Required Amount" shall mean, for any
----------------------------------------
Distribution Date with respect to an Early Amortization Period, an amount
equal to the greater of (a) (_)% of the initial principal balance of the
Series (_) Certificates and (b) the excess of (i) the sum of (x) the
Available Subordinated Amount on the preceding Determination Date (after
giving effect to the allocations, distributions, withdrawals and deposits to
be made on such Distribution Date) and (y) (A) a percentage equal to the
excess of the Required Participation Percentage over 100%, multiplied by (B)
the outstanding principal balance of the Certificates on such Distribution
Date (after giving effect to any changes therein on such Distribution Date)
over (ii) the Transferor's Interest on such Distribution Date (after giving
effect to changes therein on such Distribution Date); provided that the
-------- ----
Excess Reserve Fund Required Amount shall not exceed such Available
Subordinated Amount.
"Excess Transferor's Percentage" shall mean, with respect to any
------------------------------
Collection Period, a percentage (which percentage shall never be less than 0%
nor more than 100%) equal to (a) 100% minus, when used with respect to Non-
-----
Principal Receivables and Defaulted Receivables, the sum of (i) the Floating
Allocation Percentage with respect to such Collection Period and the sum of
the floating allocation percentages for all other outstanding Series of
Investor Certificates for such Collection Period and (ii) the percentage
equivalent of a fraction, the numerator of which is the sum of the Aggregate
Available Subordinated Amount as of the Determination Date occurring in such
Collection Period and the sum of the aggregate available subordinated amounts
for all other outstanding Series of Investor Certificates as of such
Determination Date (in each case, after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the Distribution Date
immediately following such Determination Date), and the denominator of which
is the Pool Balance as of the last day of the immediately preceding
Collection Period or (b) 100% minus, when used with respect to Principal
-----
Receivables, the sum of (i) the floating allocation percentages for all
outstanding Series that are in their revolving periods with respect to such
Collection Period and the sum of the principal allocation percentages for all
outstanding Series of Investor Certificates that are not in their revolving
periods with respect to such Collection Period and (ii) the percentage
equivalent of a fraction, the numerator of which is the sum of the Aggregate
Available Subordinated Amount as of the Determination Date Occurring in such
Collection Period and the sum of the aggregate available subordinate amounts
for all other Series of Investor Certificates as of such Determination Date
(in each case, after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Distribution Date immediately
following such Determination Date), and the denominator of which is the Pool
Balance as of the last day of such immediately preceding Collection Period.
"Excess Servicing" shall mean, with respect to any Distribution
----------------
Date, the amount, if any, specified pursuant to Section 4.06(a)(v) with
respect to such Distribution Date.
"Exchange Date" shall mean the date no earlier than 40 days after
-------------
the later of the commencement of the offering of the Certificates (as
determined by the Lead Manager) and the Closing Date.
"Expected Final Payment Date" shall mean the (______) Distribution
---------------------------
Date.
"Floating Allocation Percentage" shall mean, with respect to any
------------------------------
Collection Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Invested Amount as
of the last day of the immediately preceding Collection Period (after giving
effect to the reinvestment to occur on the next succeeding Distribution Date)
and the denominator of which is the Pool Balance as of such last day;
provided, however, that, with respect to the first Collection Period, the
- -------- -------
Floating Allocation Percentage shall mean the percentage equivalent of a
fraction, the numerator of which is the Initial Invested Amount and the
denominator of which is the Pool Balance on the Cut-Off Date.
"Incremental Subordinated Amount" shall mean, with respect to any
-------------------------------
Determination Date, the result obtained by multiplying (a) a fraction, the
numerator of which is the sum of the Invested Amount on the last day of the
immediately preceding Collection Period (or with respect to the first
Determination Date, the Invested Amount on the Closing Date) and the
Available Subordinated Amount for such Determination Date (calculated without
subtracting or adding the Incremental Subordinated Amount for such
Distribution Date as described in clause (D) or (E), respectively, of the
definition thereof and without adding the Incremental Subordinated Amount in
the definition of Required Subordinated Amount as used in the definition of
Available Subordinated Amount) (or with respect to the first Determination
Date, the product of the Invested Amount on the Closing Date and the
Subordinated Percentage) and the denominator of which is the Pool Balance on
such last day by (b) the Trust Incremental Subordinated Amount.
"Initial Cut-Off Date" shall mean (_).
--------------------
"Initial Invested Amount" shall mean the initial principal amount
------------------------
of the Series (__) Certificates, which is $(____), plus (a) the amount of any
----
withdrawals from the Excess Funding Account pursuant to Section 4.13(b) in
connection with an increase in the Pool Balance, minus (b) the amount of any
-----
additions to the Excess Funding Account pursuant to Section 4.06(b)(i) in
connection with a reduction in the Pool Balance.
"Initial Principal Amount" shall mean $(_).
------------------------
"Initial Swap Subordinated Amount" shall mean $(_).
--------------------------------
"Interest Period" shall mean, with respect to any Distribution
----------------
Date, the period from and including the Distribution Date immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date, from and including the Closing Date) to but excluding such Distribution
Date.
"Interest Rate Swap" shall mean the interest rate swap agreement,
------------------
the form of which is attached hereto as Exhibit D, dated as of (_______),
between the Swap Counterparty and the Trust in connection with Series (_).
"Interest Shortfall" shall have the meaning specified in Section
------------------
4.02.
"Invested Amount" shall mean, when used with respect to any date,
---------------
an amount equal to (a) the Initial Invested Amount minus (b) the amount,
-----
without duplication, of principal payments (except principal payments made
from the Excess Funding Account and any transfers from the Excess Funding
Account to the Principal Funding Account) made to Series (_) Certificate-
holder or deposited to the Principal Funding Account prior to such date minus
-----
(c) the excess, if any, of the aggregate amount of Investor Charge-Offs over
Investor Charge-Offs reimbursed pursuant to Section 4.08 prior to such date.
In addition, for purposes of the definition of "Early Amortization Period",
the Invested Amount shall be an amount equal to the outstanding principal
amount of the Certificates.
"Investment Proceeds" shall mean, with respect to any Determination
-------------------
Date, all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Series (_) Accounts, together
with an amount equal to the Series (_) Allocation Percentage of the interest
and other investment earnings on funds held in the Collection Account
credited as of such date to the Collection Account pursuant to Section 4.02
of the Agreement.
"Investor Charge-Offs" shall have the meaning specified in Section
--------------------
4.09.
"Investor Default Amount" shall mean, with respect to any
-------------------------
Distribution Date, an amount equal to the product of (a) the Defaulted Amount
for the related Collection Period and (b) the Floating Allocation Percentage
for the related Collection Period.
"Investor Non-Principal Collections" shall mean, with respect to
----------------------------------
any Distribution Date, an amount equal to the product of (i) the Floating
Allocation Percentage for the related Collection Period and (ii)
Non-Principal Collections deposited in the Collection Account for the related
Collection Period.
"Investor Principal Collections" shall mean, with respect to
--------------------------------
any Distribution Date, the sum of (a) the product of (i) the Floating
Allocation Percentage, with respect to the Revolving Period, or the Principal
Allocation Percentage, with respect to the Accumulation Period or an Early
Amortization Period, for the related Collection Period (or any partial
Collection Period which occurs as the first Collection Period during an Early
Amortization Period), and (ii) Principal Collections deposited in the
Collection Account for the related Collection Period (or any partial
Collection Period which occurs as the first Collection Period during an Early
Amortization Period) and (b) the amount, if any, of Collections of Non-
Principal Receivables, Excess Servicing and Available Transferor's
Collections to be distributed pursuant to Section 4.06(a)(iv), 4.08(b) (to
the extent Section 4.08(b) relates to a shortfall in distributions pursuant
to Section 4.06(a)(iv)) or 4.10(a) on such Distribution Date; provided that
-------- ----
in the case of clause (a), if for any Distribution Date the sum of the
Floating Allocation Percentage (if the Revolving Period is in effect), the
Principal Allocation Percentage (if the Early Amortization Period or the
Accumulation Period is in effect), the floating allocation percentage for all
other outstanding Series of Investor Certificates in their revolving period
and the principal allocation percentage for all other outstanding Series of
Investor Certificates in their early amortization or accumulation period
exceeds 100%, then Principal Collections shall be allocated among such Series
(including Series (_)) pro rata on the basis of such floating allocation
percentages and principal allocation percentages.
("LIBOR Business Day" shall mean any business day on which dealings
------------------
in deposits in United States dollars are transacted in the London, England or
Frankfurt, Germany interbank market.)
"Monthly Interest" shall have the meaning specified in Section
-----------------
4.02.
"Monthly Payment Rate" shall mean, for any Collection Period, the
--------------------
percentage derived from dividing the Principal Collections for such
Collection Period by the average daily Pool Balance for such Collection
Period.
"Monthly Principal" shall have the meaning specified in Section
-----------------
4.03.
"Monthly Servicing Fee" shall have the meaning specified in Section
---------------------
3.01.
"Net Trust Swap Payment" shall mean, for any Collection Period, the
----------------------
monthly obligation, if any, of the Trust to the Swap Counterparty pursuant to
the Interest Rate Swap to the extent that such monthly obligation exceeds the
obligation of the Swap Counterparty to the Trust pursuant to the Interest
Rate Swap for such Collection Period.
"Net Trust Swap Receipt" shall mean, for any Collection Period, the
----------------------
amount of the monthly obligation, if any, of the Swap Counterparty to the
Trust pursuant to the Interest Rate Swap to the extent that such monthly
obligation exceeds the monthly obligation of the Trust to the Swap
Counterparty pursuant to the Interest Rate Swap for such Collection Period
and, following the termination of the Interest Rate Swap in accordance with
its terms, the net amount of any such obligation that would have benefitted
the Trust in the absence of such a termination shall be paid by applying
Collections allocated to the Swap Available Subordinated Amount.
"Notes" shall mean, the Series (___) Asset Backed Floating Rate
-----
Notes due (____) issued by (_____).
("One-Month LIBOR" shall mean, with respect to any Distribution
---------------
Date, the offered rates for deposits in United States dollars having a
maturity of one month (the "Index Maturity") commencing on the related
Adjustment Date which appears on the Reuters Screen LIBO Page as of
approximately 11:00 A.M., London time, on such date of calculation. If at
least two such offered rates appear on the Reuters Screen LIBO Page, One-
Month LIBOR will be the arithmetic mean (rounded upwards, if necessary, to
the nearest one-sixteenth of a percent) of such offered rates. If fewer than
two such quotations appear, One-Month LIBOR with respect to such Interest
Period will be determined at approximately 11:00 A.M., London time, on such
Adjustment Date on the basis of the rate at which time, on such Adjustment
Date on the basis of the rate at which deposits in United States dollars
having the Index Maturity are offered to prime banks in the London interbank
market by four major banks in the London interbank market selected by the
Calculation Agent and in a principal amount equal to an amount of not less
than U.S. $1,000,000 and that is representative for a single transaction in
such market at such time. The Calculation Agent will request the principal
London office of each of such banks to provide a quotation of its rate. If
at least two such quotations are provided, One-Month LIBOR will be the
arithmetic mean (rounded upwards as aforesaid) of such quotations. If fewer
than two quotations are provided, One-Month LIBOR with respect to such
Interest Period will be the arithmetic mean (rounded upwards as aforesaid) of
the rates quoted at approximately 11:00 A.M., New York City time, on such
Adjustment Date by three major banks in New York, New York selected by the
Calculation Agent for loans in United States dollars to leading European
banks having the Index Maturity and in a principal amount equal to an amount
of not less than U.S. $1,000,000 and that is representative for a single
transaction in such market at such time; provided, however, that if the
-------- -------
banks selected as aforesaid are not quoting as mentioned in this sentence,
One-Month LIBOR in effect for the applicable period will be One-Month LIBOR
in effect for the previous period.)
"Outstanding Series Invested Amount" shall mean the aggregate
-------------------------------------
"Invested Amounts", as defined in the applicable Supplement, with respect to
any other outstanding Series of Investor Certificates for which the revolving
period for such other outstanding Series of Investor Certificates is not
scheduled to end before the last day of the (_______) Collection Period.
"Paying Agent" shall mean each paying agent outside the United
------------
States as specified by time to time by the Transferor.
"Permanent Global Certificate" shall have the meaning specified in
----------------------------
Section 6.01.
"Pool Factor" shall mean, with respect to any Determination Date,
-----------
a number carried out to eleven decimals representing the ratio of the
Invested Amount as of such Determination Date (determined after taking into
account any increases or decreases in the Invested Amount which will occur on
the following Distribution Date) to the Initial Invested Amount.
"Principal Allocation Percentage" shall mean, with respect to
--------------------------------
any Collection Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is the Invested
Amount as of the last day of the Revolving Period and the denominator of
which is the Pool Balance as of the last day of the immediately preceding
Collection Period; provided, however, that with respect to that portion of
-------- -------
any Collection Period that falls after the date on which any Early
Amortization Event occurs (other than an Early Amortization Event which has
resulted in an Early Amortization Period which has ended as described in
clause (c) thereof), the Principal Allocation Percentage shall be reset using
the Pool Balance as of the close of business on the date on which such Early
Amortization Event shall have occurred and Principal Collections shall be
allocated for such portion of such Collection Period using such reset
Principal Allocation Percentage.
"Quarterly Payment Date" shall mean the (_)th day of each (_), (_),
----------------------
(_) and (_) (or, if any such day is not a business day, the next succeeding
business day), commencing in (____).
"Rating Agency" shall mean, with respect to the Series (___)
------ ------
Certificates, each of Moody's Investors Service Limited and Standard &
Poor's.
"Rating Agency Condition" shall mean, with respect to the Series
-----------------------
(_) Certificates and any action, that each Rating Agency shall have notified
the Transferor, the Master Servicer and the Trustee in writing that such
action will not result in a reduction or withdrawal of the rating of the
Notes (which are secured by the Series (_) Certificates).
"Reassignment Amount" shall mean, with respect to any Distribution
-------------------
Date, after giving effect to any deposits and distributions otherwise to be
made on such Distribution Date, the sum of (i) the Invested Amount on such
Distribution Date, (ii) accrued and unpaid interest on the unpaid principal
balance of the Series (_) Certificates (calculated on the basis of the
outstanding principal balance of the Series (_) Certificates at the
Certificate Rate through the day preceding such Distribution Date), and (iii)
the amount of Additional Interest, if any, for such Distribution Date and any
Additional Interest previously due but not distributed to the Series (_)
Certificateholder on a prior Distribution Date.
"Required Participation Percentage" shall mean, with respect to
---------------------------------
Series (_), (_)%; provided, however, that the Transferor may, upon 10 days'
-------- -------
prior notice to the Trustee, each Rating Agency and any Enhancement Provider,
reduce the Required Participation Percentage to a percentage which shall not
be less than 100%, provided that the Rating Agency Condition shall have been
satisfied with respect to such reduction.
"Required Subordinated Amount" shall mean, as of any date of
----------------------------
determination, the sum of (a) the product of (i) the Subordinated Percentage
and (ii) the Invested Amount on such date and (b) the Incremental
Subordinated Amount.
"Required Subordination Draw Amount" shall have the meaning
-------------------------------------
specified in Section 4.05.
"Reserve Fund" shall have the meaning specified in Section 4.04.
------------
"Reserve Fund Deposit Amount" shall mean, with respect to any
---------------------------
Distribution Date, the amount, if any, by which (i) the Reserve Fund Required
Amount for such Distribution Date exceeds (ii) the amount of funds in the
Reserve Fund after giving effect to any withdrawals therefrom on such
Distribution Date.
"Reserve Fund Required Amount" shall mean, with respect to any
----------------------------
Distribution Date, an amount equal to the product of (a) (_)% and (b) the
outstanding principal balance of the Certificates on such Distribution Date
(after giving effect to any changes therein on such Distribution Date).
("Reuters Screen LIBO Page" shall mean the display designated as
------------------------
page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as
may replace the LIBO page on that Service for the purpose of displaying
London interbank offered rates of major banks).)
"Revolving Period" shall mean the period beginning at the close of
----------------
business on the Business Day immediately preceding the Series Cut-Off Date
and ending on the earlier of (a) the close of business on the day immediately
preceding the Accumulation Period Commencement Date, and (b) the close of
business on the day an Early Amortization Period commences; provided,
--------
however, that, if any Early Amortization Period ends as described in clause
- -------
(c) of the definition thereof, the Revolving Period will recommence as of the
close of business on the day such Early Amortization Period ends.
"Second Exchange Date" shall have the meaning set forth in Section
--------------------
6.01.
"Semi-annual Payment Date" shall mean the (_)th day of each (_) and
------------------------
(_) (or, if any such day is not a business day, the next succeeding business
day), commencing in (____).
"Series Cut-Off Date" shall mean (_).
-------------------
"Series (_)" shall mean the Series of Investor Certificates, the
----------
terms of which are specified in this Series Supplement.
"Series (_) Accounts" shall have the meaning specified in Section
-------------------
4.04(e)(i).
"Series (___) Allocation Percentage" for a Collection Period shall
----------------------------------
mean the percentage derived from the fraction the numerator of which is the
Invested Amount on the last Business Day preceding such Collection Period and
the denominator of which is the Trust Invested Amount on the last Business
Day preceding such Collection Period.
"Series (_) Certificateholder" shall mean (_______), the Holder of
----------------------------
the Series (_) Certificates.
"Series (_) Certificateholder's Interest" shall mean that portion
---------------------------------------
of the Certificateholders' Interest evidenced by the Series (_) Certificates.
"Series (_) Certificates" shall mean any one of the certificates
-----------------------
executed by the Transferor and authenticated by the Trustee, substantially
in the forms of Exhibit A-1, Exhibit A-2 and Exhibit A-3, as applicable.
"Series (__) Excess Principal Collections" shall mean that portion
----------------------------------------
of Excess Principal Collections allocated to Series (_) pursuant to Section
4.11.
"Series (_) Principal Shortfall" shall have the meaning specified
------------------------------
in Section 4.11.
"Servicing Fee Rate" shall mean, with respect to Series (__), (__)%
------------------
or, for any Distribution Date in respect of which the Monthly Servicing Fee
has been waived, 0%.
"Special Payment Date" shall mean each Distribution Date with
--------------------
respect to any Early Amortization Period (other than an Early Amortization
Period which has ended as described in clause (c) of the definition thereof
in the Agreement).
"Subordinated Percentage" shall mean the percentage equivalent of
-----------------------
a fraction, the numerator of which is (_)% and the denominator of which is
the excess of 100% over (_)%.
"Swap Available Subordinated Amount" shall mean (a) with respect to
----------------------------------
the first Determination Date, the Initial Swap Subordinated Amount, and (b)
with respect to each subsequent Determination Date, the lesser of (i) the
Initial Swap Subordinated Amount and (ii) the Swap Available Subordinated
Amount for the immediately preceding Determination Date minus the aggregate
-----
amount, if any, of prior payments of Required Subordination Draw Amounts made
from Available Transferor's Collections applied to reduce the Swap Available
Subordinated Amount in accordance with Section 4.08(b), plus the amount of
----
any Excess Servicing available to be paid to the Transferor pursuant to
Section 4.10 (net of any portion thereof applied to increase the Available
Subordinated Amount).
"Swap Counterparty" shall mean Ford Motor Credit Company.
-----------------
("Telerate Page 3750" shall mean the display designated as such on
------------------
the Dow Jones Telerate Service (or such other page as may replace the page on
that service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rate for U.S. dollar deposits).)
"Temporary Global Certificate" shall have the meaning specified in
----------------------------
Section 6.01.
"Termination Date" shall mean the (_______) Distribution Date.
----------------
"Termination Proceeds" shall mean any Termination proceeds arising
--------------------
out of a sale of Receivables (or interests therein) pursuant to Section
12.02(c) of the Agreement with respect to Series (_).
("Three-Month LIBOR" shall mean the London interbank offered rate
-----------------
for three-month United States dollar deposits established by the Calculation
Agent on each Adjustment Date pursuant to Section 5.03.)
"Transferor's Collections" shall mean, with respect to any
-------------------------
Collection Period, the sum of (a) the Transferor's Percentage of
Non-Principal Collections for the related Collection Period, plus (b) the
----
Transferor's Percentage of Principal Collections for the related Collection
Period.
"Transferor's Percentage" for any Collection Period shall mean (i)
-----------------------
with respect to Non-Principal Receivables and Defaulted Receivables, 100%
minus the aggregate of the floating allocation percentages for each
outstanding Series and (ii) with respect to Principal Receivables, 100% minus
-----
the sum of (a) the aggregate of the floating allocation percentages for all
Series in their revolving periods and (b) the aggregate of the principal
allocation percentages for all Series that are not in their revolving
periods, but in any case shall not be less than 0%.
"U.S. Person" shall mean, a citizen or resident of the United
------------
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States of America (including the States and the
District of Columbia), an estate the income of which is subject to United
States Federal income taxation regardless of its source and a trust if a
court within the United States is able to exercise primary supervision of the
administration of the trust and one or more United States fiduciaries have
the authority to control all substantial decisions of the trust.
"Withholding Tax" shall have the meaning set forth in Section
---------------
7.01(g).
(a) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the term "Rating Agency" shall mean, whenever
used in this Series Supplement or the Agreement with respect to Series (_),
Standard & Poor's and Moody's. As used in this Series Supplement and in the
Agreement with respect to Series (_), "highest investment category" shall
mean (i) in the case of Standard & Poor's, AAA, A-1+, AAAm or AAAm-G, as
applicable, and (ii) in the case of Moody's, Aaa and P-1, as applicable.
(b) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the terms "Enhancement Provider" and
"Beneficiary" shall exclude the Swap Counterparty for purposes of such
party's (i) receipt of any notices, Opinions of Counsel, Officer's
Certificates, statements or the like and (ii) required consent to the
appointment of any Successor Master Servicer.
(c) All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Agreement. The definitions
in Section 2.01 are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders
of such terms.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Series Supplement shall refer to this Series
Supplement as a whole and not to any particular provision of this Series
Supplement; references to any Article, Section or Exhibit are references to
Articles, Sections and Exhibits in or to this Series Supplement unless
otherwise specified; and the term "including" means "including without
limitation".
ARTICLE III
Servicing Fee
-------------
SECTION 3.01. Servicing Compensation. The monthly servicing fee
----------------------
(the "Monthly Servicing Fee") shall be payable to the Master Servicer, in
arrears, on each Distribution Date in respect of any Collection Period (or
portion thereof) occurring prior to the earlier of the first Distribution
Date following the Series (_) Termination Date and the first Distribution
Date on which the Invested Amount is zero, in an amount equal to one-twelfth
of the product of (a) the Servicing Fee Rate and (b) the Series (_)
Allocation Percentage of the Pool Balance as of the last day of the second
Collection Period preceding such Distribution Date (or with respect to the
first Distribution Date, as of the Series Cut-Off Date). The share of the
Servicing Fee allocable to the Series (_) Certificateholder with respect to
any Distribution Date (the "Certificateholder's Monthly Servicing Fee") shall
be equal to one-twelfth of the product of (a) the Servicing Fee Rate and (b)
the Invested Amount as of the last day of the Collection Period second
preceding such Distribution Date; provided, however, that with respect to the
-------- -------
first Distribution Date, the Certificateholder's Monthly Servicing Fee shall
be equal to $(_). The remainder of the Monthly Servicing Fee shall be paid
by the Transferor and in no event shall the Trust, the Trustee or the Series
(_) Certificateholder be liable for the share of the Monthly Servicing Fee to
be paid by the Transferor; and the remainder of the Servicing Fee shall be
paid by the Transferor and the Investor Certificateholders of other Series
and the Series (_) Certificateholder shall in no event be liable for the
share of the Servicing Fee to be paid by the Transferor or the Investor
Certificateholders of other Series. The Certificateholder's Monthly
Servicing Fee shall be payable to the Master Servicer solely to the extent
amounts are available for distribution in accordance with the terms of this
Series Supplement.
The Master Servicer will be permitted, in its sole discretion, to
waive the Monthly Servicing Fee for any Distribution Date by notice to the
Trustee on or before the related Determination Date; provided that the Master
-------- ----
Servicer believes that sufficient Collections of Non-Principal Receivables
will be available on any future Distribution Date to pay the
Certificateholder's Monthly Servicing Fee relating to the waived Monthly
Servicing Fee. If the Master Servicer so waives the Monthly Servicing Fee
for any Distribution Date, the Monthly Servicing Fee and the
Certificateholder's Monthly Servicing Fee for such Distribution Date shall be
deemed to be zero for all purposes of this Series Supplement and the
Agreement; provided, however, that such Certificateholder's Monthly Servicing
-------- -------
Fee shall be paid on a future Distribution Date solely to the extent amounts
are available therefor pursuant to Section 4.10(b); provided, further that,
-------- -------
to the extent any such waived Certificateholder's Monthly Servicing Fee is so
paid, the related portion of the Monthly Servicing Fee to be paid by the
Transferor shall be paid by the Transferor to the Master Servicer.
ARTICLE IV
Rights of Series (_) Certificateholder and
------------------------------------------
Allocation and Application of Collections
-----------------------------------------
SECTION 4.01. Allocations. Payments to the Transferor. (a)
-----------
(a) Collections of Non-Principal Receivables and Principal Receivables,
Miscellaneous Payments and Defaulted Amounts, as they relate to Series (_),
shall be allocated and distributed as set forth in this Article.
(b) The Master Servicer shall instruct the Trustee to withdraw
from the Collection Account and pay to the Transferor on the dates set forth
below the following amounts:
(i) on each Deposit Date:
(A) an amount equal to the Excess Transferor's
Percentage for the related Collection Period of Non-Principal
Collections deposited in the Collection Account for such
Deposit Date; and
(B) an amount equal to the Excess Transferor's
Percentage for the related Collection Period of Principal
Collections deposited in the Collection Account for such
Deposit Date, if the Transferor's Participation Amount
(determined after giving effect to any Principal Receivables
transferred to the Trust on such Deposit Date) exceeds the
Trust Aggregate Available Subordinated Amount for the
immediately preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to
be made on the Distribution Date immediately following such
Determination Date); and
(ii) on each Deposit Date with respect to the Revolving Period
or the revolving period for any other Series of Investor
Certificates, an amount equal to the Available Transferor's
Principal Collections for such Deposit Date, if the Transferor's
Participation Amount (determined after giving effect to any
Principal Receivables transferred to the Trust on such Deposit
Date) exceeds the Trust Aggregate Available Subordinated Amount for
the immediately preceding Determination Date (after giving effect
to the allocations, distributions, withdrawal, and deposits to be
made on the Distribution Date immediately following such Deposit
Date); provided, however, that Available Transferor's Principal
-------- -------
Collections shall be paid to the Transferor with respect to any
Collection Period only after an amount equal to the sum of (A) the
Deficiency Amount, if any, relating to the immediately preceding
Collection Period and (B) the excess, if any, of the Reserve Fund
Required Amount over the amount in the Reserve Fund on the
immediately preceding Distribution Date (after giving effect to the
allocations of, distributions from, and deposits in, the Reserve
Fund on such Distribution Date), has been deposited in the
Collection Account from such Available Transferor's Principal
Collections.
The withdrawals to be made from the Collection Account pursuant to
this Section 4.01(b) do not apply to deposits into the Collection Account
that do not represent Collections, including Miscellaneous Payments, payment
of the purchase price for the Certificateholders' Interest pursuant to
Section 2.03 of the Agreement, payment of the purchase price for the Series
(_____) Certificateholder's Interest pursuant to Section 8.01 of this Series
Supplement and proceeds from the sale, disposition or liquidation of
Receivables pursuant to Section 12.02 of the Agreement.
(c) The Master Servicer shall instruct the Trustee to withdraw
from the Collection Account and deposit into the Reserve Fund on Deposit
Dates with respect to the Revolving Period Available Transferor's Principal
Collections for such Deposit Date, up to the amount of the excess, if any,
determined pursuant to Section 4.01(b)(ii)(B).
SECTION 4.02. Monthly Interest. The amount of monthly interest
----------------
("Monthly Interest") with respect to the Series (_) Certificates on any
Distribution Date shall be an amount equal to (a) (the actual number of days
in the related Interest Period divided by 360 multiplied by) (one-twelfth
multiplied by) (b) the product of (i) the Certificate Rate and (ii) the
outstanding principal balance of the Series (_) Certificates as of the close
of business on the day immediately preceding the Distribution Date.
On the Determination Date preceding each Distribution Date, the
Master Servicer shall determine the excess, if any (the "Interest
Shortfall"), of (x) the aggregate Monthly Interest for the Interest Period
applicable to such Distribution Date over (y) the amount which will be
available to be deposited in the Interest Funding Account on such
Distribution Date in respect thereof pursuant to this Series Supplement. If,
on any (Quarterly) (Semi-annual) Payment Date or any Special Payment Date, an
amount covering any Interest Shortfall for any prior Distribution Date shall
not have been deposited into the Interest Funding Account pursuant to Section
4.06(a)(i), then an additional amount ("Additional Interest") equal to (a)
(the actual number of days in the related Interest Period divided by 360
multiplied by) (one-twelfth multiplied by) (b) the product of (i) the
Certificate Rate plus two percentage points and (ii) such Interest Shortfall
----
(or the portion thereof which has not been paid or deposited in the Interest
Funding Account) shall be payable as provided herein with respect to the
Series (_) Certificates on each Distribution Date following such Distribution
Date to and including the Distribution Date on which such Interest Shortfall
is paid or deposited in the Interest Funding Account. Notwithstanding
anything to the contrary herein, Additional Interest shall be payable to the
Interest Funding Account or distributed to Series (_) Certificateholder only
to the extent permitted by applicable law.
SECTION 4.03. Determination of Monthly Principal. The amount of
----------------------------------
monthly principal ("Monthly Principal") distributable with respect to the
Series (_) Certificates on each Distribution Date with respect to an Early
Amortization Period and the Accumulation Period shall be equal to the
Available Investor Principal Collections with respect to such Distribution
Date; provided, however, that for each Distribution Date with respect to the
-------- -------
Accumulation Period, Monthly Principal shall not exceed the Controlled
Distribution Amount for such Distribution Date; and provided, further that
-------- -------
Monthly Principal shall not exceed the outstanding principal balance of the
Series (_) Certificates.
SECTION 4.04. Establishment of Reserve Fund and Funding Accounts.
--------------------------------------------------
(a)(i) The Master Servicer, for the benefit of the Series (_)
Certificateholder, shall cause to be established and maintained in the name
of the Trustee, on behalf of the Trust, an Eligible Deposit Account (the
"Reserve Fund") which shall be identified as the "Reserve Fund for the Ford
Credit Auto Loan Master Trust II, Series (_)" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Series (_) Certificateholder.
(ii) At the direction of the Master Servicer, funds on deposit in
the Reserve Fund shall be invested by the Trustee in Eligible Investments
selected by the Master Servicer that will mature so that such funds will be
available at the close of business on or before the Business Day next
preceding the following Distribution Date. All Eligible Investments shall be
held by the Trustee for the benefit of the Series (_) Certificateholder. On
each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Reserve Fund
received prior to such Distribution Date shall be applied as set forth in
Section 4.06(a) of this Series Supplement. Funds deposited in the Reserve
Fund on a Business Day (which immediately precedes a Distribution Date) upon
the maturity of any Eligible Investments are not required to be invested
overnight.
(b)(i) The Master Servicer, for the benefit of the Series (_)
Certificateholder, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Interest Funding
Account"), which shall be identified as the "Interest Funding Account for the
Ford Credit Auto Loan Master Trust II, Series (_)" and shall bear a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Series (_) Certificateholder.
(ii) At the direction of the Master Servicer, funds on deposit in
the Interest Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Master Servicer. All such Eligible Investments
shall be held by the Trustee for the benefit of the Series (_)
Certificateholder. On each Distribution Date, all interest and other
investment earnings (net of losses and investment expenses) on funds on
deposit in the Interest Funding Account shall be applied as set forth in
Section 4.06(a) of this Series Supplement. Funds deposited in the Interest
Funding Account on any Distribution Date (which are not distributed to
Certificateholders pursuant to Section 4.07 on such Distribution Date) shall
be invested at the direction of the Master Servicer in Eligible Investments
that will mature so that such funds will be available on or before the close
of business on the Business Day preceding the next following Distribution
Date or, if an Early Amortization Event shall have occurred, the next
following Special Payment Date. Funds deposited in the Interest Funding
Account on a Business Day (which immediately precedes a (Quarterly) (Semi-
annual) Payment Date) upon the maturity of any Eligible Investments are not
required to be invested overnight.
(c)(i) The Master Servicer, for the benefit of the Series (_)
Certificateholder, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Principal Funding
Account"), which shall be identified as the "Principal Funding Account for
Ford Credit Auto Loan Master Trust II, Series (_)" and shall bear a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Series (_) Certificateholder.
(ii) At the direction of the Master Servicer, funds on deposit in
the Principal Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Master Servicer; provided that (unless otherwise
-------- ----
agreed to by the Rating Agencies) such investments bear interest at a rate
based on LIBOR, payable on a monthly basis with the interest rate thereon
reset monthly. All such Eligible Investments shall be held by the Trustee
for the benefit of the Series (_) Certificateholder. On each Distribution
Date, all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit therein shall be applied as set
forth in Section 4.06(a) of this Series Supplement. Funds on deposit in the
Principal Funding Account shall be invested at the direction of the Master
Servicer in Eligible Investments that will mature so that such funds will be
available on or before the close of business on the Business Day next
preceding the following Distribution Date or, if an Early Amortization Event
shall have occurred, the next Special Payment Date; provided, however,
-------- -------
Eligible Investments may mature so that funds will be available on the
following Distribution Date or Special Payment Date, as applicable, upon
notice from the Master Servicer to each Rating Agency and written
confirmation from Moody's to the Master Servicer that such change would not
result in a change in its rating on the Certificates. Funds deposited in the
Principal Funding Account on a Business Day (which immediately precedes the
Expected Payment Date) upon the maturity of any Eligible Investments are not
required to be invested overnight.
(d)(i) The Master Servicer, for the benefit of the Series (_)
Certificateholder, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Excess Funding
Account"), which shall be identified as the "Excess Funding Account for Ford
Credit Auto Loan Master Trust II, Series (_)" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Series (_) Certificateholder.
(ii) At the direction of the Master Servicer, funds on deposit in
the Excess Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Master Servicer; provided that (unless otherwise
-------- ----
agreed to by the Rating Agencies) such investments bear interest at a rate
based on LIBOR, payable on a monthly basis with the interest rate thereon
reset monthly. All such Eligible Investments shall be held by the Trustee for
the benefit of the Series (_) Certificateholder. On each Distribution Date,
all interest and other investment earnings (net of losses and investment
expenses) on funds on deposit in the Excess Funding Account shall be applied
as set forth in Section 4.06(a) of this Series Supplement. Funds deposited
in the Excess Funding Account on any Distribution Date shall be invested in
Eligible Investments that will mature so that such funds will be available on
or before the close of business on the Business Day next preceding the
following Distribution Date; provided that if, pursuant to Section 4.13,
-------- ----
deposits to and withdrawals from the Excess Funding Account are being made on
a weekly or daily basis, then such Eligible Investments shall mature on each
Business Day on a weekly or daily basis, as the case may be; provided,
further that such Eligible Investments shall still mature so that funds will
- -------- -------
be available on or before the close of business on the Business Day next
preceding the following Distribution Date. Funds deposited in the Excess
Funding Account on a Business Day (which immediately precedes a Distribution
Date) upon the maturity of any Eligible Investments are not required to be
invested overnight.
(e)(i) The Trustee shall possess all right, title and interest in
and to all funds on deposit from time to time in, and all Eligible
Investments credited to, the Reserve Fund, the Interest Funding Account, the
Principal Funding Account and the Excess Funding Account (collectively, the
"Series (_) Accounts") and in all proceeds thereof. The Series (_) Accounts
shall be under the sole dominion and control of the Trustee for the benefit
of the Series (_) Certificateholder. If, at any time, any of the Series (_)
Accounts ceases to be an Eligible Deposit Account, the Trustee (or the Master
Servicer on its behalf) shall within 10 Business Days (or such longer period,
not to exceed 30 calendar days, as to which each Rating Agency may consent)
establish a new Series (_) Account meeting the conditions specified in
paragraph (a)(i), (b)(i), (c)(i) or (d)(i) above, as applicable, as an
Eligible Deposit Account and shall transfer any cash and/or any investments
to such new Series (_) Account. Neither the Transferor, the Master Servicer
nor any person or entity claiming by, through or under the Transferor, the
Master Servicer or any such person or entity shall have any right, title or
interest in, or any right to withdraw any amount from, any Series (_)
Account, except as expressly provided herein. Schedule 1, which is hereby
incorporated into and made part of this Series Supplement, identifies each
Series (_) Account by setting forth the account number of each such account,
the account designation of each such account and the name of the institution
with which such account has been established. If a substitute Series (_)
Account is established pursuant to this Section, the Master Servicer shall
provide to the Trustee an amended Schedule 1, setting forth the relevant
information for such substitute Series (_) Account.
(ii) Pursuant to the authority granted to the Master Servicer in
Section 3.01(a) of the Agreement, the Master Servicer shall have the power,
revocable by the Trustee, to make withdrawals and payments or to instruct the
Trustee to take withdrawals and payments from the Series (_) Accounts for the
purposes of carrying out the Master Servicer's or Trustee's duties hereunder.
SECTION 4.05. Deficiency Amount. With respect to each Distribution
-----------------
Date, on the related Determination Date, the Master Servicer shall determine
the amount (the "Deficiency Amount"), if any, by which
(a) the sum of
(i) Monthly Interest for such Distribution Date,
(ii) any Monthly Interest previously due but not deposited in the
Interest Funding Account on a prior Distribution Date,
(iii) Additional Interest, if any, for such Distribution Date and
any Additional Interest previously due but not deposited into the
Interest Funding Account on a prior Distribution Date,
(iv) the Certificateholder's Monthly Servicing Fee for such
Distribution Date,
(v) the Investor Default Amount, if any, for such Distribution
Date,
(vi) the Series (_) Allocation Percentage of the amount of any
Adjustment Payment required to be deposited in the Collection Account
pursuant to Section 3.09(a) of the Agreement with respect to the related
Collection Period that has not been so deposited as of such
Determination Date and,
(vii) the Net Trust Swap Payment, if any, with respect to such
Distribution Date,
exceeds (b) the sum of
-------
(i) Investor Non-Principal Collections for such Distribution
Date plus any Investment Proceeds plus the Net Trust Swap Receipt,
---- ----
if any, with respect to such Distribution Date and
(ii) the amount of funds in the Reserve Fund which are
available pursuant to Section 4.08(a) to cover any portion of the
amount, if any, by which the amount of clause (a) exceeds the
amount of clause (b)(i).
The "Required Subordination Draw Amount" shall be the lesser of (x)
----------------------------------
the Deficiency Amount and (y) either the Available Subordinated Amount or, in
the event of an Early Amortization Event (other than an Early Amortization
Event which has resulted in an Early Amortization Period which has ended as
described in clause (c) of the definition thereof), the Aggregate Available
Subordinated Amount on the related Determination Date. Following an Early
Amortization Event, any Required Subordination Draw Amount shall reduce the
Swap Available Subordinated Amount in its entirety before any reduction to
the Available Subordinated Amount.
SECTION 4.06. Application of Investor Non-Principal Collections,
---------------------------------------------------
Investment Proceeds, Net Trust Swap Receipts and Available Investor Principal
- -----------------------------------------------------------------------------
Collections. The Master Servicer shall cause the Trustee to make the
- -----------
following distributions on each Distribution Date:
(a) On each Distribution Date, an amount equal to the sum of
Investor Non-Principal Collections, and any Investment Proceeds and payments
in respect of Net Trust Swap Receipts, if any, with respect to such
Distribution Date will be distributed in the following priority:
(i) first, an amount equal to Monthly Interest for such
-----
Distribution Date (net of any Net Trust Swap Receipts not required to be paid
on such date), plus any payments in respect of Net Trust Swap Receipts (net
----
of any portion thereof included in Monthly Interest), if any, plus the amount
----
of any Monthly Interest previously due but not deposited in the Interest
Funding Account or distributed to the Series (_) Certificateholder on a prior
Distribution Date, plus the amount of any Additional Interest for such
----
Distribution Date and any Additional Interest previously due but not
deposited in the Interest Funding Account or distributed to the Series (_)
Certificateholder on a prior Distribution Date, shall be deposited to the
Interest Funding Account; then, the Net Trust Swap Payment, if any, shall be
paid to the Swap Counterparty;
(ii) second, an amount equal to the Certificateholder's Monthly
------
Servicing Fee for such Distribution Date shall be distributed to the Master
Servicer (unless such amount has been netted against deposits to the
Collection Account or waived);
(iii) third, an amount equal to the Reserve Fund Deposit Amount, if
-----
any, for such Distribution Date shall be deposited in the Reserve Fund;
(iv) fourth, an amount equal to the Investor Default Amount for
------
such Distribution Date shall be treated as a portion of Investor Principal
Collections for such Distribution Date; and
(v) fifth, the balance, if any, shall constitute Excess Servicing
-----
and shall be allocated and distributed as set forth in Section 4.10.
(b) On each Distribution Date with respect to the Revolving
Period, an amount equal to Available Investor Principal Collections deposited
in the Collection Account for the related Collection Period shall be applied
in the following priority:
(i) first, if (A) the Pool Balance at the end of the preceding
-----
Collection Period is less than the Pool Balance at the end of the second
preceding Collection Period and (B) the Pool Balance at the end of the
preceding Collection Period is less than the Required Participation Amount
for such Distribution Date (calculated before giving effect to any deposits
to the Excess Funding Account and any excess funding account for any other
Series in their revolving periods to be made on such Distribution Date), then
the Master Servicer shall cause to be deposited into the Excess Funding
Account an amount which will reduce the Invested Amount such that, together
with the deposits to the excess funding accounts (and the resulting
reductions in the invested amounts) for other outstanding Series in their
revolving periods for such Distribution Date, the Pool Balance is equal to
the Required Participation Amount, and
(ii) second, an amount equal to the balance (such balance being
------
part of "Excess Principal Collections"), if any, of such Available Investor
Principal Collections shall be applied in accordance with Section 4.04 of the
Agreement.
For purposes of determining the amount to be applied pursuant to subparagraph
(i) above, allocations of the amounts to be deposited in the Excess Funding
Account and the excess funding account for other outstanding Series shall be
made pro rata on the basis of the invested amounts (including the Invested
Amount) for such Series.
If the Master Servicer has elected in respect of a Collection
Period to make withdrawals from the Excess Funding Account on a daily or
weekly basis pursuant to Section 4.13(b), then deposits into the Excess
Funding Account required by this Section 4.06(b) shall be made on each
Business Day in such Collection Period (if daily withdrawals and deposits
have been elected) or on each Wednesday (or the next succeeding Business Day
if such Wednesday is not a Business Day) in such Collection Period (if weekly
withdrawals and deposits have been elected). In the case of such election,
the Pool Balance referred to in clause (B) above shall be the Pool Balance on
the preceding Business Day, in the case of an election to make daily deposits
and withdrawals, and on the Monday next preceding the related Wednesday, in
the case of an election to make weekly deposits and withdrawals.
(c) On each Distribution Date with respect to the Accumulation
Period or an Early Amortization Period, an amount equal to Available Investor
Principal Collections will be distributed in the following priority:
(i) first, an amount equal to Monthly Principal for such
-----
Distribution Date shall be deposited by the Master Servicer or the Trustee
into the Principal Funding Account; and
(ii) second, for each Distribution Date with respect to the
------
Accumulation Period unless an Early Amortization Event has occurred, after
giving effect to the deposit referred to in clause (i) above, an amount equal
to the balance (such balance being part of "Excess Principal Collections"),
if any, of such Available Investor Principal Collections shall be applied in
accordance with Section 4.04 of the Agreement and Section 4.11 hereof.
SECTION 4.07. Distributions to the Series (__) Certificateholder.
---------------------------------------------------
(a) The Master Servicer shall cause the Trustee to make the following
distributions at the following times from the Interest Funding Account, the
Principal Funding Account and the Excess Funding Account:
(i) on each (Quarterly) (Semi-annual) Payment Date and on each
Special Payment Date, all amounts on deposit in the Interest Funding
Account (other than Investment Proceeds) shall be distributed to the
Series (_) Certificateholder to pay accrued interest on the Series (_)
Certificates plus any accrued Additional Interest that has not been
previously distributed to the Series (_) Certificateholder;
(ii) on each Special Payment Date and on the Expected Final Payment
Date, all amounts on deposit in the Principal Funding Account, the
Excess Funding Account and (after giving effect to the application
pursuant to Section 4.07(a)(i)) the Interest Funding Account, up to a
maximum amount on any such day equal to the excess of the outstanding
principal balance of the Series (_) Certificates over the unreimbursed
Investor Charge-Offs, shall be distributed to the Series (_)
Certificateholder; and
(iii) on each Distribution Date following an Asset Composition
Event, the Asset Composition Amount will be distributed to Series (_)
Certificateholder as set forth in Section 4.12(b) of this Series
Supplement.
(b) (Reserved)
(c) The distributions to be made pursuant to this Section 4.07 are
subject to the provisions of Sections 2.03, 9.02, 10.01 and 12.02 of the
Agreement and Sections 5.01, 9.01 and 9.02 of this Series Supplement.
SECTION 4.08. Application of Reserve Fund and Available
---------------------------------------------------
Subordinated Amount. (a) If the portion of Investor Non-Principal
- --------------------
Collections, Investment Proceeds and Net Trust Swap Receipts, if any,
allocated to Series (_) Certificateholder on any Distribution Date pursuant
to Section 4.06(a) is not sufficient to make the entire distributions
required on such Distribution Date by Section 4.06(a)(i), (ii) and (iv), the
Master Servicer shall cause the Trustee to withdraw funds from the Reserve
Fund to the extent available therein, and apply such funds to complete the
distributions pursuant to Section 4.06(a)(i), (ii) and (iv); provided,
--------
however, that during any Early Amortization Period (other than an Early
- -------
Amortization Period which has ended as described in clause (c) of the
definition thereof) funds shall not be withdrawn from the Reserve Fund to
make distributions otherwise required by Section 4.06(a)(iv) to the extent
that, after giving effect to such withdrawal, the amount on deposit in the
Reserve Fund shall be less than $1,000,000.
(b) If there is a Required Subordination Draw Amount for such
Distribution Date, the Master Servicer shall, subject to the following
paragraph, apply or cause the Trustee to apply the Available Transferor's
Collections on deposit in the Collection Account on such Distribution Date,
but only up to the amount of the Required Subordination Draw Amount, to make
up the shortfall in the distributions required by Sections 4.06(a)(i), (ii)
and (iv) that have not been made through the application of funds from the
Reserve Fund in accordance with Section 4.08(a). Any such Available
Transferor's Collections remaining after the application thereof pursuant to
the preceding sentence shall be treated as a portion of Investor Principal
Collections for such Distribution Date, but only up to the amount of unpaid
Adjustment Payments allocated to Series (_) as described in Section
4.05(a)(vi). The amount of the Available Transferor's Collections applied in
accordance with the two preceding sentences shall reduce (i) if an Early
Amortization Event shall have occurred, first the Swap Available Subordinated
Amount to the extent thereof and then the Available Subordinated Amount, or
(ii) if an Early Amortization Event shall not have occurred, the Available
Subordinated Amount as described in clause (i)(x)(A) of the definition
thereof. If the Required Subordination Draw Amount exceeds Available
Transferor's Collections for such Distribution Date, (i) the Swap Available
Subordinated Amount to the extent thereof and then the Available Subordinated
Amount or (ii) the Available Subordinated Amount, as the case may be, shall
be further reduced by the amount of such excess, but not by more than the sum
of (x) the Investor Default Amount and (y) the amount of unpaid Adjustment
Payments allocated to Series (_) as described in Section 4.05(a)(vi).
If for such Distribution Date the sum of the Required Subordination
Draw Amount and the aggregate of the required subordination draw amounts for
all other Series outstanding exceeds the Available Transferor's Collections
on deposit in the Collection Account on such Distribution Date, then such
Available Transferor's Collections shall be allocated to such Series
(including Series (_)) pro rata on the basis of such required subordination
draw amounts (including the Required Subordination Draw Amount).
(c) After giving effect to the allocations of, distributions from,
and deposits in, the Reserve Fund made pursuant to Sections 4.01(c), 4.04,
4.06(a) and 4.08(a) and (d), (i) if the amount in the Reserve Fund is
greater than the Reserve Fund Required Amount (or, for any Distribution Date
with respect to an Early Amortization Period, the Excess Reserve Fund
Required Amount) for such Distribution Date, then the Master Servicer shall
cause the Trustee to distribute such excess amount to the Transferor and (ii)
if the amount in the Reserve Fund is less than such Reserve Fund Required
Amount, then the Trustee shall, subject to the following paragraph, deposit
any remaining Available Transferor's Collections on deposit in the Collection
Account for such Distribution Date after giving effect to paragraph (b) of
Section 4.08 into the Reserve Fund until the amount in the Reserve Fund is
equal to such Reserve Fund Required Amount. On the Termination Date, any
funds in the Reserve Fund will be treated as Available Investor Principal
Collections. Upon payment in full of the outstanding principal balance of
the Series (_) Certificates, any funds remaining on deposit in the Reserve
Fund shall be paid to the Transferor.
If for such Distribution Date the sum of the amount required to be
deposited into the Reserve Fund and the aggregate of the amounts required to
be deposited into the reserve funds for all other Series outstanding exceeds
the Available Transferor's collections that remain available to make such
deposits on such Distribution Date, then such remaining Available
Transferor's Collections shall be allocated to such Series (including Series
(_)) pro rata on the basis of the amounts required to be deposited in each
such reserve fund (including the Reserve Fund).
(d) If, for any Distribution Date with respect to an Early
Amortization Period, after giving effect to the allocations of, distributions
from, and deposits in, the Reserve Fund and the reserve funds for other
Series made pursuant to Sections 4.01(c), 4.04, 4.06(a) and 4.08(a), the
amount in the Reserve Fund is less than the Excess Reserve Fund Required
Amount for such Distribution Date, the Trustee shall, subject to the
following paragraph, deposit any remaining Available Transferor's Collections
on deposit in the Collection Account for such Distribution Date into the
Reserve Fund until the amount in the Reserve Fund is equal to such Excess
Reserve Fund Required Amount.
If for any Distribution Date the sum of the amount required to be
deposited into the Reserve Fund to fund the Excess Reserve Fund Required
Amount and the aggregate of the amounts required to be deposited into the
reserve funds for all other Series outstanding to fund the excess reserve
fund required amounts for such Series exceeds the remaining Available
Transferor's Collections available to make such deposits for such
Distribution Date, then such remaining Available Transferor's Collections
shall be allocated to such Series (including Series (_)) pro rata on the
basis of such amounts required to be deposited in each such reserve fund
(including the Reserve Fund) to fund the excess reserve fund required amount.
(e) The balance of Available Transferor's Collections on any
Distribution Date, after giving effect to any distributions thereof pursuant
to Sections 4.08(b), (c) and (d) and the distributions in respect of other
Series referred to in Sections 4.08(b), (c) and (d), shall be distributed to
the Transferor on such Distribution Date; provided that if the Trust
-------- ----
Aggregate Available Subordinated Amount for the immediately preceding
Determination Date exceeds the Transferor's Participation Amount on such
date (determined after giving effect to any Principal Receivables transferred
to the Trust on such Distribution Date), Section 4.08(c) hereof shall not
apply and such balance of Available Transferor's Collections shall be
deposited into the Reserve Fund to the extent of such excess. Any remaining
Available Transferor's Principal Collections shall be paid to the Transferor.
(f) Notwithstanding any other provision herein, FCAR may elect to
increase the Available Subordinated Amount up to the lesser of (i) $(_) and
(ii) (_)% of the Invested Amount at the time of such increase.
SECTION 4.09. Investor Charge-Offs. If, on any Distribution Date
--------------------
on which the Available Subordinated Amount on the preceding Determination
Date (after giving effect to the allocations, distributions, withdrawals
and deposits to be made on such Distribution Date) is zero and the Deficiency
Amount for such Distribution Date is greater than zero, the Invested Amount
shall be reduced by the amount of the excess of such Deficiency Amount over
any remaining Available Subordinated Amount on such Determination Date, but
not by more than the Investor Default Amount. Investor Charge-Offs shall
thereafter be reimbursed and the Invested Amount increased (but not by an
amount in excess of the aggregate unreimbursed Investor Charge-Offs) on any
Distribution Date by the sum of (a) Allocable Miscellaneous Payments with
respect to such Distribution Date and (b) the amount of Excess Servicing
allocated and available for that purpose pursuant to Section 4.10(a).
SECTION 4.10. Excess Servicing. The Master Servicer shall cause
----------------
the Trustee to apply, on each Distribution Date, Excess Servicing with
respect to the Collection Period immediately preceding such Distribution
Date, to make the following distributions in the following priority:
(a) an amount equal to the aggregate amount of Investor
Charge-Offs which have not been previously reimbursed as provided in
Section 4.09 (after giving effect to the allocation on such Distribution
Date of any amount for that purpose pursuant to Section 4.09) shall be
treated as a portion of Available Investor Principal Collections with
respect to such Distribution Date;
(b) an amount equal to the aggregate outstanding amounts of the
Certificateholder's Monthly Servicing Fee which have been previously
waived pursuant to Section 3.01 shall be distributed to the Master
Servicer; and
(c) the balance, if any, shall be distributed to the Transferor.
SECTION 4.11. Excess Principal Collections.
----------------------------
"Series (___) Excess Principal Collections", with respect to any
-----------------------------------------
Distribution Date, shall mean Excess Principal Collections for such
Distribution Date in an amount equal to the lesser of (a) the Series (_)
Principal Shortfall, if any, for such Distribution Date and (b) an amount
equal to the product of (x) Excess Principal Collections for all Series for
such Distribution Date and (y) a fraction, the numerator of which is the
Series (_) Principal Shortfall for such Distribution Date and the denominator
of which is the aggregate amount of Principal Shortfalls for all Series for
such Distribution Date. The Series (_) Principal Shortfall, with respect to
any Distribution Date, shall equal the excess of (i) (x) for any Distribution
Date with respect to the Accumulation Period, the Controlled Distribution
Amount or (y) for any Distribution Date with respect to an Early Amortization
Period, the Invested Amount, over (ii) Available Investor Principal
Collections for such Distribution Date (excluding any portion thereof
attributable to Excess Principal Collections).
SECTION 4.12. Asset Composition Event. (a) "Asset Composition
-----------------------
Event" shall mean and will occur if during the revolving period for any
Series (a) the sum of all Eligible Investments and amounts on deposit in all
Series Accounts represents more than 25% of the Trust Assets on each of
twelve or more consecutive Determination Dates; or (b) on each of any two
consecutive Determination Dates the sum of all Eligible Investments and
amounts on deposit in all Series Accounts represents more than 45% of the
total assets of the Trust, in each case after giving effect to all payments
made or to be made on the Distribution Date next succeeding each such
respective Determination Date.
No Asset Composition Event will arise, and any pre-existing Asset Composition
Event will be of no further effect, following the beginning of the
Accumulation Period or the Early Amortization Period.
(b) Upon the occurrence of an Asset Composition Event, the Master
Servicer shall calculate the minimum additional amount that would be
necessary to be paid out of the Series (_) Accounts on the next Distribution
Date to achieve compliance with the percentages set forth in Sections 4.12
(a) and (b), after giving effect to such additional payment and to all other
payments that would otherwise have been made on such Distribution Date
pursuant to Section 4.06 and Section 4.07, and interest on and principal of
the Series (_) Certificates will become payable on such Distribution Date,
and the Master Servicer shall cause the Trustee to make such payment in the
amount required (the "Asset Correction Amount") to achieve compliance with
the percentages set forth in Sections 4.12(a) and (b) by applying amounts on
deposit in the Interest Funding Account and the Excess Funding Account in the
following order of priority:
(i) first, amounts shall be withdrawn from the Interest Funding
-----
Account to pay all or a portion of accrued but unpaid interest on the
Certificates; and
(ii) second, amounts shall be withdrawn from the Excess Funding
------
Account to repay a portion of the outstanding principal balance of the
Certificates.
SECTION 4.13. Excess Funding Account. (a) Any funds on deposit
----------------------
in the Excess Funding Account at the beginning of the Accumulation Period or
upon the occurrence of an Early Amortization Event will be deposited in the
Principal Funding Account. In addition, no funds will be deposited in the
Excess Funding Account during the Accumulation Period or any Early
Amortization Period.
(b) If (i) on any Determination Date during the Revolving Period
there are any funds in the Excess Funding Account and (ii) the Pool Balance
at the end of the preceding Collection Period is greater than the Pool
Balance at the end of the second preceding Collection Period, then, subject
to the other provisions of this Section 4.13(b) and to Sections 4.13(c) and
(d), the Invested Amount and the invested amounts (but, in each case, not in
excess of the initial principal amount of such Series) for all other
outstanding Series that provide for an excess funding account or similar
arrangement and are in their revolving periods shall be increased such that,
after giving effect to such increases, the Required Participation Amount is
at least equal to the Pool Balance. On such Determination Date the Master
Servicer shall notify the Trustee of the amount, if any, of such increase in
the Invested Amount and the Trustee shall withdraw from the Excess Funding
Account and pay to the Transferor or allocate to one or more other Series, on
the immediately succeeding Distribution Date, an amount equal to the amount
of such increase in the Invested Amount. Such payment shall be in payment or
partial payment pursuant to the Receivables Purchase Agreement for additional
Principal Receivables transferred to the Trust or allocated to Series (_).
To the extent that the Invested Amount is increased by any payment to the
Transferor or any allocation to one or more other Series, the Transferor's
Interest or such other Series' invested amount, as applicable, shall be
reduced by the amount of such payment. In addition, any increase in the
Invested Amount is subject to the condition that after giving effect to such
increase the Pool Balance equals or exceeds the sum of (A) the Required
Participation Amount (exclusive of the amount in clause (b) of the definition
thereof), (B) the sum of the Required Subordinated Amount and the sum of the
required subordinated amounts for all other Series (or, if such other series
shall have no required subordinated amount, the available subordinated amount
with respect to such Series) and (C) the sum of the Swap Available
Subordinated Amount and any other subordinated amounts supporting any other
Enhancement for all other Series. In connection with the foregoing, the
Transferor shall endeavor (taking into account any seasonality experienced in
the Accounts in the Trust) to minimize the amounts on deposit, from time to
time, in the Excess Funding Account.
The Transferor may elect to make such withdrawals from the Excess
Funding Account and the excess funding accounts or similar arrangements for
other Series on a daily or weekly basis during a Collection Period by giving
the Trustee notice of such election at least two Business Days and no more
than five Business Days prior to the commencement of such daily or weekly
withdrawals. If such election is made, then deposits into the Excess Funding
Account and excess funding accounts or similar arrangements for other Series
shall be made on a similar basis for the related Collection Period. If such
election is for withdrawals on a daily basis, then such withdrawals shall be
made on each Business Day and the Pool Balance to be referenced shall be the
Pool Balance on the next preceding Business Day. If such election is for
withdrawals on a weekly basis, then such withdrawals shall be made on each
Wednesday (or if such Wednesday is not a Business Day, then on the Business
Day next succeeding such Wednesday) and the Pool Balance to be referenced
shall be the Pool Balance on the preceding Monday.
(c) In the event that other Series issued by the Trust provide for
excess funding accounts or other arrangements similar to the Excess Funding
Account involving fluctuating levels of investments in Principal Receivables,
(i) the allocation of additional Principal Receivables to increase the
Invested Amount and the invested amounts of such other Series (and the
related withdrawals from the Excess Funding Account and the other excess
funding or similar accounts) will be based on the proportion that the amount
on deposit in the Excess Funding Account bears to amounts on deposit in the
excess funding accounts (including the Excess Funding Account) of all Series
providing for excess funding accounts or such similar arrangements or to
amounts otherwise similarly available and (ii) the deposit of amounts into
the Excess Funding Account and the excess funding accounts of such other
Series will be pro rata based on the proportion that the Invested Amount
bears to the invested amounts (including the Invested Amount) of all Series
providing for excess funding accounts or such similar arrangements.
(d) In the event that any other Series is in an amortization
period, early amortization period or accumulation period, the amounts of any
withdrawals from the Excess Funding Account shall be applied first to satisfy
-----
in full any then applicable funding or payment requirements of such Series
and second to make a payment to the Transferor. In the event that more than
------
one other Series is in an amortization period, early amortization period or
accumulation period, the amounts of any withdrawals from the Excess Funding
Account shall be allocated (and, if necessary, reallocated) among such Series
as specified in the related Series Supplement, to meet the funding or payment
requirements of each such Series first to satisfy in full all then applicable
-----
funding or payment requirements of each such Series and second to make a
------
payment to the Transferor.
ARTICLE V
Distributions and Reports to the
--------------------------------
Series (_) Certificateholder
----------------------------
SECTION 5.01. Distributions. (a) On each Distribution Date, the
-------------
Trustee shall distribute to the Common Depositary by wire transfer the pro
rata share (based on the aggregate fractional undivided interests of the
Series (_) Certificates represented by the Permanent Global Certificate) of
the amounts on deposit in the Series (_) Accounts that are payable to the
Series (_) Certificateholder on such Distribution Date pursuant to Section
4.07.
(b) Distributions to the Series (_) Certificateholder with respect
to the Bearer Certificates and Coupons shall be payable only upon
presentation of such Bearer Certificates or Coupons, as the case may be, at
the offices of the Paying Agents outside the United States as may be
appointed by the Trustee from time to time. At the option of the bearer of
the Bearer Certificates and Coupons, and subject to the applicable laws and
regulations, such payments shall be made by a U.S. Dollar check drawn on a
bank in New York City or by transfer to a U.S. Dollar account maintained by
such bearer with a bank located outside the United States. If payment in
U.S. dollars at the offices of all such Paying Agents outside the United
States becomes illegal or is effectively precluded because of the imposition
of exchange controls or similar restrictions on the payment or receipt of
such amounts in U.S. dollars, the Trustee shall appoint an office or agent in
the United States to which such payment may be made. Any money paid by the
Trust to any of the Paying Agents for the payment of Coupons which remains
unclaimed for two years shall be returned to the Trust and the bearer of the
Coupons may look only to the Trust for payment thereof. No demand for
payment on the Bearer Certificates or Coupons may be made at any office of
any Paying Agent in the United States nor shall any payment be made by
transfer to an account in, or by mail to an address in, the United States.
SECTION 5.02. Reports and Statements to Series (___)
------------------------------------------------
Certificateholder; Other Reports. (a) At least two Business Days prior to
- --------------------------------
each Distribution Date, the Master Servicer will deliver to the Trustee and
the Rating Agencies statements substantially in the forms of Exhibits B-1 and
B-2 and deliver to Investor Certificateholders statements substantially in
the form of Exhibit B-1.
(b) A copy of each statement provided pursuant to paragraph (a)
will be made available for inspection at the Corporate Trust Office.
(c) No less frequently than semiannually, the Master Servicer will
provide to Moody's certain data concerning the Manufacturer base comprising
the PRIMUS U.S. wholesale loan portfolio in the form previously agreed upon
between the Master Servicer and Moody's.
(d) The Master Servicer will notify Moody's upon any material
change in the dealer audit policies and procedures of PRIMUS from those
currently in effect at the Closing Date and provide Moody's with a
description thereof.
(SECTION 5.03. Determination of Three-Month LIBOR.
----------------------------------
(a) On each Adjustment Date prior to the occurrence of an Early
Amortization Event or subsequent to the recommencement, if any, of the
Revolving Period, the Calculation Agent shall determine Three-Month LIBOR
applicable to the calculation of the Certificate Rate for the next Interest
Period and provide such rate to the Trustee. Except as otherwise provided
herein, Three-Month LIBOR shall equal the rate appearing for deposits in U.S.
dollars having a three-month maturity which appears on Telerate Page 3750 as
of 11:00 A.M., London time, on an Adjustment Date.
(b) If on any such Adjustment Date no such rate appears on
Telerate Page 3750, the Calculation Agent shall request the principal London
office of four major banks in the London interbank market selected by the
Calculation Agent (the "Calculation Banks") to provide a quotation of the
rate at which it is offering at approximately 11:00 A.M., London time, on
such Adjustment Date, to prime banks in the London interbank market,
commencing on the second London Business day immediately following such
Adjustment Date and having a three-month maturity and in a principal amount
of not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time. If at least two such quotations are
provided, Three-Month LIBOR for such Adjustment Date shall be calculated by
the Calculation Agent and shall equal the arithmetic mean (rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point, with
5 one-millionths of a percentage point rounded upwards) of such quotations.
If less than two such quotations are provided, Three-Month LIBOR on such
Adjustment Date shall be calculated by the Calculation Agent and shall be
equal the arithmetic mean (rounded, if necessary, to the nearest one hundred-
thousandth of a percentage point, with 5 one-millionths of a percentage point
rounded upwards) of the rates quoted by three major banks in New York City
selected by the Calculation Agent at approximately 11:00 A.M., New York time,
on such Adjustment Date for loans in U.S. dollars to leading European banks,
commencing on the second LIBOR Business Day immediately following such
Adjustment Date and having a three-month maturity and in a principal amount
equal to an amount not less than U.S $1,000,000 that is representative for a
single transaction in such market at such time.
(c) If on any such Adjustment Date the Calculation Agent is unable
to establish Three-Month LIBOR in the manner provided in paragraph (a) or (b)
above, Three-Month LIBOR shall be the Three-Month LIBOR established on the
preceding Adjustment Date.
(d) The establishment of Three-Month LIBOR and each Certificate
Rate for the Series (_) Certificates by the Calculation Agent and the
Trustee, as the case may be, shall (in the absence of manifest error) be
final, conclusive and binding upon each Holder of a Series (_) Certificate.)
(SECTION 5.04. Determination of One-Month LIBOR.
--------------------------------
(a) The establishment of One-Month LIBOR, if applicable, by the
Calculation Agent and the Trustee, as the case may be, shall (in the absence
of manifest error) be final, conclusive and binding upon each Holder of a
Series (_) Certificate.)
ARTICLE VI
The Series (_) Certificates
---------------------------
SECTION 6.01. (a) Notwithstanding anything to the contrary in the
Agreement, the Series (_) Certificates initially shall be issued in the form
of a single temporary global certificate (the "Temporary Global Certificate")
in bearer form, without interest coupons, in the denomination of the entire
aggregate principal amount of the Series (_) Certificates and substantially
in the form set forth in Exhibit A-1. The Temporary Global Certificate shall
be authenticated and delivered by the Trustee outside the United States to
the Custodian which shall hold the same on behalf of the Series (_)
Certificateholder. The Custodian on behalf of the Series (_)
Certificateholder shall be entitled to receive the permanent global
certificate substantially in the form set forth in Exhibit A-2 (the
"Permanent Global Certificate") in replacement of the Temporary Global
Certificate.
(b) Definitive Certificates in bearer form ("Bearer Certificates")
with coupons attached thereto at the time of issue for the interest due on
each (Quarterly) (Semi-annual) Payment Date thereafter, shall be exchanged
for beneficial interests in the Permanent Global Certificate within 60
calendar days following the receipt of notice from the Series (_)
Certificateholder to the Custodian (who shall immediately forward a copy of
such notice to the Trustee) or to the Trustee, requesting Bearer Certificates
(each, a "Second Exchange Date"). The Trustee not less than 45 days prior to
any Second Exchange Date shall send written notice to the Transferor, the
Master Servicer and the Paying Agent of receipt of such notice.
(c) On any Second Exchange Date, all or a portion of the interests
in the Permanent Global Certificate shall be exchanged for Bearer
Certificates. When the Trustee receives a request for the exchange of
interests in the Permanent Global Certificate for Bearer Certificates, the
Transferor, at the request of the Trustee shall, without undue delay, arrange
for the printing of the Bearer Certificates in accordance with applicable
printing regulations and, upon completion of such printing, deliver such
Bearer Certificates to arrange for authentication and delivery to or to the
order of the Custodian. All Bearer Certificates so issued and delivered
shall have Coupons attached substantially in the form of Exhibit C (the
"Coupons"). The Bearer Certificates shall constitute "Bearer Certificates"
for all purposes under the Agreement, and the provisions of the Agreement
relating to Bearer Certificates shall apply to the Bearer Certificates in all
respects. The bearer of each Coupon, whether or not the Coupon is attached
to the Bearer Certificate, shall be subject to and bound by all the
provisions contained in the Bearer Certificate to which such Coupon relates.
The Bearer Certificates shall be issued in denominations of $1,000.
(d) Upon the exchange of any portion of the Permanent Global
Certificate for Bearer Certificates, the Permanent Global Certificate shall
be endorsed by or on behalf of the Trustee to reflect the reduction of its
principal amount by an amount equal to the corresponding principal amount of
Bearer Certificates which the Trustee or its designated agent shall
authenticate. If at the time of any Second Exchange Date, any beneficial
interests remain in the Temporary Global Certificate, such interest must be
exchanged for a beneficial interest in the Permanent Global Certificate in
accordance with the provisions of the Agreement prior to exchange for Bearer
Certificates.
ARTICLE VII
Amortization Events
-------------------
SECTION 7.01. Additional Amortization Events. The occurrence of
-------------------------------
any of the following events shall, immediately upon the occurrence thereof
without notice or other action on the part of the Trustee or the Series (_)
Certificateholder, be deemed to be an Early Amortization Event solely with
respect to Series (_):
(a) on any Determination Date, the average of the Monthly Payment
Rates for the three preceding Collection Periods is less than (_)%;
(b) on any Determination Date, the Available Subordinated Amount
for the next Distribution Date will be less than the Required
Subordinated Amount on such Determination Date, after giving effect to
the distributions to be made on the next Distribution Date;
(c) any Servicing Default with respect to Series (_) occurs;
(d) on any Determination Date, as of the last day of the preceding
Collection Period, the aggregate amount of Principal Receivables
relating to Used Vehicles exceeds (_)% of the Pool Balance on such last
day;
(e) the Interest Rate Swap is terminated in accordance with its
terms;
(f) the outstanding principal amount of the Certificates is not
repaid by the Expected Payment Date; or
(g) the Master Servicer determines that the Trust has or will
become obligated to deduct or withhold amounts ("Withholding Tax") from
payments to be made with respect to the Certificates on the next
succeeding Payment Date for or on account of any tax, assessment or
other governmental charge by the U.S. or any political subdivision or
taxing authority thereof or therein on any amounts due to the beneficial
owner of the Certificates, as a result of any change in, or amendment
to, the laws (or any regulations or rulings promulgated thereunder) of
the U.S. or any political subdivision or taxing authority thereof or
therein, or any change in official position regarding the application or
interpretation of such laws, regulations or rulings, which change or
amendment becomes effective on or after the Closing Date; provided that
-------- ----
such obligation to deduct or withhold cannot be avoided prior to the
imposition of any such Withholding Tax by the use of reasonable measures
available to the Trust that, in the opinion of the Master Servicer,
which opinion shall be rendered in good faith, shall not have either (A)
a material adverse impact upon the conduct of the business of the
Transferor or (B) an adverse effect on the rating of the Certificates of
any other outstanding Series. The Master Servicer's determination shall
be evidenced by delivery to the Trustee of (x) a certificate setting
forth a statement of facts showing that such Amortization Event has
occurred or shall occur and (y) an opinion of independent tax counsel to
such effect based on such statement of facts.
ARTICLE VIII
Optional Repurchase
-------------------
SECTION 8.01. Optional Repurchase. (a) On any Distribution Date
-------------------
occurring after the date on which the Invested Amount is reduced to (_)% of
the principal amount of the Certificates on the Closing Date or less, the
Transferor shall have the option, subject to the condition set forth in
paragraph (c), to purchase the entire, but not less than the entire, Series
(_) Certificateholder's Interest, at a purchase price equal to the
Reassignment Amount for such Distribution Date.
(b) The Transferor shall give the Master Servicer and the Trustee
at least 10 days' prior written notice of the Distribution Date on which the
Transferor intends to exercise such purchase option. Not later than 12:00
noon, New York City time, on such Distribution Date the Transferor shall
deposit the Reassignment Amount into the Collection Account in immediately
available funds. Such purchase option is subject to payment in full of the
Reassignment Amount. The Reassignment Amount shall be distributed as set
forth in Section 9.01(b).
(c) If at the time the Transferor exercises its purchase option
hereunder the Transferor's long-term unsecured debt has a rating lower than
the lowest investment grade rating of the Rating Agency, the Transferor shall
deliver to the Trustee on such Distribution Date an Opinion of Counsel (which
must be an independent outside counsel) to the effect that, in reliance on
certain certificates to the effect that the Series (_) Certificateholder's
Interest purchased by the Transferor constitutes fair value for the
consideration paid therefor and as to the solvency of the Transferor, the
purchase of the Series (_) Certificateholder's Interest would not be
considered a fraudulent conveyance under applicable law.
ARTICLE IX
Final Distributions
-------------------
SECTION 9.01. Sale of Certificateholders' Interest Pursuant to
---------------------------------------------------
Section 2.03 of the Agreement; Distributions Pursuant to Section 8.01 of the
- -----------------------------------------------------------------------------
Series Supplement or Section 2.03 or 12.02(c) of the Agreement. (a) The
- -----------------------------------------------------------------
amount to be paid by the Transferor to the Collection Account with respect to
Series (_) in connection with a purchase of the Certificateholder's Interest
pursuant to Section 2.03 of the Agreement shall equal the Reassignment Amount
for the Distribution Date on which such repurchase occurs.
(b) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 8.01 or 9.01 of this Series Supplement
or Section 2.03 of the Agreement or any Termination Proceeds deposited into
the Collection Account pursuant to Section 12.02(c) of the Agreement, the
Trustee shall, not later than 12:00 noon, New York City time, on the
Distribution Date on which such amounts are deposited (or, if such date is
not a Distribution Date, on the immediately following Distribution Date) (in
the priority set forth below): (i) first, (x) deposit the Invested Amount on
-----
such date into the Principal Funding Account and (y) deposit the amount of
accrued and unpaid interest on the unpaid balance of the Certificates, plus
----
the amount of Additional Interest, if any, for such Distribution Date and any
Additional Interest previously due but not deposited into the Interest
Funding Account or paid to Series (_) Certificateholder on any prior
Distribution Date, into the Interest Funding Account, up to the Reassignment
Amount for Series (___) and (ii) second, pay the remainder of any Termination
------
Proceeds to the Transferor.
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Principal
Funding Account and the Interest Funding Account pursuant to Section 8.01 or
9.01 and all other amounts on deposit therein shall be distributed in full to
the Series (_) Certificateholder on such date and any distribution made
pursuant to paragraph (b) above shall be deemed to be a final distribution
pursuant to Section 12.02 of the Agreement with respect to Series (_).
ARTICLE X
Miscellaneous Provisions
------------------------
SECTION 10.01. Execution and Delivery of the Interest Rate Swap.
--------------------------------------------------
On the Closing Date the Trustee shall execute and deliver the Interest Rate
Swap. On the Closing Date the Transferor shall contribute the amount of the
Initial Exchange Amount (as defined in the Interest Rate Swap) to the Trust
by paying such amount to the Swap Counterparty on behalf of the Trust.
SECTION 10.02. Ratification of Agreement. As supplemented by this
-------------------------
Series Supplement, the Agreement is in all respects ratified and confirmed
and the Agreement as so supplemented by this Series Supplement shall be read,
taken and construed as one and the same instrument.
SECTION 10.03. Counterparts. This Series Supplement may be executed
------------
in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which together
shall constitute one and the same instrument.
SECTION 10.04. Governing Law. This Series 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 of the parties hereunder shall be determined in accordance with such
laws.
IN WITNESS WHEREOF, the Transferor, the Master Servicer and the
Trustee have caused this Series Supplement to be duly executed by their
respective officers as of the day and year first above written.
FORD CREDIT AUTO RECEIVABLES
LLC,
Transferor
By:____________________________
Name:
Title:
FORD MOTOR CREDIT COMPANY,
Master Servicer
By:____________________________
Name:
Title:
THE CHASE MANHATTAN BANK, Trustee
By:____________________________
Name:
Title:
EXHIBIT A-1
(FORM OF TEMPORARY GLOBAL CERTIFICATE)
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT")
AND MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN
THE UNITED STATES OR TO ANY U.S. PERSON (EACH AS DEFINED
HEREIN).
THIS CERTIFICATE IS A TEMPORARY GLOBAL CERTIFICATE, WITHOUT
COUPONS, EXCHANGEABLE FOR A PERMANENT GLOBAL CERTIFICATE.
THE RIGHTS ATTACHING TO THIS TEMPORARY GLOBAL CERTIFICATE,
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR
THE PERMANENT GLOBAL CERTIFICATE ARE AS SPECIFIED IN THE
AGREEMENT AND THE SERIES SUPPLEMENT (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS
TEMPORARY GLOBAL CERTIFICATE SHALL BE ENTITLED TO RECEIVE
PAYMENT OF INTEREST HEREON EXCEPT PURSUANT TO THE PROVISIONS
HEREOF.
TEMPORARY GLOBAL CERTIFICATE
representing
$(_)
FORD CREDIT AUTO LOAN MASTER TRUST II
SERIES (_)
(FLOATING RATE) (FIXED RATE) AUTO LOAN
ASSET BACKED CERTIFICATES
evidencing a fractional undivided interest in certain
assets of the
FORD CREDIT AUTO LOAN MASTER TRUST II
the corpus of which consists primarily of wholesale (i.e., dealer floorplan)
----
receivables (the "Receivables") generated or acquired from time to time in
the ordinary course of business in a portfolio of revolving financing
arrangements (the "Accounts") of Ford Motor Credit Company ("Ford Credit") or
other Originators meeting certain eligibility criteria. This certificate (a
"Certificate") does not represent any interest in, or obligation of, Ford
Credit Auto Receivables LLC ("FCAR" or the "Transferor"), Ford Credit, any
other Originator or any affiliate thereof.
The holder of this Temporary Global Certificate shall not be
entitled to receive payments of interest hereon. This Temporary Global
Certificate shall in all other respects be entitled to the same benefits as
the Permanent Global Certificate under the Agreement and the Series
Supplement.
This Temporary Global Certificate is exchangeable on and after the
Exchange Date in whole or from time to time in part for interests in the
Permanent Global Certificate upon presentation of a certification, in
accordance with the Agreement, to the effect that the beneficial owner of
such interest in the Permanent Global Certificate is not a U.S. Person. Upon
exchange of any portion of this Temporary Global Certificate for interests in
the Permanent Global Certificate, the Trustee shall cause Schedule A of this
Temporary Global Certificate to be endorsed to reflect the reduction of its
principal amount by an amount equal to the increase in the principal amount
of the Permanent Global Certificate, whereupon the principal amount of this
Temporary Global Certificate shall be reduced for all purposes by the amount
so exchanged and noted.
Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee, by manual signature, this Temporary Global
Certificate shall not be entitled to any benefit under the Agreement or the
Series Supplement or be valid for any purpose.
THIS CERTIFICATE 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.
IN WITNESS WHEREOF, the Transferor has caused this Certificate to
be duly executed.
FORD CREDIT AUTO RECEIVABLES
LLC
By:_________________________
Name:
Title:
Dated: ______________, (___)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates described in the within-mentioned Pooling and
Servicing Agreement.
_____________________________,
as Trustee,
by
______________________________
Authorized Officer
REVERSE OF CERTIFICATE
The bearer of this Certificate (the "Series (_)
Certificateholder"), is the owner of a fractional undivided interest in
certain assets of the FORD CREDIT AUTO LOAN MASTER TRUST II (the "Trust")
created pursuant to a Pooling and Servicing Agreement (the "P&S") dated as of
September 30, 1997, as supplemented by the Series (_) Series Supplement dated
as of (_), among Ford Credit Auto Receivables LLC ("FCAR"), as Transferor
(the "Transferor"), Ford Motor Credit Company ("Ford Credit"), as servicer
(the "Master Servicer"), and The Chase Manhattan Bank, as trustee (the
"Trustee"), that are allocated to the Series (_) Certificateholder's Interest
pursuant to the P&S and the Series Supplement. The P&S and the Series
Supplement are hereinafter collectively referred to as the Pooling and
Servicing Agreement.
The corpus of the Trust will include (a) all of the Transferor's
right, title and interest in, to and under the Receivables in each Account
and all Related Security with respect thereto owned by the Transferor at the
close of business on the Cut-Off Date, in the case of the Initial Accounts,
and on the applicable Additional Cut-Off Date, in the case of Additional
Accounts, and all monies due or to become due and all amounts received with
respect thereto and all proceeds (including "proceeds" as defined in Section
9-306 of the UCC as in effect in the State of Michigan) and Recoveries
thereof, (b) all of the Transferor's rights, remedies, powers and privileges
with respect to such Receivables under the Receivables Purchase Agreement,
(c) all of the Transferor's right, title and interest in, to and under the
Receivables in each Account and all Related Security with respect thereto
owned by the Transferor at the close of business on each Transfer Date and
not theretofore conveyed to the Trust, all monies due or to become due and
all amounts received with respect thereto and all proceeds (including
"proceeds" as defined in Section 9-306 of the UCC as in effect in the State
of Michigan) and Recoveries thereof, (d) all monies on deposit in, and
Eligible Investments credited to, the Collection Account or any Series
Account, (e) any Enhancements and (f) all other assets and interests
constituting the Trust. In addition to the Certificates, the Transferor's
Certificate will be issued pursuant to the Pooling and Servicing Agreement
which will represent the Transferor's Interest in the Trust. The
Transferor's Certificate will represent the interest in the Trust Assets not
represented by the Investor Certificates.
The Receivables consist of advances made directly or indirectly by
Ford Credit to domestic automobile dealers franchised by Ford Motor Company
and/or other automobile manufacturers or distributors.
Subject to the terms and conditions of the Pooling and Servicing
Agreement, the Transferor may from time to time direct the Trustee, on behalf
of the Trust, to issue one or more new Series of Investor Certificates, which
will represent fractional undivided interests in certain of the Trust Assets.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement to which, as
amended and supplemented from time to time, the Series (_) Certificateholder
by virtue of the acceptance hereof assents and is bound. Although a summary
of certain provisions of the Pooling and Servicing Agreement is set forth
below, this Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to the Pooling and Servicing
Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Trustee. A copy of the Pooling and Servicing Agreement
(without schedules) may be requested from the Trustee by writing to the
Trustee at 450 West 33rd Street, New York, New York 10001, Attention:
Corporate Trust Department. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Pooling and Servicing Agreement.
The Transferor has entered into the Pooling and Servicing Agreement
and the Series (_) Certificates have been (or will be) issued with the
intention that the Series (_) Certificates will qualify under applicable tax
law as indebtedness of FCAR secured by the Receivables. The Transferor, each
Beneficiary and each Series (_) Certificateholder and each beneficial owner
thereof, by the acceptance of its Certificate, as applicable, agrees to treat
the Series (_) Certificates as indebtedness of FCAR secured by the
Receivables for Federal income taxes and state and local income, single
business and franchise taxes.
On the Distribution Date occurring after the Invested Amount is
reduced to (_)% of the original principal amount of the Certificates or less,
the Transferor has the option, subject to the condition set forth in Section
8.01(c) of the Series Supplement, to purchase the entire Series (_)
Certificateholder's Interest in the Trust. The purchase price will be equal
to the Reassignment Amount (as defined in the Series Supplement).
This Certificate does not represent an obligation of, or an
interest in, Ford Motor Company, the Transferor, the Master Servicer, any
other Originator or any affiliate of any of them and is not insured or
guaranteed by any governmental agency or instrumentality. This Certificate
is limited in right of payment to certain Collections with respect to the
Receivables (and certain other amounts), all as more specifically set forth
herein and in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement may be amended from time to
time (including in connection with the issuance of a Supplemental
Certificate) by the Master Servicer, the Transferor and the Trustee, without
the consent of any of the Series (_) Certificateholders, so long as any such
action shall not adversely affect in any material respect the interests of
the Certificateholder of any outstanding Series as evidenced by either (i)
satisfaction of the Rating Agency Condition with respect to the affected
Investor Certificates or (ii) an Opinion of Counsel for the Transferor
addressed and delivered to the Trustee confirming that such amendment will
not adversely affect in any material respect the interests of the
Certificateholders of any outstanding Series. The Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Trustee's
rights, duties or immunities under the Pooling and Servicing Agreement or
otherwise. Notwithstanding anything contained therein to the contrary, the
Trustee, with the consent of any Enhancement Providers, may at any time and
from time to time amend, modify or supplement the form of Distribution Date
Statement.
The Pooling and Servicing Agreement may also be amended from time
to time (including in connection with the issuance of a Supplemental
Certificate) by the Master Servicer, the Transferor and the Trustee with the
consent of the Holders of Investor Certificates evidencing not less than
66-2/3% of the aggregate unpaid principal amount of the certificates of the
Investor Certificates of all adversely affected Series, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or of modifying in any
manner the rights of the Investor Certificateholders; provided, however, that
-------- -------
no such amendment to the Pooling and Servicing Agreement shall (i) reduce in
any manner the amount of or delay the timing of distributions to be made to
Investor Certificateholders or deposits of amounts to be so distributed
without the consent of each such affected Investor Certificateholder; (ii)
change the definition or the manner of calculating any certificateholders'
interest without the consent of each affected Investor Certificateholder;
(iii) reduce the amount available under any Enhancement without the consent
of each affected Investor Certificateholder; (iv) adversely affect the rating
of any Series or class by each Rating Agency without the consent of the
holders of certificates of such Series or class evidencing not less than
66-2/3% of the aggregate unpaid principal amount of the Investor Certificates
of such Series or Class; or (v) reduce the aforesaid percentage required to
consent to any such amendment without the consent of the Investor
Certificateholders. The Pooling and Servicing Agreement may not be amended
in any manner which adversely affects the interests of any Enhancement
Provider without its prior consent.
Schedule A
Exchange of interests in this Temporary Global Certificate
for interests in the Permanent Global Certificate
Principal amount of Principal
------------------- ---------
this Temporary Global amount of this
--------------------- --------------
Certificate exchanged Temporary
--------------------- ---------
for interests in the Global Certificate
-------------------- ------------------
Permanent following such Notation
--------- -------------- --------
Date Global Certificate exchange made by
- ------ --------------------- ------------------- ---------
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
EXHIBIT A-2
(FORM OF PERMANENT GLOBAL CERTIFICATE)
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED ("1933 ACT"). NEITHER THIS CERTIFICATE
NOR ANY PORTION HEREOF MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE
UNITED STATES OR TO ANY U.S. PERSON (EACH AS DEFINED HEREIN) EXCEPT IN
COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS.
THIS CERTIFICATE IS A PERMANENT GLOBAL CERTIFICATE, WITHOUT
COUPONS, EXCHANGEABLE FOR BEARER CERTIFICATES. THE RIGHTS ATTACHING TO THIS
PERMANENT GLOBAL CERTIFICATE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS
EXCHANGE FOR BEARER CERTIFICATES ARE AS SPECIFIED IN THE AGREEMENT AND THE
SERIES SUPPLEMENT (AS DEFINED HEREIN).
ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED.
PERMANENT GLOBAL CERTIFICATE
representing
$(_)
FORD CREDIT AUTO LOAN MASTER TRUST II
SERIES (_)
(FLOATING RATE) (FIXED RATE) AUTO LOAN
ASSET BACKED CERTIFICATES
evidencing a fractional undivided interest in certain
assets of the
FORD CREDIT AUTO LOAN MASTER TRUST II
the corpus of which consists primarily of wholesale (i.e., dealer floorplan)
----
receivables (the "Receivables") generated or acquired from time to time in
the ordinary course of business in a portfolio of revolving financing
arrangements (the "Accounts") of Ford Motor Credit Company ("Ford Credit") or
other Originators meeting certain eligibility criteria. This certificate (a
"Certificate") does not represent any interest in, or obligation of, Ford
Credit Auto Receivables LLC ("FCAR" or the "Transferor"), Ford Credit, any
other Originator or any affiliate thereof.
On or after the Exchange Date, any portion of the Temporary Global
Certificate may be exchanged for interests in this Permanent Global
Certificate, at which time the Trustee shall cause Schedule A of this
Permanent Global Certificate to be endorsed to reflect the increase of its
principal amount by an amount equal to the decrease in the principal amount
of the Temporary Global Certificate, whereupon the principal amount of this
Permanent Global Certificate shall be increased for all purposes by the
amount so exchanged and noted.
This Permanent Global Certificate may itself be exchanged following
the election of a beneficial owner of an interest herein, upon not less than
60 days prior notice to the Trustee to exchange such interest for one or more
Bearer Certificates, with Coupons attached thereto, in any authorized
denomination, all as provided in Section 6.01 of the Series Supplement and
the Agreement. Upon such election, such beneficial owner's remaining
interest in this Permanent Global Certificate will be exchanged for Bearer
Certificates, at which time the Trustee shall cause Schedule A of this
Permanent Global Certificate to be endorsed to reflect the decrease of its
principal amount by an amount equal to the principal amount of the related
Bearer Certificate. The Trustee will provide not less than 45 days prior
notice of any such issuance of Bearer Certificates in accordance with the
Agreement.
This Permanent Global Certificate shall be governed by and
construed in accordance with the law of the State of New York.
Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee, by manual or facsimile signature, this
Permanent Global Certificate shall not be entitled to any benefit under the
Agreement or the Series Supplement or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Certificate to
be duly executed.
FORD CREDIT AUTO RECEIVABLES LLC
By: ____________________________
Name:
Title:
Dated: ________, (____)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates described in the within-mentioned Pooling and
Servicing Agreement.
____________________________,
as Trustee,
by
_____________________________
Authorized Officer
REVERSE OF CERTIFICATE
The bearer of this Certificate (the "Series (_)
Certificateholder"), is the owner of a fractional undivided interest in
certain assets of the FORD CREDIT AUTO LOAN MASTER TRUST II (the "Trust")
created pursuant to a Pooling and Servicing Agreement (the "P&S") dated as of
September 30, 1997, as supplemented by the Series (_) Series Supplement dated
as of (_), among Ford Credit Auto Receivables LLC ("FCAR"), as Transferor
(the "Transferor"), Ford Motor Credit Company ("Ford Credit"), as servicer
(the "Master Servicer"), and The Chase Manhattan Bank, as trustee (the
"Trustee"), that are allocated to the Series (_) Certificateholder's Interest
pursuant to the P&S and the Series Supplement. The P&S and the Series
Supplement are hereinafter collectively referred to as the Pooling and
Servicing Agreement.
The corpus of the Trust will include (a) all of the Transferor's
right, title and interest in, to and under the Receivables in each Account
and all Related Security with respect thereto owned by the Transferor at the
close of business on the Cut-Off Date, in the case of the Initial Accounts,
and on the applicable Additional Cut-Off Date, in the case of Additional
Accounts, and all monies due or to become due and all amounts received with
respect thereto and all proceeds (including "proceeds" as defined in Section
9-306 of the UCC as in effect in the State of Michigan and Recoveries)
thereof, (b) all of the Transferor's rights, remedies, powers and privileges
with respect to such Receivables under the Receivables Purchase Agreement,
(c) all of the Transferor's right, title and interest in, to and under the
Receivables in each Account and all Related Security with respect thereto
owned by the Transferor at the close of business on each Transfer Date and
not theretofore conveyed to the Trust, all monies due or to become due and
all amounts received with respect thereto and all proceeds (including
"proceeds" as defined in Section 9-306 of the UCC as in effect in the State
of Michigan and Recoveries) thereof, (d) all monies on deposit in, and
Eligible Investments credited to, the Collection Account or any Series
Account, (e) any Enhancements and (f) all other assets and interests
constituting the Trust. In addition to the Certificates, the Transferor's
Certificate will be issued pursuant to the Pooling and Servicing Agreement
which will represent the Transferor's Interest in the Trust. The
Transferor's Certificate will represent the interest in the Trust Assets not
represented by the Investor Certificates.
The Receivables consist of advances made directly or indirectly by
Ford Credit to domestic automobile dealers franchised by Ford Motor Company
and/or other automobile manufacturers or distributors.
Subject to the terms and conditions of the Pooling and Servicing
Agreement, the Transferor may from time to time direct the Trustee, on behalf
of the Trust, to issue one or more new Series of Investor Certificates, which
will represent fractional undivided interests in certain of the Trust Assets.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement to which, as
amended and supplemented from time to time, the Series (_) Certificateholder
by virtue of the acceptance hereof assents and is bound. Although a summary
of certain provisions of the Pooling and Servicing Agreement is set forth
below, this Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to the Pooling and Servicing
Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Trustee. A copy of the Pooling and Servicing Agreement
(without schedules) may be requested from the Trustee by writing to the
Trustee at 450 West 33rd Street, New York, New York 10001, Attention:
Corporate Trust Department. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Pooling and Servicing Agreement.
The Transferor has entered into the Pooling and Servicing Agreement
and the Series (_) Certificates have been (or will be) issued with the
intention that the Series (_) Certificates will qualify under applicable tax
law as indebtedness secured by the Receivables. The Transferor, each
Beneficiary and each Series (_) Certificateholder and each beneficial owner
thereof, by the acceptance of its Certificate, as applicable, agrees to treat
the Series (_) Certificates as indebtedness secured by the Receivables for
U.S. federal income taxes and state and local income, single business and
franchise taxes.
On the Distribution Date occurring after the Invested Amount is
reduced to (_)% of the original principal amount of the Certificates or less,
the Transferor has the option, subject to the condition set forth in Section
8.01(c) of the Series Supplement, to purchase the entire Series (_)
Certificateholder's Interest in the Trust. The purchase price will be equal
to the Reassignment Amount (as defined in the Series Supplement).
This Certificate does not represent an obligation of, or an
interest in, Ford Motor Company, the Transferor, the Master Servicer, any
other Originator or any affiliate of any of them and is not insured or
guaranteed by any governmental agency or instrumentality. This Certificate
is limited in right of payment to certain Collections with respect to the
Receivables (and certain other amounts), all as more specifically set forth
herein and in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement may be amended from time to
time (including in connection with the issuance of a Supplemental
Certificate) by the Master Servicer, the Transferor and the Trustee, without
the consent of any of the Series (_) Certificateholder, so long as any such
action shall not adversely affect in any material respect the interests of
the Certificateholders of any outstanding Series as evidenced by either (i)
satisfaction of the Rating Agency Condition with respect to the affected
Investors Certificates or (ii) an Opinion of Counsel for the Transferor
addressed and delivered to the Trustee, confirming that such amendment shall
not adversely affect in any material respect the interests of the
Certificateholders of any outstanding Series. The Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Trustee's
rights, duties or immunities under the Pooling and Servicing Agreement or
otherwise. Notwithstanding anything contained therein to the contrary, the
Trustee, with the consent of any Enhancement Providers, may at any time and
from time to time amend, modify or supplement the form of Distribution Date
Statement.
The Pooling and Servicing Agreement may also be amended from time
to time (including in connection with the issuance of a Supplemental
Certificate) by the Master Servicer, the Transferor and the Trustee with the
consent of the Holders of Investor Certificates evidencing not less than
66-2/3% of the aggregate unpaid principal amount of the certificates of the
Investor Certificates of all adversely affected Series, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or of modifying in any
manner the rights of the Investor Certificateholders; provided, however, that
-------- -------
no such amendment to the Pooling and Servicing Agreement shall (i) reduce in
any manner the amount of or delay the timing of distributions to be made to
Investor Certificateholder or deposits of amounts to be so distributed
without the consent of each such affected Investor Certificate-holder; (ii)
change the definition or the manner of calculating any certificateholders'
interest without the consent of each affected Investor Certificateholder;
(iii) reduce the amount available under any Enhancement without the consent
of each affected Investor Certificateholder; (iv) adversely affect the rating
of any Series or class by each Rating Agency without the consent of the
holders of certificates of such Series or class evidencing not less than
66-2/3% of the aggregate unpaid principal amount of the Investor Certificates
of such Series or Class; or (v) reduce the aforesaid percentage required to
consent to any such amendment without the consent of all Investor
Certificateholders. The Pooling and Servicing Agreement may not be amended
in any manner which adversely affects the interests of any Enhancement
Provider without its prior consent.
Schedule A
Exchange of interests in the Temporary Global Certificate
for interests in this Permanent Global Certificate
Principal amount of Principal
------------------- ---------
this Temporary Global amount of this
--------------------- --------------
Certificate exchanged Permanent
--------------------- ---------
for interests in the Global Certificate
-------------------- ------------------
Permanent following such Notation
--------- -------------- --------
Date Global Certificate exchange made by
- ------ --------------------- ------------------- ---------
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
______ _____________________ ___________________ _________
EXHIBIT A-3
(FORM OF DEFINITIVE BEARER CERTIFICATE)
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED ("1933 ACT"). NEITHER THIS CERTIFICATE
NOR ANY PORTION HEREOF MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE
UNITED STATES OR TO ANY U.S. PERSON (EACH AS DEFINED HEREIN) EXCEPT IN
COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS.
ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED.
BEARER CERTIFICATE
representing
$(_)
FORD CREDIT AUTO LOAN MASTER TRUST II
SERIES (_)
(FLOATING RATE) (FIXED RATE) AUTO LOAN
ASSET BACKED CERTIFICATES
evidencing a fractional undivided interest in certain
assets of the
FORD CREDIT AUTO LOAN MASTER TRUST II
the corpus of which consists primarily of wholesale (i.e., dealer floorplan)
----
receivables (the "Receivables") generated or acquired from time to time in
the ordinary course of business in a portfolio of revolving financing
arrangements (the "Accounts") of Ford Motor Credit Company ("Ford Credit") or
other Originators meeting certain eligibility criteria. This certificate (a
"Certificate") does not represent any interest in, or obligation of, Ford
Credit Auto Receivables LLC ("FCAR" or the "Transferor"), Ford Credit, any
other Originator or any affiliate thereof.
This Certificate shall be governed by and construed in accordance
with the law of the State of New York.
Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee, by manual or facsimile signature, this
Certificate shall not be entitled to any benefit under the Agreement or the
Series Supplement or be valid for any purpose.
IN WITNESS WHEREOF, the Transferor has caused this Certificate to
be duly executed.
FORD CREDIT AUTO RECEIVABLES LLC
By: ___________________________
Name:
Title:
Dated: _________, (____)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates described in the within-mentioned Pooling and
Servicing Agreement.
____________________________,
as Trustee,
by
_____________________________
Authorized Officer
REVERSE OF CERTIFICATE
The bearer of this Certificate (the "Series (_)
Certificateholder"), is the owner of a fractional undivided interest in
certain assets of the FORD CREDIT AUTO LOAN MASTER TRUST II (the "Trust")
created pursuant to a Pooling and Servicing Agreement (the "P&S") dated as of
September 30, 1997, as supplemented by the Series (_) Series Supplement dated
as of (_), among Ford Credit Auto Receivables LLC ("FCAR"), as Transferor
(the "Transferor"), Ford Motor Credit Company ("Ford Credit"), as servicer
(the "Master Servicer"), and The Chase Manhattan Bank, as trustee (the
"Trustee"), that are allocated to the Series (_) Certificateholder's Interest
pursuant to the P&S and the Series Supplement. The P&S and the Series
Supplement are hereinafter collectively referred to as the Pooling and
Servicing Agreement.
The corpus of the Trust will include (a) all of the Transferor's
right, title and interest in, to and under the Receivables in each Account
and all Related Security with respect thereto owned by the Transferor at the
close of business on the Cut-Off Date, in the case of the Initial Accounts,
and on the applicable Additional Cut-Off Date, in the case of Additional
Accounts, and all monies due or to become due and all amounts received with
respect thereto and all proceeds (including "proceeds" as defined in Section
9-306 of the UCC as in effect in the State of Michigan and Recoveries)
thereof, (b) all of the Transferor's rights, remedies, powers and privileges
with respect to such Receivables under the Receivables Purchase Agreement,
(c) all of the Transferor's right, title and interest in, to and under the
Receivables in each Account and all Related Security with respect thereto
owned by the Transferor at the close of business on each Transfer Date and
not theretofore conveyed to the Trust, all monies due or to become due and
all amounts received with respect thereto and all proceeds (including
"proceeds" as defined in Section 9-306 of the UCC as in effect in the State
of Michigan and Recoveries) thereof, (d) all monies on deposit in, and
Eligible Investments credited to, the Collection Account or any Series
Account, (e) any Enhancements and (f) all other assets and interests
constituting the Trust. In addition to the Certificates, the Transferor's
Certificate will be issued pursuant to the Pooling and Servicing Agreement
which will represent the Transferor's Interest in the Trust. The
Transferor's Certificate will represent the interest in the Trust Assets not
represented by the Investor Certificates.
The Receivables consist of advances made directly or indirectly by
Ford Credit to domestic automobile dealers franchised by Ford Motor Company
and/or other automobile manufacturers or distributors.
Subject to the terms and conditions of the Pooling and Servicing
Agreement, the Transferor may from time to time direct the Trustee, on behalf
of the Trust, to issue one or more new Series of Investor Certificates, which
will represent fractional undivided interests in certain of the Trust Assets.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Pooling and Servicing Agreement to which, as
amended and supplemented from time to time, the Series (_) Certificateholder
by virtue of the acceptance hereof assents and is bound. Although a summary
of certain provisions of the Pooling and Servicing Agreement is set forth
below, this Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to the Pooling and Servicing
Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Trustee. A copy of the Pooling and Servicing Agreement
(without schedules) may be requested from the Trustee by writing to the
Trustee at 450 West 33rd Street, New York, New York 10001, Attention:
Corporate Trust Department. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Pooling and Servicing Agreement.
The Transferor has entered into the Pooling and Servicing Agreement
and the Series (_) Certificates have been (or will be) issued with the
intention that the Series (_) Certificates will qualify under applicable tax
law as indebtedness secured by the Receivables. The Transferor, each
Beneficiary and each Series (_) Certificateholder and each beneficial owner
thereof, by the acceptance of its Certificate, as applicable, agrees to treat
the Series (_) Certificates as indebtedness secured by the Receivables for
U.S. federal income taxes and state and local income, single business and
franchise taxes.
On the Distribution Date occurring after the Invested Amount is
reduced to (_)% of the original principal amount of the Certificates or less,
the Transferor has the option, subject to the condition set forth in Section
8.01(c) of the Series Supplement, to purchase the entire Series (_)
Certificateholder's Interest in the Trust. The purchase price will be equal
to the Reassignment Amount (as defined in the Series Supplement).
This Certificate does not represent an obligation of, or an
interest in, Ford Motor Company, the Transferor, the Master Servicer, any
other Originator or any affiliate of any of them and is not insured or
guaranteed by any governmental agency or instrumentality. This Certificate
is limited in right of payment to certain Collections with respect to the
Receivables (and certain other amounts), all as more specifically set forth
herein and in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement may be amended from time to
time (including in connection with the issuance of a Supplemental
Certificate) by the Master Servicer, the Transferor and the Trustee, without
the consent of any of the Series (_) Certificateholder, so long as any such
action shall not, as evidenced by either (i) satisfaction of the Rating
Agency Condition with respect to the affected Investor Certificates or (ii)
an Opinion of Counsel addressed and delivered to the Trustee, confirming that
such amendment shall not adversely affect in any material respect the
interests of the Certificateholders of any outstanding Series. The Trustee
may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's rights, duties or immunities under the Pooling and
Servicing Agreement or otherwise. Notwithstanding anything contained therein
to the contrary, the Trustee, with the consent of any Enhancement Providers,
may at any time and from time to time amend, modify or supplement the form of
Distribution Date Statement.
The Pooling and Servicing Agreement may also be amended from time
to time (including in connection with the issuance of a Supplemental
Certificate) by the Master Servicer, the Transferor and the Trustee with the
consent of the Holders of Investor Certificates evidencing not less than
66-2/3% of the aggregate unpaid principal amount of the certificates of the
Investor Certificates of all adversely affected Series, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or of modifying in any
manner the rights of the Investor Certificateholders; provided, however, that
-------- -------
no such amendment to the Pooling and Servicing Agreement shall (i) reduce in
any manner the amount of or delay the timing of distributions to be made to
Investor Certificateholders or deposits of amounts to be so distributed
without the consent of each such affected Investor Certificate-holder; (ii)
change the definition or the manner of calculating any certificateholders'
interest without the consent of each affected Investor Certificateholder;
(iii) reduce the amount available under any Enhancement without the consent
of each affected Investor Certificateholder; (iv) adversely affect the rating
of any Series or class by each Rating Agency without the consent of the
holders of certificates of such Series or class evidencing not less than
66-2/3% of the aggregate unpaid principal amount of the Investor Certificates
of such Series or Class; or (v) reduce the aforesaid percentage required to
consent to any such amendment without the consent of all Investor
Certificateholders. The Pooling and Servicing Agreement may not be amended
in any manner which adversely affects the interests of any Enhancement
Provider without its prior consent.
EXHIBIT B-1
DISTRIBUTION DATE STATEMENT
(a) The aggregate amount of collections, the aggregate amount of
Interest Collections and the aggregate amount of Principal Collections
processed during the immediately preceding Collection Period;
(b) The Floating Allocation Percentage and the Principal Allocation
Percentage for such Collection Period;
(c) The total amount, if any, distributed on the Series (_)
Certificates;
(d) The amount of such distribution allocable to principal on the
Series (_) Certificates;
(e) The amount of such distribution allocable to interest on the (_)
Certificates;
(f) The Investor Default Amount for such Distribution Date;
(g) The Required Subordination Draw Amount, if any, for the preceding
Collection Period;
(h) The amount of the Investor Charge-Offs and the amounts of
reimbursements thereof for the preceding Collection Period;
(i) The amount of the Monthly Servicing Fee for the preceding
Collection Period;
(j) The Invested Amount, the Excess Funding Amount and the outstanding
principal balance of the Series (_) Certificates for such distribution (after
giving effect to all distributions which will occur on such Distribution
Date);
(k) The "pool factor" for the Series (_) Certificates as of the
Determination Date with respect to such Distribution Date (consisting of an
eight-digit decimal expressing the Invested Amount as of such Determination
Date (determined after taking into account any reduction in the Invested
Amount which will occur on such Distribution Date) as a proportion of the
Initial Invested Amount);
(l) The Available Subordinated Amount for such Determination Date;
(m) The Reserve Fund balance for such date;
(n) The Collection Account balance with respect to such date; and
(o) A list of the Accounts that are in "Status".
EXHIBIT B-2
DISTRIBUTION DATE STATEMENT
(a) The aggregate amount of collections, the aggregate amount of
Interest Collections and the aggregate amount of Principal Collections
processed during the immediately preceding Collection Period;
(b) The Floating Allocation Percentage and the Principal Allocation
Percentage for such Collection Period;
(c) The total amount, if any, distributed on the Series (_)
Certificates;
(d) The amount of such distribution allocable to principal on the
Series (_) Certificates;
(e) The amount of such distribution allocable to interest on the (_)
Certificates;
(f) The Investor Default Amount for such Distribution Date;
(g) The Required Subordination Draw Amount, if any, for the preceding
Collection Period;
(h) The amount of the Investor Charge-Offs and the amounts of
reimbursements thereof for the preceding Collection Period;
(i) The amount of the Monthly Servicing Fee for the preceding
Collection Period;
(j) The Invested Amount, the Excess Funding Amount and the outstanding
principal balance of the Series (_) Certificates for such distribution (after
giving effect to all distributions which will occur on such Distribution
Date);
(k) The "pool factor" for the Series (_) Certificates as of the
Determination Date with respect to such Distribution Date (consisting of an
eight-digit decimal expressing the Invested Amount as of such Determination
Date (determined after taking into account any reduction in the Invested
Amount which will occur on such Distribution Date) as a proportion of the
Initial Invested Amount);
(l) The Available Subordinated Amount for such Determination Date;
(m) The Reserve Fund balance for such date; and
(n) The Collection Account balance with respect to such date.
EXHIBIT C
(FORM OF COUPON)
ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL
REVENUE CODE.
THIS COUPON (A "COUPON") DOES NOT REPRESENT ANY INTEREST IN, OR
OBLIGATION OF, FORD CREDIT AUTO RECEIVABLES LLC ("FCAR" OR THE
"TRANSFEROR"), FORD CREDIT, OR ANY OTHER ORIGINATOR OR ANY
AFFILIATE OF THE FOREGOING.
No._
On the ___________ (Quarterly) (Semi-annual) Payment Date or Special
Payment Date, the bearer hereof shall be paid (subject to the terms and
conditions of the Ford Credit Auto Loan Master Trust II, Series (_)
Definitive Bearer Certificate, to which this Coupon appertains, which shall
be binding on the bearer of this Coupon whether or not attached to such
Certificate and subject to the terms and conditions of the Pooling and
Servicing Agreement referred to in the Certificate), upon surrender hereof,
the amount of interest then payable on its Series (_) Certificate, the number
of which appears on this Coupon, up to but not exceeding the amount shown
hereon. Payment of this Coupon will be made in U.S. Dollars only upon
presentation of this Coupon at the office of any Paying Agent outside the
United States as may be appointed from time to time pursuant to such Pooling
and Servicing Agreement. Such payment will be made at the option of the
bearer hereof and subject to any applicable laws and regulations, by a U.S.
Dollar check or drawn on a bank located in New York City, or by wire transfer
to a U.S. Dollar account maintained by the bearer hereof with a bank located
outside the United States. Unless otherwise provided for by the Trust, no
demand for payment or payment on this Coupon may be made at any office of any
Paying Agent in the United States nor will any payment be mailed to an
address or transferred to an account in the United States. The Transferor
has initially appointed the Paying Agents listed on the reverse side of this
Coupon.
This Coupon shall be governed by and construed in accordance with
the law of the State of New York.
IN WITNESS WHEREOF, the Transferor has caused this Coupon to be
duly executed.
FORD CREDIT AUTO RECEIVABLES
LLC
By:_________________________
Name:
Title:
TRUSTEE
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
EXHIBIT D
Form of Interest Rate Swap Agreement
------------------------------------
SCHEDULE 1
Name of Series: Series (_)
Institution: The Chase Manhattan Bank
(_) Account
and Account No.
Collection Account (_)
Interest Funding Account (_)
Principal Funding Account (_)
Excess Funding Account (_)
Reserve Fund (_)
June 17, 1998
Ford Credit Auto Receivables LLC
The American Road
Dearborn, Michigan 48121
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
Gentlemen:
Re: Registration Statement on Form S-3
relating to Ford Credit Auto Loan Master
Trust II (the "Registration Statement")
---------------------------------------
I am Secretary and Corporate Counsel of each of Ford Credit Auto
Receivables LLC, a Delaware limited liability company, as transferor (the
"Transferor") and Ford Motor Credit Company, a Delaware corporation, as master
servicer (the "Servicer"), in connection with (a) the transfer and assignment
of certain wholesale loans of automotive dealers (the "Receivables") by the
Transferor to The Chase Manhattan Bank, as trustee (the "Trustee") for a trust
(the "Trust") formed pursuant to a Pooling and Servicing Agreement, dated as
of September 30, 1997 (the "Agreement"), among the Transferor, the Servicer
and the Trustee, providing for the issuance of Auto Loan Asset Backed
Certificates (the "Certificates"), each such Certificate evidencing a
fractional undivided interest in the Trust.
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.
I have examined, or caused to be examined, the forms of the Pooling and
Servicing Agreement previously filed or filed herewith, as the case may be, as
an exhibit to the Registration Statement. In addition, I have examined, or
caused to be examined, executed originals or counterparts, or certified or
other copies identified to my satisfaction as being true copies of such
certificates, instruments, documents and other records of the Transferor and
matters of fact and law as I deem necessary for the purposes of the opinion
expressed below.
I have assumed the genuineness of all signatures, the authenticity of all
documents submitted to the Transferor or Servicer as originals, the conformity
to original documents of all documents submitted to the Transferor and
Servicer as certified or photostatic copies and the authenticity of the
originals of such letter documents. As to any facts material to the opinions
expressed herein which were not independently established or verified, I have
relied upon statements and representations of officers and other
representatives of the Transferor, the Servicer and others.
Based on and subject to the foregoing, I am of the opinion that the
Certificates to be sold under the Registration Statement have been duly and
validly authorized by the Transferor and, when sold, will be legally issued,
fully paid and non-assessable.
I 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.
Very truly yours,
/s/ Hurley Smith
June 17, 1998
Ford Credit Auto Receivables LLC
The American Road
Dearborn, Michigan 48121
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
Gentlemen:
Re: Registration Statement on Form S-3
relating to Ford Credit Auto Loan Master
Trust II (the "Registration Statement")
---------------------------------------
I am Secretary and Corporate Counsel of each of Ford Credit Auto
Receivables LLC, a Delaware limited liability company, as transferor (the
"Transferor") and Ford Motor Credit Company, a Delaware corporation, as master
servicer (the "Servicer"), in connection with (a) the transfer and assignment
of certain wholesale loans of automotive dealers (the "Receivables") by the
Transferor to The Chase Manhattan Bank, as trustee (the "Trustee") for a trust
(the "Trust") formed pursuant to a Pooling and Servicing Agreement, dated as
of September 30, 1997 (the "Agreement"), among the Transferor, the Servicer
and the Trustee, providing for the issuance of Auto Loan Asset Backed
Certificates (the "Certificates"), each such Certificate evidencing a
fractional undivided interest in the Trust.
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.
I have examined, or caused to be examined, the forms of the Pooling and
Servicing Agreement previously filed or filed herewith, as the case may be, as
an exhibit to the Registration Statement. In addition, I have examined, or
caused to be examined, executed originals or counterparts, or certified or
other copies identified to my satisfaction as being true copies of such
certificates, instruments, documents and other records of the Transferor and
matters of fact and law as I deem necessary for the purposes of the opinion
expressed below.
I have assumed the genuineness of all signatures, the authenticity of all
documents submitted to the Transferor or Servicer as originals, the conformity
to original documents of all documents submitted to the Transferor and
Servicer as certified or photostatic copies and the authenticity of the
originals of such letter documents. As to any facts material to the opinions
expressed herein which were not independently established or verified, I have
relied upon statements and representations of officers and other
representatives of the Transferor, the Servicer and others.
Based on and subject to the foregoing, I am of the opinion that the
Certificates to be sold under the Registration Statement have been duly and
validly authorized by the Transferor and, when sold, will be legally issued,
fully paid and non-assessable.
I 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.
Very truly yours,
/s/ Brown & Wood LLP
