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REGISTRATION NO.
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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
(IN WHICH THE CERTIFICATES EVIDENCE UNDIVIDED INTERESTS)
FORD CREDIT AUTO RECEIVABLES CORPORATION
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Delaware 6146 38-2973806
(State of Incorporation) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer 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)
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J.D. BRINGARD, ESQ.
FORD MOTOR CREDIT COMPANY
The American Road
Dearborn, Michigan 48121
(313-594-7742)
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
STEPHEN B. ESKO, ESQ.
BROWN & WOOD
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, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
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CALCULATION OF REGISTRATION FEE
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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
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Asset Backed Certificates......... $1,000,000 100% $1,000,000 $344.83
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(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.
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The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED JULY 21, 1994
$[ ]
FORD CREDIT AUTO LOAN MASTER TRUST
SERIES 1994-1, % AUTO LOAN
ASSET BACKED CERTIFICATES
(LOGO)
Ford Credit Auto Receivables Corporation
Seller
Ford Motor Credit Company
Servicer
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The Series 1994-1, % Auto Loan Asset Backed Certificates (the
"Certificates") offered hereby evidence undivided interests in certain assets of
the Ford Credit Auto Loan Master Trust (the "Trust") created pursuant to a
Pooling and Servicing Agreement among Ford Credit Auto Receivables Corporation,
as the seller ("FCAR" or the "Seller"), Ford Motor Credit Company, as servicer
("Ford Credit" or the "Servicer"), and Chemical Bank, as trustee. 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 the Receivables. Certain assets of the Trust will be
allocated to 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 Seller will own the remaining
interest in the Trust not represented by the Certificates or the certificates of
any other Series issued by the Trust (the "Seller's Interest"). From time to
time, subject to certain conditions, the Seller may offer other series of
certificates (each, a "Series"), which may have terms significantly different
from the terms of the Certificates.
Interest with respect to the Certificates will accrue from
[ ], 1994, and is payable semi-annually on or about the fifteenth
day of January and July, commencing in January 1995, and on the related maturity
date or, under certain limited circumstances described herein, monthly on or
about the fifteenth day of each month. The principal of the Certificates is
scheduled to be paid on the [ ] Distribution Date.
The Seller's Interest will be subordinated to the rights of the
Certificateholders to the limited extent of the Available Subordinated Amount
(or, in some circumstances, the Aggregate Available Subordinated Amount) as
described herein.
Prospective investors should consider the factors set forth under "Special
Considerations".
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THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF THE SELLER, THE SERVICER OR
ANY AFFILIATE THEREOF. NEITHER THE CERTIFICATES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL
AGENCY.
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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.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) THE SELLER(1)(3)
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Per Certificate......................... [ ]% [ ]% [ ]%
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Total................................... $[ ] $[ ] $[ ]
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(1) Plus accrued interest, if any, at the Certificate Rate from
[ ], 1994.
(2) Ford Credit has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting expenses, estimated to be $[ ].
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The Certificates are offered subject to prior sale, and subject to the
Underwriters' right to reject orders in whole or in part. 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 S.A. and the Euroclear System
on or about [ ], 1994.
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The date of this Prospectus is [ ], 1994.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Seller has filed a Registration Statement (the "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 part of the Registration Statement, does not contain all of the
information contained in the Registration Statement and the exhibits thereto.
For further information, reference is made to the Registration Statement and
amendments thereof and exhibits thereto, which are available for inspection
without charge at the public reference facilities maintained by the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549; 75 Park Place, New York, New
York 10007; and Northwest Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of the Registration Statement and amendments thereof and
exhibits thereto may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports, containing information concerning the Trust and prepared by
the 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 the
Certificates, pursuant to the Pooling and Servicing Agreement. Such reports may
be available to beneficial owners of Certificates ("Certificate Owners") in
accordance with the regulations and procedures of DTC. See "Description of the
Certificates -- Reports" and "-- Evidence as to Compliance". 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.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Reference is made
to the Index of Principal Terms for the location herein of the definitions of
certain capitalized terms used herein.
Title of Securities........... Series 1994-1, % Auto Loan Asset Backed
Certificates (the "Certificates" or "Series
1994-1").
Issuer........................ Ford Credit Auto Loan Master Trust (the
"Trust").
Seller........................ Ford Credit Auto Receivables Corporation (the
"Seller" or "FCAR"), a wholly-owned subsidiary
of Ford Motor Credit Company.
Servicer...................... Ford Motor Credit Company ("Ford Credit" or,
together with, as applicable, a successor
servicer, the "Servicer"), a wholly-owned
subsidiary of Ford Motor Company ("Ford").
Trustee....................... Chemical Bank (the "Trustee").
The Trust..................... The Trust was formed pursuant to a Pooling and
Servicing Agreement, dated as of December 31,
1991, among FCAR, as Seller, Ford Credit, as
Servicer, and Manufacturers Hanover Trust
Company, predecessor trustee to Chemical Bank,
as supplemented by the Supplement relating to
the Certificates (as supplemented and amended
from time to time, the "Pooling and Servicing
Agreement"). The assets of the Trust include
(a) certain Receivables existing under the
Accounts at the close of business on December
31, 1991 (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 or to be collected in respect
of such Receivables, (c) all funds on deposit
in certain accounts of the Trust, including
funds on deposit in the Excess Funding Account,
the Principal Funding Account, the Interest
Funding Account and the Reserve Fund, (d) the
Interest Rate Swap, (e) any other Enhancement
issued with respect to any other Series (the
drawing on or payment of such Enhancement not
being available to Certificateholders) and (f)
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 in certain parts inventory,
equipment, fixtures, service accounts, realty
and/or a personal guarantee (collectively, the
"Collateral Security") securing the
Receivables. The term "Enhancement" shall mean,
with respect to any Series, any letter of
credit, surety bond, cash collateral account,
guaranteed rate agreement, maturity liquidity
facility, tax protection agreement, interest
rate swap agreement or other similar
arrangement for the benefit of
certificateholders of such Series.
The Accounts.................. The Accounts pursuant to which the Receivables
have been or will be generated are revolving
credit agreements entered into with Ford Credit
by dealers to purchase or finance automobile
and light
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duty truck inventory. The Accounts are selected
from all such credit agreements of Ford Credit
which meet the criteria provided in the Pooling
and Servicing Agreement (the "Eligible
Accounts"). Under certain circumstances
Accounts may be added to, or removed from, the
Trust. See "The Accounts", "Description of the
Certificates -- Addition of Accounts" and "--
Removal of Accounts".
The Receivables............... The Receivables have arisen or will arise in
the Accounts. The Receivables consist of
advances made directly or indirectly by Ford
Credit to domestic automobile dealers
franchised by Ford and/or other automobile
manufacturers or automobile distributors (the
"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
such automobile manufacturers. 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) has sold and will sell to the Seller 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) has
assigned and will assign its interests in the
Vehicles and the Collateral Security to the
Seller. The Seller in turn has transferred and
will transfer such Receivables and Collateral
Security to the Trust pursuant to the Pooling
and Servicing Agreement. The Seller has also
assigned 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 Seller and transferred by
the Seller 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
uncollectible or otherwise adjusted.
The Certificates.............. The Certificates will be issued in the
aggregate initial principal amount of $[ ]
(the "Initial Principal Amount"), in minimum
denominations of $1,000 and in integral
multiples thereof. Except
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in certain limited circumstances as described
herein under "Description of the Certificates
-- Definitive Certificates", the Certificates
will only be available in book-entry form. The
Trust's assets will be allocated in part to the
Certificateholders (the "Certificateholders'
Interest") and to the certificateholders of any
other outstanding Series (such other
certificateholders, together with the
Certificateholders, are referred to as
"certificateholders"), with the remainder
allocated to the Seller (the "Seller's
Interest"). A portion of the Seller's Interest
will be subordinated to the Certificateholders'
Interest, as described below. The Certificates
will evidence an undivided beneficial interest
in 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 semi-annually (or in some cases
monthly) payments of interest on the
Certificates at % per annum (the
"Certificate Rate") and to make the payment of
principal on the Expected Final Payment Date or
earlier or later under certain limited
circumstances in an amount up to the
outstanding principal amount of the
Certificates.
On the date of the initial issuance of the
Certificates (the "Closing Date") the Invested
Amount will equal the Initial Principal Amount
and 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 "Description of the
Certificates -- Excess Funding Account".
The principal amount of the Seller's Interest
may fluctuate as the aggregate amount of the
Receivables balance changes from time to time
and as new Series are issued.
The Certificates will represent beneficial
interests in the Trust only and will not
represent interests in or obligations of Ford
Credit, FCAR or any affiliate thereof. Neither
the Certificates nor the Receivables are
insured or guaranteed by Ford Credit, FCAR or
any affiliate thereof.
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
person acquiring an interest in the
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
Centrale de Livraison de Valeurs Mobilieres
S.A. ("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
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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 "Description
of the Certificates -- 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 Seller 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 Seller's
Interest must equal or exceed a specified
amount. The issuance of the Certificates
pursuant to the Supplement related thereto will
constitute a New Issuance. The Pooling and
Servicing Agreement also provides that the
Seller may specify, with respect to any Series,
the Principal Terms of the Series. The Seller
may offer any Series to the public or other
investors under 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 United
States federal income and Michigan income and
single business tax purposes, (x) such issuance
will not adversely affect the characterization
of the certificates of any outstanding Series
or class as debt, (y) such issuance will not
cause a taxable event to any certificateholders
and (z) 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 or
any other Series or class of certificates then
outstanding. See "Description of the
Certificates -- New Issuances".
Other Series Issuances........ As of the date hereof the Trust has issued
three Series, the Series 1992-1, 6 7/8% Auto
Loan Asset Backed Certificates ("Series 1992-1"
and with respect to the certificates of such
Series, the "Series 1992-1 Certificates"), the
Series 1992-2, 7 3/8% Auto Loan Asset Backed
Certificates ("Series 1992-2" and with respect
to the certificates of such Series, the "Series
1992-2 Certificates") and the Series 1992-3,
5 5/8% Auto Loan Asset Backed Certificates
("Series 1992-3" and with respect to
certificates of such Series, the "Series 1992-3
Certificates"). See "Annex 1: Other Issuances
of Investor Certificates" for a summary of the
Series 1992-1 Certificates, the Series 1992-2
Certificates and the Series 1992-3
Certificates.
Allocations................... The Certificateholders' Interest 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
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each calendar month (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 "Description of the
Certificates -- Allocation Percentages".
Interest Collections, Principal Collections and
Defaulted Receivables not allocated to Series
1994-1 will be allocated to the Seller's
Interest and the certificateholders' interests
in 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 Seller 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 Seller'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 of principal with
respect to 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 Seller or
allocated to any other Series as described
herein. See "Description of the Certificates --
Allocation Percentages -- Principal Collections
for all Series".
Interest...................... Interest on the principal balance of the
Certificates will accrue at the Certificate
Rate and will be payable semi-annually to
Certificateholders on the fifteenth day of
January and July (or, if such day is not a
business day, on the next succeeding business
day) (each, a "Semi-Annual Payment Date"),
commencing in January 1995; 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
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exceptions, on each subsequent Distribution
Date until the Certificates are retired.
"Distribution Date" shall mean the fifteenth
day of each month (or, if such date is not a
business day, the next succeeding business
day). Certificateholder Interest Collections
will be deposited each month into a trust
account (the "Interest Funding Account") and
used to make interest payments to the
Certificateholders on each Semi-Annual Payment
Date. Interest payable on a Semi-Annual Payment
Date will accrue from and including the
preceding Semi-Annual Payment Date (or, in the
case of the first Semi-Annual Payment Date,
from and including the Closing Date) to but
excluding such Semi-Annual Payment Date.
Interest for any Semi-Annual Payment Date or
Distribution Date will be calculated on the
basis of a 360-day year consisting of twelve
30-day months, and interest due but not paid on
any Semi-Annual Payment Date or Distribution
Date will be due on the next Semi-Annual
Payment Date or Distribution Date, as the case
may be, together with, to the extent lawfully
payable, interest on such amount at the
Certificate Rate plus 2%. Interest payments on
the Certificates will be derived from
Certificateholder Interest Collections for the
related Collection Period, withdrawals, if any,
from the Reserve Fund, Investment Proceeds, if
any, Net Trust Swap Receipts, if any, and,
under certain circumstances, Available Seller's
Collections to the extent of the Available
Subordinated Amount.
Principal..................... It is expected that the final principal payment
with respect to the Certificates will be made
on the [ ] Distribution Date (the "Expected
Final Payment Date"). The final principal
payment with respect to the 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. Upon the occurrence of an
Asset Composition Event described herein,
certain principal amounts may be payable to the
Certificateholders.
Asset Composition Event; Asset
Composition Premium......... An "Asset Composition Event" will occur if
during the Revolving Period for any Series (a)
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 25% of the total assets of the Trust
on each of twelve 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 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 to be made
on the next succeeding Distribution Date. Upon
the occurrence of an Asset Composition Event
during the Revolving Period for any Series, an
amount equal to the Series 1994-1 Allocation
Percentage of the Asset Correction Amount shall
be distributed in respect of the Certificates
on the next following Distribution Date. At any
time, the "Asset Correction Amount" shall equal
the amount which, if distributed, would result
in compliance with the
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percentage limitation the violation of which
gave rise to the Asset Composition Event.
With respect to any distribution of an Asset
Correction Amount, an additional payment equal
to the Asset Composition Premium for Series
1994-1 shall be paid to the Certificateholders
to the extent that funds are available therefor
as described under "Description of the
Certificate -- Distributions from the
Collection Account; Reserve Fund". 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 for 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
, 1994 with a settlement date of
, 1994 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.
Any unpaid Asset Composition Premium will be
payable on each Distribution Date following an
Asset Composition Event only to the extent that
Certificateholder Interest Collections are
available therefor after making all required
distributions and deposits with respect to the
Certificates, including payments with respect
to Net Trust Swap Payments, Monthly Interest,
the Monthly Servicing Fee, the Reserve Fund
Deposit Amount and the Investor Default Amount
for such date. The rating of the Certificates
does not address the likelihood of payment of
the Asset Composition Premium.
Revolving Period.............. During the Revolving Period, Principal
Collections allocable to the
Certificateholders' Interest generally will be
paid to the Seller, deposited to the Excess
Funding Account or allocated to another Series
(in effect, 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
Seller's Interest or the interest of the
certificateholders of such other Series) in
order to maintain the sum of the Invested
Amount and the amount, if any, in the Excess
Funding Account at a constant level. The
"Revolving Period" will be the period beginning
on [ ], 199 (the "Series Cut-Off
Date") and ending on the earlier of (x) the day
immediately preceding the Accumulation Period
Commencement Date and (y) the business day
immediately preceding the day on which an Early
Amortization Event occurs. See "Description of
the Certificates -- Early Amortization Events"
for a discussion of certain events which might
lead to the
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<PAGE> 11
early termination of the Revolving Period and,
in certain limited circumstances, the
recommencement of the Revolving Period.
Accumulation Period........... Unless an Early Amortization Period commences,
the Certificates will have an accumulation
period (the "Accumulation Period"), which will
commence on the Accumulation Period
Commencement Date, and continue until the
earlier of (a) the commencement of an Early
Amortization Period and (b) the Expected Final
Payment Date. Unless an Early Amortization
Event shall have occurred, the Accumulation
Period will be one, two, three, four or five
month(s) long as described in the following
paragraph. 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 "Description of the Certificates --
Distributions from the Collection Account;
Reserve Fund -- Principal Collections".
On [ ], the Servicer shall determine the
Accumulation Period Length. The "Accumulation
Period Length" will be one, two, three, four or
five month(s) and will be calculated as the
product, rounded upwards to the nearest
integer, of (a) five and (b) a fraction, the
numerator of which is the Invested Amount as of
[ ], (after giving effect to all changes
therein on such date) and the denominator of
which is the sum of such Invested Amount and
the invested amounts as of [ ], (after
giving effect to all changes therein on such
date) of all other outstanding Series whose
respective revolving periods are not scheduled
to end before the last day of the [ ]
Collection Period. If the Accumulation Period
Length is one month, two months, three months,
four months or five months, the "Accumulation
Period Commencement Date" shall be the first
day of the [ ] Collection Period, the
[ ] Collection Period, the [ ]
Collection Period, the [ ] Collection
Period or the [ ] Collection Period,
respectively. Notwithstanding the foregoing,
the Accumulation Period Commencement Date shall
be [ ], 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 its
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
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<PAGE> 12
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.
Early Amortization Period..... During the period beginning on the day on which
an Early Amortization Event has occurred and,
except as described below, ending on the
earlier of the payment in full of the
outstanding principal balance of the
Certificates and the Termination Date (the
"Early Amortization Period"), the Revolving
Period or the Accumulation Period, as the case
may be, will terminate and Principal
Collections and certain other amounts allocable
to the Certificateholders' Interest will no
longer be paid to the Seller or the holders of
any other outstanding Series as described above
but instead will be distributed to the
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 "Description
of the Certificates -- Early Amortization
Events" for a description of events that might
result in the commencement of an Early
Amortization Period. During an Early
Amortization Period, distributions of principal
on the Certificates will not be subject to the
Controlled Distribution Amount. See
"Description of the Certificates --
Distributions from the Collection Account;
Reserve Fund -- Principal Collections". In
addition, on the first Special Payment Date (a)
any amounts on deposit in the Interest Funding
Account (as needed to pay accrued interest on
the Certificates) will be paid to the
Certificateholders and (b) any amounts on
deposit in the Excess Funding Account, the
Principal Funding Account and the Interest
Funding Account (after the payment of accrued
interest on such date) will be paid to the
Certificateholders up to the outstanding
principal balance of the Certificates. See
"Description of the Certificates --
Distributions".
The Seller is required to add Receivables to
the Trust under certain circumstances described
under "Description of the Certificates --
Addition of Accounts". The failure of the
Seller to add Receivables when required will
result in the occurrence of an Early
Amortization Event. However, if no other Early
Amortization Event has occurred, the Early
Amortization Period resulting from such failure
will terminate and the Revolving Period will
recommence when the Seller would no longer be
required to add Receivables to the Trust, so
long as the scheduled termination date of the
Revolving Period has not occurred.
Subordination of the Seller's
Interest...................... If the Interest Collections, Investment
Proceeds, Net Trust Swap Receipts, 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 the interest
payable on the Certificates on the next
Distribution Date (plus any overdue interest
and interest thereon), the Monthly Servicing
Fee for such
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<PAGE> 13
Distribution Date, any Investor Default Amount
for such Distribution Date, Net Trust Swap
Payments, if any, for such Distribution Date
and certain other amounts, a portion of the
Seller's Interest will be applied to make up
such deficiency. Generally, the amount of the
Seller's Interest subject to such subordination
is the Available Subordinated Amount. The
Available Subordinated Amount for the first
Determination Date will be equal to the
Required Subordinated Amount. The "Required
Subordinated Amount" 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. 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 Available Subordinated Amount for
subsequent Distribution Dates will be
determined pursuant to the calculation
described under "Description of the
Certificates -- Allocation of Collections;
Deposits in Collection Accounts; Limited
Subordination of Seller's Interest". The
Available Subordinated Amount will fluctuate
based on the increase and decrease, if any, in
the Invested Amount and the corresponding
decrease and increase in the amount, if any, in
the Invested Amount and the corresponding
decrease and increase in the amount, if any, in
the Excess Funding Account and the additions
and subtractions specified in the calculation
referred to above. The Seller 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 lesser of (i) $[ ] or (ii)
% of the Invested Amount on such date. Any
such increase may have the effect of avoiding
an Early Amortization Event. The Available
Subordinated Amount, to the extent it was
reduced because of any application of the
Seller'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 Seller as
described under "Description of the
Certificates -- Distributions from the
Collection Account; Reserve Fund -- Excess
Servicing".
Servicing..................... The Servicer (initially, Ford Credit) is
responsible for servicing, managing and making
collections on the Receivables and will, except
as provided below, 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 with respect
to the related Collection Period. In certain
circumstances, the 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 "Description of the
Certificates -- Allocation of Collections;
Deposits in Collection Account; Limited
Subordination of Seller's Interest".
On the second business day preceding each
Distribution Date (each a "Determination
Date"), the Servicer will calculate the amounts
to be allocated as described herein in respect
of collec-
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<PAGE> 14
tions on Receivables received with respect to
the related Collection Period to the
Certificateholders, to the holders of other
outstanding Series or to the Seller as
described herein. See "Description of the
Certificates -- Allocation of Collections;
Deposits in Collection Account; Limited
Subordination of Seller's Interest" and
"Special Considerations -- Certain Legal
Aspects".
In certain limited circumstances Ford Credit
may resign or be removed as 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 Servicer to any
of its affiliates, but any such delegation will
not relieve the Servicer of its obligations
under the Pooling and Servicing Agreement. The
Servicer will receive a monthly servicing fee
and certain other amounts as described herein
as servicing compensation from the Trust. See
"Description of the Certificates -- Servicing
Compensation and Payment of Expenses".
Mandatory Reassignment and
Transfer of Certain
Receivables................. The Seller has made certain representations and
warranties in the Pooling and Servicing
Agreement with respect to the Receivables in
its capacity as Seller and Ford Credit has made
certain representations and warranties in the
Pooling and Servicing Agreement in its capacity
as Servicer. If the Seller 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 or the interests
of the holders of other outstanding Series
therein, the Certificateholders' Interest and
such other certificateholders' interests in
such Receivables will, subject to certain
conditions specified herein, be reassigned to
the Seller. If Ford Credit, as Servicer, fails
to comply in all material respects 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 or such other
certificateholders' interests therein, all
Receivables affected will be purchased by Ford
Credit. In the event of a transfer of servicing
obligations to a successor Servicer, such
successor Servicer, rather than Ford Credit,
would be responsible for any failure to comply
with the Servicer's covenants and warranties
arising thereafter.
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. 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 (x) LIBOR (calculated
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<PAGE> 15
as described herein) and (y) the Prime Rate
less 1.5%, on the outstanding principal balance
of the Certificates as of the preceding
Distribution Date, which rates will be reset on
various dates in each month. With respect to
each Distribution Date, any difference between
the monthly payment by the Swap Counterparty to
the Trust and the monthly payment by the Trust
to the Swap Counterparty will be referred to
herein as the "Net Trust Swap Receipt", if such
difference is a positive number, and the "Net
Trust Swap Payment", if such difference is a
negative number. Net Trust Swap Receipts, if
any, will be 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 Seller to the extent of the Swap
Available Subordinated Amount. See "Allocation
of Collections; Deposits in Collection Account;
Limited Subordination of Seller's Interest --
Swap Available Subordinated Amount".
Tax Matters................... In the opinion of special tax counsel for the
Seller and the Trust, the Certificates will be
characterized as debt for United States federal
income tax purposes and, in the opinion of
Michigan counsel for the Seller and the Trust,
the Certificates will be characterized as debt
for Michigan income and single business tax
purposes. Each Certificateholder, by the
acceptance of a Certificate, will agree to
treat the Certificates as debt for United
States federal, state and local income and
single business tax purposes. See "Certain Tax
Matters" for additional information concerning
the application of United States 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
securities" exemption described herein or the
possible application of other ERISA prohibited
transaction exemptions described herein. See
"ERISA Considerations".
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 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
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<PAGE> 16
Certificates also will not address the
likelihood of payment of the Asset Composition
Premium. 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
"Special Considerations -- Ratings of the
Certificates".
Series Cut-Off Date........... [ ], 1994.
15
<PAGE> 17
SPECIAL CONSIDERATIONS
Limited Liquidity. There is currently no market for the Certificates.
(the "Underwriters") currently intend to make a market in
the Certificates, but no Underwriter is under an obligation to do so. There can
be no assurance that a secondary market will develop or, if a secondary market
does develop, that it will provide the Certificateholders with liquidity of
investment or that it will continue for the life of the 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 Seller and, under the Pooling and
Servicing Agreement, the Seller has warranted to the Trust that the Receivables
have been or will be transferred free and clear of the lien of any third party.
Each of Ford Credit and the Seller has also covenanted that it will not sell,
pledge, assign, transfer or grant any lien on any Receivable or, except as
described under "Description of the Certificates -- The Seller's Certificate",
the Seller's Certificate (or any interest therein) other than to the Trust.
Ford Credit has warranted to the Seller in the Receivables Purchase
Agreement that the sale of the Receivables by it to the Seller is a valid sale
of the Receivables to the Seller. In addition, Ford Credit and the Seller have
and will treat the transactions described herein as a sale of the Receivables to
the Seller and Ford Credit has and will take all actions that are required under
Michigan law to perfect the Seller'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 take the position that the sale of Receivables to the
Seller should be recharacterized as a pledge of such Receivables to secure a
borrowing of such debtor, then delays in payments of collections of Receivables
to the Seller could occur or (should the court rule in favor of any such
trustee, debtor or creditor) reductions in the amount of such payments could
result. If the transfer of Receivables to the Seller is recharacterized as a
pledge, a tax or government lien on the property of Ford Credit arising before
any Receivables come into existence may have priority over the Seller's interest
in such Receivables. See "Certain Legal Aspects of the Receivables -- Certain
Matters Relating to Bankruptcy". If the transactions contemplated herein are
treated as a sale, the Receivables would not be part of Ford Credit's bankruptcy
estate and would not be available to Ford Credit's creditors.
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 bankruptcy court to order that Ford Credit be substantively
consolidated with the Seller, delays in and reductions in the amount of
distributions on the Certificates could occur.
The Seller has warranted in the Pooling and Servicing Agreement that the
transfer of the Receivables to the Trust is a valid sale of the Receivables to
the Trust. The Seller has and will take all actions that are required under
Michigan law to perfect the Trust's interest in the Receivables and the Seller
has warranted that the Trust will at all times have a first priority perfected
ownership interest therein and, with certain exceptions, in the proceeds
thereof. However, the transfer of the Receivables to the Trust could be deemed
to create a security interest therein. 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
Seller arising before a Receivable is transferred to the Trust may have priority
over the Trust's interest in such Receivables. If the Seller were to become a
debtor in a bankruptcy case and a bankruptcy trustee or the Seller as debtor in
possession or a creditor of the Seller were to take the position that the
transfer of the Receivables from the Seller to the Trust should be
recharacterized as a pledge of such Receivables, then delays in distributions on
the Certificates or, should the bankruptcy court rule in favor of any such
trustee, debtor in possession or creditor, reductions in such distributions,
could result.
If certain events relating to the bankruptcy of Ford, Ford Credit or the
Seller were to occur, then an Early Amortization Event would occur and, pursuant
to the terms of the Pooling and Servicing Agreement, additional Receivables
would not be transferred to the Trust and distributions of principal on the
Certificates
16
<PAGE> 18
would not be subject to the 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 Seller pursuant to the Pooling and Servicing Agreement may be recoverable by
Ford Credit or the Seller as debtor in possession or by a creditor or a
trustee-in-bankruptcy of Ford Credit or the Seller as a preferential transfer
from Ford Credit or the Seller if such payments are made within one year prior
to the filing of a bankruptcy case in respect of Ford Credit or the Seller.
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 written off as uncollectible or result in delays
in payments due on such Receivables. See "Description of the Certificates --
Defaulted Receivables and Recoveries".
The Seller 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 Collateral Security other than a Vehicle (referred
to herein as "Non-Vehicle Collateral 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 Collateral Security".
Payments. Receivables are generally payable by Dealers upon retail sale of
the underlying Vehicle in the case of new Vehicles. Historically, receivables
created in respect of used Vehicles have generally been paid within 60 days. The
timing of such sales is uncertain. In addition, there is no assurance that there
will be additional Receivables created under the Accounts or that any particular
pattern of Dealer repayments will occur. The payment of principal on the
Certificates is dependent on Dealer repayments and the Certificates may not be
fully amortized in five payments following the commencement of the Accumulation
Period. In addition, a significant decline in the amount of Receivables
generated could cause an Asset Composition Event or Early Amortization Event.
However, a decline in the amount of Receivables generated would initially be
absorbed by an increase in the Excess Funding Account. The Receivables Purchase
Agreement provides that Ford Credit will be required to designate additional
Accounts, the Receivables of which will be sold to the Seller, and the Pooling
and Servicing Agreement provides that the Seller will be required to transfer
such Receivables to the Trust in the event that the amount of the Pool Balance
is not maintained at a certain minimum level. If additional Accounts are not
designated by Ford Credit when required, an Early Amortization Event will occur
and result in the commencement of an Early Amortization Period, although in
certain circumstances the resulting Early Amortization Period may terminate and
the Revolving Period recommence. If an insolvency event relating to Ford Credit,
the Seller or Ford were to occur, then an Early Amortization Event would occur,
additional Receivables would not be transferred to the Trust and distributions
of principal on the Certificates would not be subject to the Controlled
Distribution Amount. See "The Dealer Floorplan Financing Business" and "Maturity
and Principal Payment Considerations" and see also "Description of the
Certificates -- Early Amortization Events" for a discussion of other events
which might lead to the commencement of an Early Amortization Period.
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) may affect retail sales. However, the Seller is unable to determine
and has no basis to predict whether or to what extent economic or social factors
will affect the level of Vehicle sales.
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<PAGE> 19
Trust's Relationship to Ford and Ford Credit. Neither Ford Credit nor Ford
is obligated to make any payments in respect of the Certificates or the
Receivables (other than the obligation of Ford Credit to purchase certain
Receivables from the Trust due to the failure to comply with certain covenants,
as described under "Description of the Certificates -- Servicer Covenants").
However, the Trust is completely dependent upon Ford Credit for the generation
of new Receivables. The ability of Ford Credit to generate Receivables is in
turn dependent to a large extent on the sales of automobiles and light duty
trucks manufactured or distributed by Ford. There can therefore be no assurance
that Ford Credit will continue to generate Receivables at the same rate as in
prior years. In addition, if Ford Credit were to cease acting as Servicer,
delays in processing payments on the Receivables and information in respect
thereof could occur and result in delays in payments to the Certificateholders.
In connection with the transfer of Receivables by Ford Credit to the Seller
and the transfer of such Receivables by the Seller to the Trust, each of Ford
Credit and the Seller make representations and warranties with respect to the
characteristics of such Receivables. Ford Credit and the Seller 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 or certificateholders of other Series.
See "Description of the Certificates -- Representations and Warranties". In
addition, subject to certain limitations, Ford Credit has the ability to change
the terms on the Accounts including the sale and the credit line, as well as
underwriting procedures.
Under agreements between Ford and Ford-franchised dealers, Ford is
committed to purchase unmiled, current-model vehicles from such dealers upon
voluntary dealership termination. Ford has, from time to time in certain
instances, provided certain financial assistance to Ford-franchised dealers, but
has no obligation to do so. If Ford elects not, or is unable, to provide any
such financial assistance to Dealers, losses with respect to the Receivables may
increase. See "The Dealer Floorplan Financing Business -- Relationship with
Ford". 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 which 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 Seller'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 will be reduced from time to
time as described herein. See "Description of the Certificates -- Allocation of
Collections; Deposits in Collection Account; Limited Subordination of Seller'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 investor 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 Seller, the holders of investor 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, is expected to issue
additional Series (which may be represented by different classes within a
Series) from time to time. A Supplement delivered in connection with the
issuance of other Series will specify certain Principal Terms applicable to such
Series. Such Principal Terms may include methods for determining applicable
allocation percentages and allocating collections,
18
<PAGE> 20
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 "Description of the
Certificates -- New Issuances". As long as the Certificates are outstanding, a
condition to the execution of any Supplement will be that the Rating Agency
shall have advised the Trustee that the issuance of such Series will not result
in the reduction or withdrawal of their rating of the Certificates. There can be
no assurance, however, that the terms of any other Series might not have a
impact on the timing or amount of payments received by a Certificateholder. The
issuance of an additional Series does not require the consent of any
Certificateholders.
Asset Composition Premium. The Asset Composition Premium will be payable to
the extent certain funds are available after an Asset Composition Event shall
have occurred. Any unpaid Asset Composition Premium will be payable on each
Distribution Date following an Asset Composition Event to the extent such 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 "Description of the
Certificates -- Distributions from the Collection Account; Reserve Fund". The
rating of the Certificates does not address the likelihood of payment of the
Asset Composition Premium.
Ratings of the Certificates. 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 (such rating agency and each other
rating agency designated by the Seller in the related Supplement in respect of
any outstanding Series or class, a "Rating Agency"). The rating of the
Certificates addresses the likelihood of the ultimate payment of principal and
interest on the Certificates. However, a Rating Agency does not evaluate, and
the rating of the Certificates does not address, the likelihood that the
outstanding principal amount of the Certificates will be paid by the Expected
Final Payment Date. In addition, a Rating Agency does not evaluate, and the
rating of the Certificates does not address, the likelihood that any Asset
Composition Premium will be paid. There is no assurance that a rating will
remain for any given period of time or that a rating will not be lowered or
withdrawn entirely by a Rating Agency if in its judgment circumstances so
warrant.
Book-Entry Registration. The Certificates will be initially represented by
one or more certificates registered in the name of Cede, the nominee for DTC,
and will not be registered in the names of the Certificateholders or their
nominees. Because of this, unless and until Definitive Certificates are issued
Certificateholders will not be recognized by the Trustee as "Certificateholders"
(as that term is used in the Pooling and Servicing Agreement). Consequently,
until such time beneficial owners of the Certificates ("Certificate Owners")
will only be able to exercise the rights of Certificateholders indirectly
through DTC, CEDEL, Euroclear and their participating organizations. See
"Description of the Certificates -- Book-Entry Registration" and "-- Definitive
Certificates".
FORD CREDIT AUTO RECEIVABLES CORPORATION AND THE TRUST
FORD CREDIT AUTO RECEIVABLES CORPORATION
The Seller, a wholly-owned subsidiary of Ford Credit, was incorporated in
the State of Delaware on February 13, 1991. The Seller was organized for limited
purposes, which include purchasing receivables from Ford Credit and transferring
such receivables to third parties and any activities incidental to and necessary
or convenient for the accomplishment of such purposes. The principal executive
offices of the Seller are located at The American Road, Dearborn, Michigan
48121. The telephone number of such offices is (313) 322-1989.
The Seller 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 state laws ("Insolvency Laws") will not result in consolidation of
the assets and liabilities of the Seller with those of Ford Credit. These steps
include the creation of the Seller as a separate,
19
<PAGE> 21
limited-purpose subsidiary pursuant to a certificate of incorporation containing
certain limitations (including restrictions on the nature of the Seller's
business and a restriction on the Seller's ability to commence a voluntary case
or proceeding under any Insolvency Law without the unanimous affirmative vote of
all of its directors). The Seller's Certificate of Incorporation includes a
provision that, under certain circumstances, requires the Seller to have two
directors who qualify under the Certificate of Incorporation as "Independent
Directors". No assurance can be given, however, that such a consolidation will
not occur. See "Special Considerations -- Certain Legal Aspects".
To the extent that the proceeds of the sale of the Series 1992-1
Certificates were less than the purchase price of the Receivables sold to the
Seller at the Initial Closing Date, Ford Credit (the owner of all the common
stock of the Seller) contributed Receivables in an amount equal to such
deficiency to the Seller as capital on the Initial Closing Date. If Additional
Accounts are added to the Trust, Ford Credit may make additional contributions
of capital to the Seller 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 Seller has purchased 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 Seller has and will convey
to the Trust, without recourse, the Receivables arising under the Accounts. 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 Seller'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 Account, the Interest Funding
Account and the Reserve Fund), the Interest Rate Swap and any other Enhancement
issued with respect to any other Series, a security interest in the Vehicles and
any other Collateral Security. See "Description of the Certificates -- Addition
of Accounts". 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 other Series. The Certificateholders 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 Seller 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 Removed
Accounts to the Seller.
The Trust has been formed for this and like transactions 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 and the Seller's Certificate (and
any Supplemental Certificates), issuing additional Series 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.
20
<PAGE> 22
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be paid to the
Seller. The Seller 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 the Interest Rate Swap. Ford Credit will
use such proceeds for general corporate purposes.
THE DEALER FLOORPLAN FINANCING BUSINESS
GENERAL
The receivables sold or to be sold to the Trust have been or will be
selected from extensions of credit made by Ford Credit to domestic motor vehicle
dealers (the accounts for which are referred to as the "U.S. Wholesale
Portfolio"). 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. In 1993, Ford Credit provided financing for 81.5% of new
factory sales to Ford dealers in the U.S. Through the first three months of
1994, Ford Credit provided financing for 79.7% of new factory sales to Ford
dealers in the U.S. As of June 30, 1994, Ford Credit provided financing to about
6,200 domestic automotive dealers, including about 1,500 non-Ford dealerships
affiliated with Ford-franchised dealers. In the first three months of 1994, Ford
Credit arranged wholesale financing for about 825,000 vehicles, up about 17%
from the same period a year ago. Ford Credit services the wholesale portfolio
through its home office in Dearborn, Michigan and through its 138 branch offices
throughout the United States.
The receivables are categorized by Ford Credit, under its policies and
procedures, as New or Used Vehicles. "New Vehicles" means those vehicles which
are presently (i) current and prior year unmiled vehicles or (ii) current and
prior year miled vehicles, generally not more than six months old, purchased at
closed auction conducted by Ford Credit. "Used Vehicles" means previously owned
vehicles (other than current and prior year miled vehicles purchased at closed
auction conducted by Ford). Vehicles purchased by a dealer at a closed auction
conducted by Ford Credit are referred to as "Auction Vehicles". The
categorization of New Vehicles and Used Vehicles may change in the future based
on Ford Credit's practices and policies.
CREATION OF RECEIVABLES
Ford Credit finances 100% of the wholesale invoice price of new vehicles,
including destination charges and a dealer holdback currently in the amount of
approximately 2% of the balance of the invoice price, which holdback amount is
later returned to the dealer. Receivables related to most 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 new vehicles not manufactured or
distributed by Ford, Ford Credit advances funds directly to the manufacturer or
the distributor on behalf of the dealer.
Once a dealer has commenced the floorplanning of a manufacturer's or
distributor's vehicles through Ford Credit, Ford Credit will finance all
purchases of vehicles by such dealer from such manufacturer or distributor. Ford
Credit may limit or cancel this arrangement if a dealer's inventory is seriously
overstocked in Ford Credit's opinion or if a dealer is experiencing financial
difficulties. In these circumstances (referred to as a "suspended" condition),
the branch or regional office will approve additional financing on a vehicle-by-
vehicle basis. As of March 31, 1994, 0.8% of the total dealers in the U.S.
Wholesale Portfolio were suspended, compared with 1.1% as of December 31, 1993.
CREDIT UNDERWRITING PROCESS
Ford Credit extends credit to dealers pursuant to established credit lines.
Lines of credit may be established for dealers to finance purchases of new
(including auction) and used vehicles. All Ford-franchised dealers and
affiliates that have a new vehicle line in place may also be eligible for a used
vehicle credit line.
A newly franchised dealer requesting the establishment of a new vehicle
credit line must submit a request for financing to a Ford Credit branch office.
After receipt of such request, the local branch office investigates
21
<PAGE> 23
the prospective dealer by reviewing that dealer's credit reports and bank
references and by evaluating the dealer's marketing capabilities, start-up
financing resources, and credit requirements. When an existing dealer requests
the establishment of a wholesale new vehicle credit line, the local branch
office reviews the dealer's credit reports (including the experience of the
dealer's present financing source) 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 local branch office prepares a written recommendation either approving
or disapproving the dealer's request and, depending on the amount of the
requested credit line, transmits such recommendation with the requisite
documentation to the central office. The branch manager can approve new
wholesale financing requests for amounts up to $6 million, in some cases. For
greater amounts, the documentation will be forwarded to the central office for
approval. Ford Credit generally applies the same underwriting standards for
dealers franchised by other manufacturers.
Upon approval, dealers execute a series of financing agreements with Ford
Credit and, in the case of Ford-franchised dealers, Ford. Such agreements
provide for a first priority security interest in favor of Ford Credit in the
vehicles and, in certain cases, in certain other collateral and require a
wholesale installment note in favor of Ford Credit.
The size of a credit line offered 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 aggregate amount advanced for each Used Vehicle is equal to the
National Automotive Dealers Association's Official Wholesale Used Car Trade-In
Guide wholesale book value for such vehicle. The amount advanced for New
Vehicles and all Auction Vehicles is equal to the amount invoiced with respect
to New Vehicles and the auction purchase price (including auction fees) of
Auction Vehicles, respectively. Used Vehicles represented approximately 1% of
the aggregate principal amount of receivables in the U.S. Wholesale Portfolio as
of March 31, 1994. As of the Series Cut-Off Date, Used Vehicles represented
approximately 0.8% of the aggregate principal amount of Receivables in the
Trust.
As of March 31, 1994, average credit lines per dealer in the U.S. Wholesale
Portfolio for new and used vehicles were $1.59 million and $0.16 million,
respectively, and the average balance of principal receivables per account was
$1.60 million. The aggregate total receivables balance as a percentage of the
aggregate total credit lines was 131.7%. As more fully described below, the
credit lines are guidelines, not limits, which dealers are 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 COLLATERAL SECURITY
As stated above, the agreements constituting the credit lines, including
the Accounts, provide for a security interest in the vehicles in favor of Ford
Credit, which security interest Ford Credit has represented is a first priority
security interest. The security interests in the Vehicles in favor of Ford
Credit have been and will be assigned by Ford Credit to the Seller pursuant to
the Receivables Purchase Agreement and then by the Seller to the Trust pursuant
to the Pooling and Servicing Agreement. In its other lending activities, Ford
Credit may have made capital loans, real estate loans or other advances to
Dealers that are also secured by a security interest in the Vehicles. Ford
Credit has agreed 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 may also have a security interest in the
Non-Vehicle Collateral Security, if any, securing the Receivables of such
Dealer. In such cases, Ford Credit, in its sole discretion, may realize on the
Non-Vehicle Collateral Security for its own benefit in respect of such loans or
advances before the Trust is permitted to realize upon such Non-Vehicle
Collateral Security. Because of the subordinate position of the Trust in respect
of Non-Vehicle Collateral Security, there is no assurance that the Trust will
realize any proceeds in respect of any Non-Vehicle Collateral Security.
22
<PAGE> 24
PAYMENT TERMS
Upon the sale 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. Under an installment plan available only for
new Ford vehicles, eligible Ford-franchised dealers may remit 90% of the amount
of the related advance to Ford Credit upon retail sale of the related vehicle.
Payment of the remaining 10% balance (the "Installment Balance") is due on the
first day of the second month following the sale 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 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.
BILLING AND COLLECTION PROCEDURES
A statement setting forth billing and related account information is
prepared by Ford Credit and distributed on a monthly basis to each dealer. Each
dealer's bills are generated and mailed by the fourth calendar day of the month.
Interest and other nonprincipal 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.
REVENUE EXPERIENCE
Ford Credit charges dealers interest at a rate determined by Ford Credit
weekly. Ford Credit is currently determining the rate to be the "prime rate"
designated from time to time by certain financial institutions selected by Ford
Credit, plus a spread of either 1% or 1.75%. The interest rate is reset by Ford
Credit each week and is applied to all balances outstanding during the
applicable period. The actual spread for each dealer is determined by the type
of each credit line and is currently 1% for a New Vehicle credit line and 1.75%
for a Used Vehicle credit line. 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 designated spread of 0.5% on the Installment Balance from
the time of sale to the time it is applied to the vehicle balance. As of March
31, 1994, the weighted average spread over the prime rate charged to dealers in
the U.S. Wholesale Portfolio was 1.01%.
RELATIONSHIP WITH FORD
On all New Vehicle financings, 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 of such optional programs 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 U.S. Wholesale Portfolio may be adversely affected. In
addition, because a substantial number of the vehicles 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 would
decrease, adversely affecting payment rates and the loss experience of the U.S.
Wholesale Portfolio. See "Payment Terms" for a discussion of an installment
payment plan made available to dealers. See also "Special Considerations --
Trust's Relationship to Ford and Ford Credit; Financial Condition of Ford".
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<PAGE> 25
DEALER MONITORING
The level of each dealer's wholesale credit line is monitored on a periodic
basis. Because the wholesale lines are not limits, dealers are 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 may evaluate a dealer's
financial position and may place the dealer in the suspended category. See
"Creation of Receivables".
Audits of dealer vehicle inventories are conducted on a regular basis by
branch office employees. The timing of each visit varies and no advance notice
is given to the audited dealer. Auditors review some dealer financial records
and conduct a physical inventory of the vehicles on the dealer's premises.
Through the audit process, Ford Credit reconciles each dealer's physical
inventory with its records of financed vehicles. Audits are intended to identify
instances where a dealer sells vehicles without immediately repaying the related
advances.
DEALER "STATUS" AND FORD CREDIT'S WRITE-OFF POLICY
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, 1994, the
number of dealers assigned to dealer Status was 41 (0.7% of the total number of
dealers in the U.S. Wholesale Portfolio); as of December 31, 1993, 46 dealers
(0.8% of the total number of dealers in the U.S. Wholesale Portfolio); as of
December 31, 1992, 78 dealers (1.4% of the total number of dealers in the U.S.
Wholesale Portfolio); as of December 31, 1991, 110 dealers (2.1% of the total
number of dealers in the U.S. Wholesale Portfolio); as of December 31, 1990, 111
dealers (2.1% of the total number of dealers in the U.S. Wholesale Portfolio);
and as of December 31, 1989, 79 dealers (1.5% of the total number of dealers in
the U.S. Wholesale Portfolio). Once a dealer is classified as dealer Status, any
further extension of credit is rare.
Ford Credit works 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 performs an analysis of its position, writes off any amounts identified
at such time as uncollectible and attempts to liquidate all remaining
collateral. During the course of a liquidation, Ford Credit may recognize
additional losses or recoveries.
THE ACCOUNTS
GENERAL
The Receivables arise in the Accounts. The Accounts have been selected from
all the wholesale accounts in the 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 by Ford Credit in the ordinary course of business and meet certain
other criteria provided in the Pooling and Servicing Agreement. See "Description
of the Certificates -- Representations and Warranties."
Pursuant to the Pooling and Servicing Agreement, the Seller, and pursuant
to the Receivables Purchase Agreement, Ford Credit, 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 Seller, which will in turn convey them to the Trust.
See "Description of the Certificates -- 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
Seller, and the Seller will represent and warrant to the
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<PAGE> 26
Trust, that the Receivables meet the eligibility requirements set forth in the
Pooling and Servicing Agreement. See "Description of the Certificates --
Conveyance of Receivables". Under certain circumstances specified in the Pooling
and Servicing Agreement, the Seller has the right to remove Accounts, and the
Receivables arising therefrom, from the Trust. See "Description of the
Certificates -- Removal of Accounts". Throughout the term of the Trust, the
Accounts from which the Receivables arise will be the same Accounts designated
by the Seller on the Initial Cut-Off Date plus any Additional Accounts, minus
any Accounts removed from the Trust.
As of the Series Cut-Off Date, with respect to the Accounts in the Trust:
(a) there were 4,310 Accounts and the Principal Receivables balance was
approximately $7.0 billion; (b) the average credit lines per Account for New and
Used Vehicles were $1.63 million and $0.14 million, respectively, and the
average balance of Principal Receivables per Account was $1.63 million; (c) the
aggregate total Receivables balance as a percentage of the aggregate total
credit line was approximately 131.7%; and (d) the weighted average spread over
the prime rate charged to Dealers was 1.01%. 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."
LOSS EXPERIENCE
The following tables set forth Ford Credit's average principal receivables
balance and loss experience for each of the periods shown with respect to the
U.S. Wholesale Portfolio. Because the Eligible Accounts will be only a portion
of the entire U.S. Wholesale Portfolio, 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 the U.S. Wholesale Portfolio. In
addition, the historical experience set forth below reflects financial
assistance provided by Ford in certain limited instances to Ford-franchised
dealers as described above under "The Dealer Floorplan Financing Business --
Relationship with Ford". If Ford is not able to or elects not to provide such
assistance in the future, the loss experience in respect of the U.S. Wholesale
Portfolio may be adversely affected. See "Special Considerations -- Trust's
Relationship to Ford and Ford Credit; Financial Condition of Ford".
LOSS EXPERIENCE FOR THE U.S. WHOLESALE PORTFOLIO
<TABLE>
<CAPTION>
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ---------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
------- ------- ------- ------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Principal
Receivables
Balance(1)............ $12,785 $11,032 $11,602 $9,596 $8,618 $7,965 $8,491
Net Losses
(Recoveries)(2)....... $ (0.7) $ (1.9) $ (1.4) $ 7.8 $ 28.7 $ 22.6 $ 25.1
Net
Losses/Liquidations... (0.004)% (0.012)% (0.002)% 0.014% 0.062% 0.051% 0.057%
Net Losses/Average
Principal Receivables
Balance(3)............ (0.022)% (0.069)% (0.012)% 0.081% 0.333% 0.284% 0.296%
</TABLE>
- -------------------------
(1) Average Principal Receivables Balance is the average of the monthly average
principal balances for the twelve months ending on the last day of the
period, except for the periods ended March 31, 1994 and March 31, 1993, each
of which is based on a three-month average.
(2) Net losses in any period are gross losses less recoveries for such period.
Recoveries include recoveries from collateral 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 Collateral Security, if any, will be
subordinate to the interest of Ford Credit in such Non-Vehicle Collateral
Security. See "The Dealer Floorplan Financing Business -- Intercreditor
Agreement in respect of Security Interests in Vehicles and Non-Vehicle
Collateral Security". Consequently, the Net Losses experienced by Ford
Credit and shown above may be more favorable than the Net Losses to be
experienced by the Trust.
(3) Percentages for the three month periods ended March 31, 1994 and March 31,
1993 are expressed on an annualized basis.
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<PAGE> 27
AGING EXPERIENCE
The following table provides the age distribution of vehicle inventory for
all dealers in the U.S. Wholesale Portfolio, as a percentage of total principal
outstanding at the date indicated. Because the Eligible Accounts will only be a
portion of the entire U.S. Wholesale Portfolio, actual age distribution with
respect to the Eligible Accounts may be different.
AGE DISTRIBUTION FOR THE U.S. WHOLESALE PORTFOLIO
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------- --------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
DAYS
1-120............................. 77.4% 74.3% 83.0% 81.1% 75.8% 76.4% 79.0%
121-180........................... 12.0 12.7 6.2 9.6 12.7 11.2 8.2
181-270........................... 7.1 9.6 5.9 4.9 5.7 6.3 5.6
Over 270.......................... 3.5 3.4 4.9 4.4 5.8 6.1 7.2
</TABLE>
GEOGRAPHIC DISTRIBUTION
The following table provides the geographic distribution of the vehicle
inventory for all dealers in the Trust on the basis of receivables outstanding
and the number of dealers generating such portfolio.
GEOGRAPHIC DISTRIBUTION OF ACCOUNTS IN THE TRUST
AS OF JUNE 30, 1994
<TABLE>
<CAPTION>
RECEIVABLES
OUTSTANDING PERCENTAGE OF PERCENTAGE OF
(THOUSANDS OF RECEIVABLES TOTAL NUMBER NUMBER OF
DOLLARS) OUTSTANDING OF ACCOUNTS ACCOUNTS
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Texas............................. $ 657,588 9.4% 382 8.9%
California........................ 653,440 9.3 236 5.5
Florida........................... 473,346 6.7 157 3.6
Illinois.......................... 368,704 5.3 219 5.1
Michigan.......................... 367,088 5.2 167 3.9
Other(1).......................... 4,502,412 64.1 3,149 73.0
</TABLE>
- -------------------------
(1) No other state includes more than 5% of the outstanding Receivables.
FORD MOTOR CREDIT COMPANY
Ford Credit was incorporated in Delaware in 1959 and is a wholly-owned
subsidiary of Ford Motor Company ("Ford").
Ford Credit provides wholesale financing and capital loans to franchised
Ford Motor Company vehicle dealers and other dealers associated with such
dealers and purchases retail installment sale contracts and retail leases from
them. Ford Credit also makes loans to vehicle leasing companies, the majority of
which are affiliated with such dealers. More than 85% of all new vehicles
financed by Ford Credit are manufactured by Ford or its affiliates. In addition,
a wholly-owned subsidiary of Ford Credit provides these financing services in
the U.S. to other vehicle dealers. In addition to vehicle financing, Ford Credit
makes loans to affiliates of Ford, finances certain receivables of Ford and its
subsidiaries, and offers diversified financing services which are managed by USL
Capital Corporation, a wholly-owned subsidiary of Ford Holdings, Inc. ("Ford
Holdings"). Ford Credit also manages the insurance businesses of The American
Road Insurance Company, a wholly-owned subsidiary of Ford Holdings. Ford Credit
also is a significant equity participant in Ford Holdings, which primarily is
engaged in consumer and commercial finance and insurance businesses.
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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.
MATURITY AND PRINCIPAL PAYMENT CONSIDERATIONS
Principal with respect to the Certificates will not be payable until the
[ ] Distribution Date (the "Expected Final Payment Date"), unless an
Early Amortization Event or, in some instances, an Asset Composition Event has
occurred. Full amortization of the Certificates by 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 "Description of the
Certificates -- 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.
The following table sets forth the highest and lowest monthly payment rates for
the U.S. Wholesale Portfolio 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 Eligible
Accounts will be only a portion of the entire U.S. Wholesale Portfolio, actual
monthly payment rates with respect to the Eligible Accounts may be different.
MONTHLY PAYMENT RATES FOR THE U.S. WHOLESALE PORTFOLIO
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------- --------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Highest Month..................... 53.1% 50.2% 64.4% 56.2% 53.8% 61.7% 60.2%
Lowest Month...................... 44.9 44.5 44.5 42.0 35.4 23.3 26.1
Average of the Months in the
Period.......................... 48.2 46.7 50.1 48.4 44.6 47.2 43.6
</TABLE>
Because an Early Amortization Event may occur which would initiate an Early
Amortization Period, the final distribution of principal on the Certificates may
be made prior to the scheduled termination of the Revolving Period or prior to
the Expected Final Payment Date. See "Description of the Certificates -- Early
Amortization Events".
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement, as supplemented by the Supplement relating to the Certificates (as so
supplemented and as further supplemented or amended from time to time, the
"Pooling and Servicing Agreement"), among FCAR, as Seller of the Receivables,
Ford Credit, as 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.
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<PAGE> 29
The Certificates will evidence undivided beneficial interests in the assets
of the Trust allocated to the Certificateholders' Interest 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
Certificates pursuant to the Pooling and Servicing Agreement.
The Certificates 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 Seller, the "Depository"), except as set forth below.
The Certificates will be available for purchase in minimum denominations of
$1,000 and integral multiples thereof in book-entry form. Each $1,000 principal
amount of the Certificates will represent [ ] of the Certificateholders'
Interest. The Seller has been informed by DTC that DTC's nominee will be Cede &
Co. ("Cede"). Accordingly, Cede is expected to be the holder of record of the
Certificates. No Certificate Owner will be entitled to receive a certificate
representing such person's beneficial interest in the Certificates. Unless and
until Definitive Certificates are issued under the limited circumstances
described herein, all references herein to actions by Certificateholders shall
refer to actions taken by DTC upon instructions from its Participants (as
defined below), and all references herein to distributions, notices, reports and
statements to Certificateholders shall refer to distributions, notices, reports
and statements to Cede, as the registered holder of the Certificates. See
"Book-Entry Registration" and "Definitive Certificates".
INTEREST
Interest on the principal balance of the Certificates will accrue at the
Certificate Rate and will be payable to the Certificateholders on each
Semi-Annual Payment Date, commencing in January, 1995; provided that (a) if an
Early Amortization Event shall have occurred, interest shall thereafter be
distributed to the Certificateholders on each Special Payment Date or (b) if an
Asset Composition Event shall have occurred, interest (to the extent described
herein) will be distributed to the Certificateholders on the first Distribution
Date following such Asset Composition Event. Certificateholder Interest
Collections will be deposited into the Interest Funding Account and used to make
interest payments to the Certificateholders on each Semi-Annual Payment Date.
Interest due on a Semi-Annual Payment Date will accrue from and including the
preceding Semi-Annual Payment Date (or, in the case of the first Semi-Annual
Payment Date, from and including the Closing Date) to but excluding such
Semi-Annual Payment Date. Interest due for any Semi-Annual Payment Date or
Distribution Date will be calculated on the basis of a 360-day year consisting
of twelve 30-day months and interest due but not paid on any Semi-Annual Payment
Date or Distribution Date will be due on the next Semi-Annual Payment Date or
Distribution Date, as the case may be, together with, to the extent lawfully
payable, interest on such amount at the Certificate Rate plus 2%. Interest
payments on the Certificates will be derived from Certificateholder Interest
Collections for a Collection Period, the amount, if any, in the Reserve Fund,
Investment Proceeds, Interest Rate Swap Receipts and, under certain
circumstances, Available Seller's Collections to the extent of the Available
Subordinated Amount (or, in some cases, the Aggregate 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 herein,
until the first Distribution Date following such event. On each Distribution
Date with respect to 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 herein,
(b) allocated to one or more Series which are in amortization, early
amortization or accumulation periods to cover principal payments due to the
investor 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 otherwise does not provide for excess
funding accounts or similar arrangements, paid to the Seller 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".
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<PAGE> 30
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 with respect to 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 Seller 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.
It is expected that the final principal payment with respect to the
Certificates will be made on the Expected Final Payment Date, but the principal
of the Certificates may be paid earlier or, depending on the actual payment rate
on the Receivables, later, as described under "Special Considerations --
Payments". If the Receivables are sold or repurchased as described below,
principal payments on the Certificates 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 will be made on each Semi-Annual Payment
Date or Distribution Date to the holders of Certificates in whose names the
Certificates were registered (expected to be Cede, as nominee of DTC) at the
close of business on the day preceding such Semi-Annual 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 will be made only upon presentation and
surrender of the Certificates. Distributions will be made to DTC in immediately
available funds.
ASSET COMPOSITION EVENT; ASSET COMPOSITION PREMIUM
An "Asset Composition Event" will occur if during the Revolving Period (a)
the sum of all Eligible Investments and amounts on deposit in all Series
Accounts represents more than 25% of the total assets of the Trust on each of
twelve 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 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, after giving
effect to all payments to be made on the next succeeding Distribution Date.
Upon the occurrence of an Asset Composition Event, the Servicer will
calculate the Asset Correction Amount, which equals the amount that would be
necessary to be paid first out of the Interest Funding Account and interest
funding accounts for other Series and second out of the Excess Funding Account
and excess funding accounts, if any, for other Series on the next Distribution
Date to achieve compliance with the tests specified above, after giving effect
to such payment and to all payments that otherwise would have been made on such
Distribution Date. Interest on and, if necessary, principal of the Certificates
will become payable on such Distribution Date to the extent of the Series 1994-1
Allocation Percentage of the Asset Correction Amount.
With respect to any distribution of an Asset Correction Amount, an
additional payment equal to the Asset Composition Premium will be payable to the
extent that funds are available therefor as described under "Description of the
Certificates -- Distributions from the Collection Account; Reserve Fund". The
"Asset Composition Premium" for Series 1994-1 shall 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, if any, of such Asset
Correction Amount payable to the Certificateholders from the Distribution Date
on which such
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<PAGE> 31
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 , 1994 with a settlement date of , 1994 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.
Any unpaid Asset Composition Premium payable to the Certificateholders will
be payable on each Distribution Date following an Asset Composition Event to the
extent Certificateholder Interest Collections are available therefor after
making all required distributions and deposits with respect to the Certificate,
including payments with respect to 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 "Description of the Certificates --
Distributions from the Collection Account; Reserve Fund". The rating of the
Certificates will not address the likelihood of payment of the Asset Composition
Premium.
BOOK-ENTRY REGISTRATION
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC 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, 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.
30
<PAGE> 32
DTC has advised the Seller 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 countries
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 Tax Matters -- United States Federal Income Tax
Consequences". 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
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<PAGE> 33
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 will initially be registered in the name of CEDE & Co.,
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 Tax
Matters -- United States Federal Income Tax Consequences -- Non-U.S.
Certificateholders".
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
The Certificates 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 Seller advises the Trustee in writing that
DTC is no longer willing or able to properly discharge its responsibilities as
Depository with respect to the Certificates and the Seller is unable to locate a
qualified successor, (ii) the Seller, at its option, elects to terminate the
book-entry system through DTC, or (iii) after the occurrence of a Servicer
Default, Certificateholders representing not less than 50% of the aggregate
unpaid principal amount of the Certificates 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.
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<PAGE> 34
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. Upon
surrender by DTC of the certificate or certificates representing such
Certificates 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 exchangeable at the offices of
the Trustee, which shall initially be Chemical 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 Seller may exchange a
portion of the certificate evidencing the Seller's Interest (the "Seller's
Certificate") for another certificate (a "Supplemental Certificate") for
transfer or assignment to a person designated by the Seller 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 Seller shall after giving effect
thereto have an interest in the Pool Balance of not less than 2% of the Pool
Balance, (b) the Seller shall have delivered to the Trustee, the Rating Agency
and any Enhancement Provider a Tax Opinion (as defined below) with respect to
such exchange and (c) the Seller 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 or any
other outstanding Series or class of certificates. 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 investor certificates
(including the Certificates) which are transferable and have the characteristics
described below and (ii) the Seller's Certificate (and any Supplemental
Certificate) which will evidence the Seller'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 Seller may cause the Trustee to issue one or more
new Series. Under the Pooling and Servicing Agreement, the Seller may specify,
among other things, with respect to any 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
amortization period or controlled amortization period, if any, (e) the method
for allocating principal and interest to certificateholders, (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
Seller'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
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<PAGE> 35
mandatory redemption by the Seller 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 Seller may offer any Series under 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. 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 Seller 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 early amortization periods
or accumulation 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 Seller may
specify different certificate rates and monthly servicing fees with respect to
each Series (or a particular class within a Series). In addition, the Seller 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 Seller.
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 Seller 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 Seller and the 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, for United States federal income
and Michigan income and single business tax purposes, (x) such issuance will not
adversely affect the characterization of the certificates (including the
Certificates) of any outstanding Series or class as debt, (y) such issuance will
not cause a taxable event to any certificateholders (including the
Certificateholders) (an opinion of counsel to the effect referred to in clauses
(x) and (y) with respect to any action is referred to herein as a "Tax Opinion")
and (z) such new Series will be characterized as debt 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 or any
other outstanding Series or class of certificates. Such issuance is also subject
to the conditions that (a) the Seller shall have represented and warranted that
such issuance shall not, in the reasonable belief of the Seller, cause an Early
Amortization Event to occur and (b) after giving effect to such issuance, the
Seller'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 COLLATERAL SECURITY
On the date on which the Series 1992-1 Certificates were originally issued
(the "Initial Closing Date"), FCAR sold and assigned to the Trust all of its
right, title and interest in and to the Receivables and the related Collateral
Security as of the Initial Cut-Off Date, all receivables thereafter created in
the Accounts and its interests in the related Collateral Security and the
Receivables Purchase Agreement, and the proceeds of all of the foregoing. See
"Ford Credit Auto Receivables Corporation and the Trust".
In connection with the sale of the Receivables to the Seller by Ford Credit
and the transfer of the Receivables by the Seller to the Trust, Ford Credit
indicated in their computer records that the Receivables in the Accounts and the
related Collateral Security had been conveyed to the Trust. In addition, the
Seller 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 balance of the
Receivables in such Account and (iii) the outstanding balance of Principal
Receivables in such
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Account. Ford Credit has and will retain and has not 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 have not
and will not be segregated from those relating to other accounts of Ford Credit,
and the physical documentation relating to the Receivables has not and will not
be stamped or marked to reflect the transfer of the Receivables to the Trust.
The Seller filed one or more financing statements in accordance with applicable
state law to perfect the Trust's interest in the Receivables, the Collateral
Security, the Receivables Purchase Agreement and the proceeds thereof. See
"Special Considerations -- Certain Legal Aspects" and "Certain Legal Aspects of
the Receivables". The Trust's interest in the Non-Vehicle Collateral Security
will, in the sole discretion of Ford Credit, be subordinate to the interest of
Ford Credit in such Non-Vehicle Collateral Security. See "The Dealer Floorplan
Financing Business -- Intercreditor Agreement in respect of Security Interest in
Vehicles and Non-Vehicle Collateral Security".
As described below under "Addition of Accounts", the Seller 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 Seller will
follow the procedures set forth in the preceding paragraph, except the list will
show information for such Additional Accounts as of the date such Additional
Accounts are identified and selected (the "Additional Cut-Off Date").
REPRESENTATIONS AND WARRANTIES
The Seller has made representations and warranties to the Trust relating to
the Accounts, the Receivables and the Collateral Security to the effect, among
other things, that (a) as of the Series Cut-Off Date, the Closing Date and the
date of issuance of any other Series (a "Series Issuance 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 (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
Collateral Security conveyed to the Trust on the Closing Date and on each
Transfer Date or, in the case of Additional Accounts, on the Addition Date, and
all of the Seller'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 Seller in connection with the conveyance of each such Receivable or
Collateral Security have been duly obtained. If the Seller 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 Seller or the
Servicer or receipt of written notice of such breach by the Seller or the
Servicer, and such breach has a materially adverse effect on the
Certificateholders' Interest or the interests of the holders of other
outstanding Series in any Receivable or Account, the Certificateholders'
Interest and such other 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 Seller 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 Seller on or before the end
of the Collection Period in which such reassignment obligation arises by the
Seller directing the Servicer to deduct the principal balance of such Receivable
from the Pool Balance. In the event that such deduction would cause the Seller'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 Seller will be obligated
to make a
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deposit into the Collection Account in immediately available funds in an amount
equal to the amount by which the Seller'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 Seller'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 Seller 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 Seller has also made representations and warranties to the Trust to the
effect, among other things, that as of the Closing Date and each Series Issuance
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 Seller 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 Seller in the Receivables and the Collateral 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 the
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 or the interests of the holders of all other
outstanding Series in the Receivables, either the Trustee or the holders of
certificates of all outstanding Series (including the Certificates) evidencing
not less than 51% of the aggregate unpaid principal amount of all outstanding
Series, by written notice to the Seller and the Servicer (and to the Trustee and
the issuer or provider of any Enhancement (an "Enhancement Provider") if given
by certificateholders), may direct the Seller to accept the reassignment of the
Certificateholders' Interest and the certificateholders' interests of other
Series within 60 days of such notice, or within such longer period specified in
such notice. The Seller will be obligated to accept the reassignment of the
Certificateholders' Interest and such other 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 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 at the applicable Certificate Rate
(together with interest on overdue interest at the Certificate Rate plus 2%, 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 and such other certificateholders'
interests. The portion of such funds allocable to the Certificateholders'
Interest will be distributed upon presentation and surrender of the
Certificates. If the Trustee or the certificateholders give a notice as provided
above, the obligation of the Seller 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 uncollectible.
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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 Seller,
(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 Seller
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 Seller to the Trust of
all the Seller'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
Seller 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
Seller 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 and (o) which was transferred to the Trust with all applicable
governmental authorization.
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 Seller 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 Servicer for the purpose
of establishing the compliance by the Servicer with its representations or
warranties, the observation of its obligations under the Pooling and Servicing
Agreement or for any other purpose. The 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 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 is adjusted by the
portion of the aggregate principal amount of Receivables included therein
allocable to the Certificateholders' Interest. In addition, the Incremental
Subordinated Amount shall be adjusted to reflect, on each Distribution Date, the
aggregate principal amount of Receivables in the Trust on such Distribution Date
which are Dealer Overconcentrations (the "Overconcentration Amount") allocable
to the Certificateholders' Interest and the portion of the aggregate amount of
Installment Balances in respect of which Ford Credit 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 Distribution Date means, with
respect to any Account, the excess of (x) the aggregate principal amount of
Receivables in such Account on the last day of the Collection Period immediately
preceding such Distribution Date over (y) 2% of the Pool Balance on the last day
of such immediately preceding Collection Period. See "Allocation of Collections;
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Deposits in Collection Account; Limited Subordination of Seller's Interest --
Available Subordinated Amount".
ADDITION OF ACCOUNTS
Subject to the conditions described below, the Seller has the right to
designate from time to time additional accounts to be included as Accounts (the
"Additional Accounts"). In addition, the Seller 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 Participation Amount or
(ii) the portion of the Seller's Interest represented by the Seller'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 Seller,
Ford Credit or Ford, Ford Credit under the Receivables Purchase Agreement will
be required to sell to the Seller, and the Seller 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 Seller shall represent and warrant
that the addition of such Additional Accounts shall not, in the reasonable
belief of the Seller, cause an Early Amortization Event to occur; (iii) the
Seller shall not select such Additional Accounts in a manner that it believes is
adverse to the interests of the certificateholders or any Enhancement Provider;
(iv) the Seller shall 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 or any other outstanding Series or
class of certificates.
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 of such Series at its Series Issuance Date minus the amount of any
deposits into its excess funding account in connection with a reduction in
the Pool Balance plus the amount of any withdrawals from its 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, with respect to Series
1994-1, [ ]%; provided, however, that the Seller may, upon ten days'
prior notice to the Trustee, the Rating Agencies and any Enhancement
Provider reduce the Required Participation Percentage to not less than
100%, so long as each Rating Agency shall have notified the Seller or the
Servicer that any such reduction will not result in a reduction or
withdrawal of the rating of the Certificates or any other outstanding
Series or class of certificates rated by it at the request of the Seller.
REMOVAL OF ACCOUNTS
The Seller 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 Seller (or the
Servicer on its behalf) shall, among other things, (a) on or before the fifth
business day prior to the date of removal (the "Removal Date"), furnish to the
Trustee, any Enhancement Provider and the Rating Agencies a written notice (the
"Removal Notice") specifying the Removal Date; (b) on or before the fifth
business day after the Removal Date, the Seller shall have furnished to the
Trustee a computer file, microfiche list or other list of the
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Accounts (the "Removed Accounts") that were removed on the Removal 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 Date will not, in
the reasonable belief of the Seller, 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 Seller to be
adverse to the interest of the certificateholders were utilized in selecting the
Removed Accounts; (e) represent and warrant that the Rating Agencies shall not
have notified the Seller or the Servicer that such removal will result in a
reduction or withdrawal of the rating of the Certificates or any other
outstanding Series or class of certificates; and (f) on or before the related
Removal 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 shall execute and
deliver to the Seller a written reassignment and shall be deemed to sell,
transfer, assign, set over and otherwise convey to the Seller 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 Removed Accounts, all
amounts received or to be received with respect thereto and all proceeds
thereof.
COLLECTION ACCOUNT
The 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 one of the states 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 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.
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 during the preceding Interest
Period at the Certificate Rate on the outstanding principal balance of the
Certificates as of the preceding Distribution Date. In exchange for such
payments, the Trust will pay to the Swap Counterparty, as of each
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Distribution Date, interest accrued during the preceding Interest Period at a
per annum rate equal to the lesser of (x) LIBOR and (y) the Prime Rate less
1.5%, on the outstanding principal balance of the Certificates on the preceding
Distribution Date, which rates will be reset on various dates within each month.
Net Trust Swap Receipts (money payable to the Trust by the Swap Counterparty)
will be paid to the Collection Account on each Distribution Date and Net Trust
Swap Payments (money payable by the Trust to the Swap Counterparty) will be paid
out of Certificateholder Interest Collections, Investment Proceeds, the Reserve
Fund and Available Seller's Collections (in the case of Available Seller's
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 Seller to the extent of
the Swap Available Subordinated Amount. See "Allocation of Collections; Deposits
in Collection Account; Limited Subordination of Seller's Interest -- Swap
Available Subordinated Amount".
"LIBOR" shall mean, with respect to any Interest Period, 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, 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,
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 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, LIBOR will be the arithmetic
mean (rounded upwards as aforesaid) of such quotations. If fewer than two
quotations are provided, 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, LIBOR in effect
for the applicable period will be LIBOR in effect for the previous period.
"Interest Period" shall mean, with respect to any Semi-Annual Payment
Date or Distribution Date, as the case may be, the period from and
including the Semi-Annual Payment Date or Distribution Date, as applicable,
immediately preceding such Semi-Annual Payment Date or Distribution Date
(or, in the case of the first Semi-Annual Payment Date or Distribution
Date, from and including the Closing Date) to but excluding such
Semi-Annual Payment Date or Distribution Date.
"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.
"Prime Rate" shall mean, with respect to any Interest Period, the
median of the rates of interest publicly announced effective on the second
Thursday next preceding the first day of such Interest Period by each of
Chase Manhattan Bank, Chemical Bank, Citibank, N.A., Morgan Guaranty Trust
Company of New York, and Bank of America, San Francisco, as its U.S. Dollar
"prime rate" or "base rate" for such date.
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Pursuant to the terms of the Interest Rate Swap, the
will receive an initial payment from the on the Closing Date. The amount of
such payment will be equal to $ .
EXCESS FUNDING ACCOUNT
During the Revolving Period, funds (to the extent available therefor as
described herein) will be deposited in the Excess Funding Account on a
Distribution Date in an amount equal to the excess, if any, of (i) the Invested
Amount immediately prior to such Distribution Date over (ii) the
Certificateholders' Interest in the principal balances of the Receivables at the
end of the preceding Collection Period. Funds on deposit in the Excess Funding
Account will be withdrawn and paid to the Seller or allocated to one or more
Series which are in amortization, early amortization or accumulation periods to
the extent of any increases in the Certificateholders' Interest in 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 Account
may be made on a daily basis. The allocation of additional Receivables to
increase the Invested Amount and the invested amounts of such other Series will
be pro rata based on the proportion that the amount on deposit in the Excess
Funding Account bears to the aggregate amounts in all of the Trust's excess
funding accounts (including the Excess Funding Account) and similar arrangements
for accommodating the fluctuation in the principal balances of the Receivables.
The deposit of amounts into the Excess Funding Account and the excess funding
accounts and such similar arrangements for other Series will be based on the
proportion that the Invested Amount bears to the aggregate of the invested
amounts (including the Invested Amount) for all Series.
Any funds on deposit in the Excess Funding Account at the beginning of the
Accumulation Period 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.
Funds on deposit in the Excess Funding Account will be invested by the
Trustee at the direction of the Servicer in LIBOR based 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 the Swap Counterparty. Such
investments are required to mature by the next Distribution Date. On each
Distribution Date, all net investment income earned on amounts in the Excess
Funding Account since the preceding Distribution Date will be withdrawn from the
Excess Funding Account and applied as described herein.
ALLOCATION PERCENTAGES
Allocation to the Certificateholders' Interest. The Servicer will allocate
amounts to the Certificateholders' Interest for each Collection Period as
follows:
(i) Interest Collections and the Defaulted Amount will be allocated to
Certificateholders based on the Floating Allocation Percentage;
(ii) during the Revolving Period, Principal Collections will be
allocated to Certificateholders based on the Floating Allocation Percentage
(subject to the following paragraph);
(iii) during the Accumulation Period and any Early Amortization
Period, Principal Collections will be allocated to Certificateholders based
on the Principal Allocation Percentage (subject to the following
paragraph); and
(iv) Miscellaneous Payments will at all times be allocated to
Certificateholders on the basis of the Series 1994-1 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 (including the
Floating Allocation Percentage, if applicable) for each Series in its revolving
period and (ii) the principal allocation percentage (including the Principal
Allocation Percentage, if applicable) 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
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Certificateholders as described above will be allocated to the Seller and the
other outstanding Series of certificates, if any.
"Aggregate Available Subordinated Amount" means the sum of the
Available Subordinated Amount and the Swap Available Subordinated Amount.
"Floating Allocation Percentage" for any Collection Period means the
percentage equivalent (which 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 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 Principal Amount of the Certificates and the denominator of which
is the Pool Balance on the Series Cut-Off Date.
"Initial Invested Amount" means the Initial Principal Amount of the
Certificates plus (x) the amount of any withdrawals from the Excess Funding
Account in connection with an increase in Principal Receivables in the
Trust since the Closing Date, minus (y) the amount of any additions to the
Excess Funding Account in connection with a reduction in the Principal
Receivables in the Trust since the Closing Date.
"Invested Amount" means for any date an amount equal to the Initial
Invested Amount of the Certificates, minus 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 Certificateholders or deposited to the
Principal Funding Account prior to such date from and after the Closing
Date minus the excess, if any, of the aggregate amount of Investor
Charge-Offs for all Distribution Dates preceding such date, over the
aggregate amount of any reimbursements of Investor Charge-Offs for all
Distribution Dates preceding such dates.
"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".
"Principal Allocation Percentage" for any Collection Period means the
percentage equivalent (which 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.
"Series 1994-1 Allocation Percentage" means, for any Collection
Period, the percentage equivalent of a fraction, the numerator of which is
the 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.
"Trust Available Subordinated Amount" means the sum of the Aggregate
Available Subordinated Amount and the aggregate available subordinated
amounts for all other outstanding Series.
"Trust Invested Amount" means, with respect to any Collection Period,
the sum of the Invested Amount and the invested amounts for all other
outstanding Series.
The Floating Allocation Percentage and the Principal Allocation Percentage will
be adjusted for any Collection Period in 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, for any Collection Period with respect to the
Accumulation Period or any Early Amortization Period, will first be allocated to
make required payments of principal to the Principal Funding Account during the
Accumulation Period and to the Certificateholders during the Early Amortization
Period. See "Distributions from the Collection Account; Reserve Fund --
Principal Collections" and "Distributions". The Servicer will determine the
amount of Available Certificateholder Principal Collections for any Collection
Period remaining after such
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required payments and the amount of any similar excess for any other Series
("Excess Principal Collections"). The Servicer will allocate Excess Principal
Collections to cover any principal distributions to certificateholders for any
Series which are either scheduled or permitted and which have not been covered
out of Principal Collections and certain other amounts allocated to such Series
("Principal Shortfalls"). Excess Principal Collections will generally 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 Seller
if the Seller's Participation Amount (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 the Distribution Date immediately following such Determination
Date). Any amount not allocated to the Seller because the Seller's Participation
Amount does not exceed the Trust Available Subordinated Amount will be held
unallocated ("Unallocated Principal Collections") until the Seller's
Participation Amount exceeds the Trust Available Subordinated Amount, at which
time such amount will be allocated to the Seller, 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 SELLER'S INTEREST
The 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
Seller) in each Collection Period into the Collection Account. Notwithstanding
the foregoing requirement for daily deposits, for so long as (i) Ford Credit
remains the Servicer under the Pooling and Servicing Agreement, (ii) no Servicer
Default has occurred and is continuing and (iii) (x) 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, (y) Ford
Credit arranges for and maintains a letter of credit or other form of
Enhancement in respect of the 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 (z) 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 Seller 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 or any other outstanding Series or class of
certificates. In addition, during any Collection Period the 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, 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 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 Servicer will distribute directly to the Seller an amount equal to (a) the
Excess Seller's Percentage for the related Collection Period of Interest
Collections for such date and (b) the Excess Seller's Percentage for the related
Collection Period of Principal Collections for such date, if the Seller's
Participation Amount (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 the Distribution Date immediately following such Determination Date). In
addition, during the Revolving Period, subject to certain limitations, the
Servicer will distribute
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directly to the Seller on each such date of deposit an amount equal to the
Available Seller's Principal Collections for such date, if the Seller's
Participation Amount (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 the Distribution Date immediately following such Determination Date).
"Available Seller's Collections" for any date means the sum of (a) the
Available Seller's Interest Collections for such date and (b) the Available
Seller's Principal Collections for such date; provided, however, that the
Available Seller'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 Seller's Interest Collections" for any date means an amount
equal to the result obtained by multiplying (a) the excess of (i) the
Seller's Percentage for the related Collection Period over (ii) the Excess
Seller's Percentage for such Collection Period by (b) Interest Collections
for such date.
"Available Seller's Principal Collections" for any date means an
amount equal to the product of (a) the excess of (i) the Seller's
Percentage for the related Collection Period over (ii) the Excess Seller's
Percentage for such Collection Period and (b) Principal Collections for
such date.
"Excess Seller'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 aggregate of the aggregate available subordinated amounts for
each outstanding Series 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
amortization, accumulation 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.
"Seller'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.
"Seller's Percentage" means 100% minus (a) when used with respect to
Interest Collections, the aggregate of the floating allocation percentages
for each outstanding Series (including the Certificates), and (b) when used
with respect to Principal Collections, the sum of (i) the aggregate of the
floating allocation percentages for each outstanding Series (including the
Certificates, if applicable) in its revolving period and (ii) the aggregate
of the principal allocation percentages for each outstanding Series
(including the Certificates, if applicable) in its amortization,
accumulation or early amortization period, but in each case shall not be
less than 0%.
Deficiency Amount. On each Determination Date, the Servicer will determine
for the Certificates the amount (the "Deficiency Amount"), if any, by which (a)
the sum of (i) Monthly Interest for the following Distribution Date, (ii)
Monthly Interest accrued but not paid with respect to prior Distribution Dates
(and interest thereon), (iii) the Monthly Servicing Fee for such Distribution
Date, (iv) the Investor Default Amount for such Distribution Date, (v) the
amount of any Adjustment Payment allocated to the Certificates for such
Distribution Date that has not been deposited in the Collection Account as
required under the Pooling and Servicing Agreement and (vi) Net Trust Swap
Payments, exceeds (b) the sum of (i) Certificateholder Interest Collections,
Investment Proceeds and Net Trust Swap Receipts for such Distribution Date and
(ii) the amount of funds in the 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
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"Interest Collections". The lesser of the Deficiency Amount and the Available
Subordinated Amount is the "Draw Amount".
"Monthly Interest" for any Distribution Date shall mean an amount
equal to the product of (a) the Certificate Rate and (b) the outstanding
principal balance of the Certificates as of the close of business on the
preceding Distribution Date after giving effect to all repayments of
principal made to the Certificateholders on such preceding Distribution
Date, if any; provided, however, that, with respect to the first
Distribution Date, Monthly Interest shall be equal to $[ ].
Required Subordinated Amount. The "Required Subordinated Amount" shall
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. On the Closing Date such amount is $[ ].
Available Subordinated Amount. The Available Subordinated Amount for a
Determination Date is equal to (i) the lesser of (a) 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 to cover any portion of the Investor Default Amount, plus
the amount of Excess Servicing available to be paid to the Seller as described
under "Distributions from the Collection Account; Reserve Fund -- Excess
Servicing", 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 (b) the
sum of (1) the product of the Subordinated Percentage and the Invested Amount
plus (2) 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 (iii) 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 Seller or allocated to
one or more Series. The Available Subordinated Amount for the first
Determination Date is equal to the Required Subordinated Amount. The
"Incremental Subordinated Amount" on any Determination Date will equal 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 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 by (b) the excess, if
any, of (x) the sum of the Overconcentration Amount, the Installment Balance
Amount and the aggregate amount of Ineligible Receivables on such Determination
Date over (y) 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 Seller or Ford Credit 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 Seller 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 (i)
$ or (ii) % of the Invested Amount on such date. The Seller 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 Seller 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 Seller to the extent of the Swap
Available Subordinated Amount. The Swap Available Subordinated Amount
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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.
DISTRIBUTIONS FROM THE COLLECTION ACCOUNT; RESERVE FUND
Interest Collections. On each Distribution Date, the Trustee will apply
Certificateholder Interest Collections, Investment Proceeds and Net Trust Swap
Receipts, if any, in respect of the related Collection Period to make the
following distributions in the following order of priority:
(i) an amount equal to Monthly Interest for such Distribution Date,
plus the amount of any Monthly Interest previously due but not distributed
on a prior Distribution Date (plus, but only to the extent permitted under
applicable law, interest at the applicable Certificate Rate plus 2% Monthly
Interest previously due but not distributed), shall be deposited to the
Interest Funding Account; and Net Trust Swap Payments, if any, will be paid
to the Swap Counterparty;
(ii) an amount equal to the Monthly Servicing Fee for such
Distribution Date shall be distributed to the Servicer (unless such amount
has been netted against deposits to the Collection Account as described
above or waived as described below);
(iii) an amount equal to the Reserve Fund Deposit Amount, if any, for
such Distribution Date shall be deposited in the Reserve Fund;
(iv) 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;
(v) an amount equal to any unpaid Asset Composition Premium for such
Distribution Date and any prior Distribution Date shall be distributed to
the Certificateholders; and
(vi) the balance shall constitute Excess Servicing.
If such Certificateholder Interest Collections, Investment Proceeds and Net
Trust Swap Receipts, if any, are not sufficient to make the entire distributions
required by clauses (i) and (ii) and (iv), the Trustee shall withdraw funds from
the 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, the application of funds in the
Reserve Fund to cover the amount in clause (iv) will be reduced or eliminated to
the extent necessary to maintain the amount in the Reserve Fund at least equal
to $1,000,000.
If there is a Draw Amount for such Distribution Date, the Trustee shall
apply the amount of Available Seller'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 (i), (ii)
and (iv) above that have not been made through the application of funds from the
Reserve Fund as described in the preceding paragraph. If the sum of the draw
amounts (including the Draw Amount) for all Series in respect of a Distribution
Date exceeds such Available Seller's Collections for the related Collection
Period, then such Available Seller's Collections will be allocated among those
Series with draw amounts pro rata on the basis of such draw amounts. The
Available Subordinated Amount will be reduced by the amount of Available
Seller's Collections so applied in respect of the Certificates. If the Draw
Amount exceeds such Available Seller's Collections, the Available Subordinated
Amount will be reduced by the amount of such excess, but not by more than the
sum of the Investor Default Amount for such Distribution Date and the amount of
any Adjustment Payments allocable to the Certificates and not paid by the
Seller.
"Certificateholder Interest Collections" for any Distribution Date
means the portion of Interest Collections for the related Collection Period
allocated to the Certificateholders' Interest as described under
"Allocation Percentages -- Allocation to the Certificateholders' Interest".
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"Investment Proceeds" for any 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 1994-1 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 the Excess Funding Account, the
Principal Funding Account and the Interest Funding Account since the
preceding Distribution Date.
"Excess Servicing" for any Distribution Date means the amount
described in clause (vi) above.
Reserve Fund. An Eligible Deposit Account will be established and
maintained in the name of the Trustee for the benefit of the Certificateholders
(the "Reserve Fund"). No deposit will be made into the Reserve Fund prior to the
first Distribution Date. The "Reserve Fund Required Amount" means an amount
which upon any Distribution Date will equal % of the outstanding principal
balance of the Certificates 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 the next following Distribution Date, the
Trustee shall deposit any remaining Available Seller'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" is the amount, if any, by which the 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 Servicer will credit to the Collection
Account 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 and the Termination Date, any
funds remaining on deposit in the Reserve Fund will be paid to the Seller.
If, for any Distribution Date with respect to an Early Amortization Period,
after giving effect to the allocations, distributions and deposits described in
the preceding paragraph, the amount in the Reserve Fund is less than the Excess
Reserve Fund Required Amount for such Distribution Date, the Trustee shall
deposit the remaining Available Seller'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 Distribution Date means an amount equal to the greater of (a) %
of the Initial Principal Amount of the 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 Determination Date) and (y) an amount equal to (A)
the excess of the Required Participation Percentage over 100%, multiplied by (B)
the outstanding principal balance of the Certificates on such Determination Date
(after giving effect to any changes therein on such Determination Date) over
(ii) the Seller's Interest on such Determination Date (after giving effect to
changes therein on such Determination Date); provided that the Excess Reserve
Fund Required Amount shall not exceed such Available Subordinated Amount.
In connection with the allocations to reserve funds referred to in the two
preceding paragraphs, if the remaining Available Seller's Collections are not
sufficient to fund the reserve funds for all outstanding Series (including the
Certificates), then such remaining Available Seller's Collections will be
allocated to such reserve funds (including the Reserve Fund, if applicable) pro
rata on the basis of the respective amounts required to be deposited in such
reserve funds.
Excess Servicing. On each Distribution Date, the Servicer will allocate
Excess Servicing 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
which have not been previously reimbursed (after giving effect to the
allocation on such Distribution Date of Series 1994-1 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;
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(b) an amount equal to the aggregate outstanding amounts of the
Monthly Servicing Fee which have been previously waived as described under
"Servicing Compensation and Payment of Expenses" will be distributed to the
Servicer; and
(c) the balance, if any, shall be distributed to the Seller and shall
increase the Available Subordinated Amount as described in the definition
thereof.
Principal Collections. On each Distribution Date, the Servicer will
allocate Available Certificateholder Principal Collections as follows:
(a) for each Distribution Date with respect to the Revolving Period,
all Available Certificateholder Principal Collections will be allocated,
first, to make a deposit to the Excess Funding Account if the sum of (i)
the Certificateholders' Interest in Principal Receivables and (ii) the
amount on deposit in the Excess Funding Account prior to the allocation on
such Distribution Date is less than the outstanding principal balance of
the Certificates 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
or any Early Amortization Period:
(i) an amount equal to Monthly Principal for such Distribution Date
will be deposited to the Principal Funding Account; and
(ii) the balance, if any, will be allocated to Excess Principal
Collections.
In the event that the aggregate invested Amount is greater than zero on the
Termination Date, any funds remaining in the 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 Termination Date.
"Available Certificateholder Principal Collections" for any
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 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 Seller's Collections allocated to cover
the Investor Default Amount or reimburse Investor Charge-Offs, (c) the
Series 1994-1 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 Series 1994-1.
"Monthly Principal" with respect to any Distribution Date relating to
the Accumulation Period or any Early Amortization Period will equal
Available Certificateholder Principal Collections for such Distribution
Date; provided, however, that for each Distribution Date with respect to
the Accumulation Period, Monthly Principal may not exceed the Controlled
Distribution Amount for such Distribution Date; and provided, further, that
Monthly Principal will not exceed the Invested Amount.
"Controlled Distribution Amount" for a 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), before giving effect to any
withdrawals from or deposits to such account on such Distribution Date.
"Controlled Amortization Amount" means an amount equal to the Invested
Amount as of [ ], 199 (after giving effect to any changes therein on
such date) divided by the number of months comprising the Accumulation
Period Length.
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INTEREST FUNDING ACCOUNT
The 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 (the "Interest Funding Account"). On each Distribution Date
Monthly Interest will be deposited in the 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 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, 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 Account on any Distribution
Date (after giving effect to distributions to be made on such Distribution Date)
(the "Interest Funding Account Balance") 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 Servicer in Eligible Investments. On each Distribution Date,
the interest and other investment income on the Interest Funding Account Balance
will be paid to the Collection Account and distributed on such Distribution
Date.
PRINCIPAL FUNDING ACCOUNT
The 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 (the "Principal Funding Account"). On each Distribution Date
with respect to the Accumulation Period, Monthly Principal will be deposited in
the Principal Funding Account as provided above under "Distributions from the
Collection Account; Reserve Fund"; provided that if an Early Amortization Event
occurs during the Accumulation Period (unless, in limited circumstances with
respect to the required addition of Accounts, such Early Amortization Event
shall have been cured), the Principal Funding Account Balance (as defined below)
shall be paid to the Certificateholders on the first Special Payment Date.
All amounts on deposit in the Principal Funding Account on any Distribution
Date (after giving effect to distributions to be made on such Distribution Date)
(the "Principal Funding Account Balance") 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 Servicer in LIBOR based 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 the Swap Counterparty. On each Distribution
Date, the interest and other investment income on the Principal Funding Account
Balance will be applied as provided above under "Distributions from the
Collection Account; Reserve Fund".
DISTRIBUTIONS
Payments to Certificateholders will be made from the Interest Funding
Account, the Principal Funding Account and the Excess Funding Account. The
Servicer shall instruct the Trustee to apply the funds on deposit in the
Interest Funding Account, the Principal Funding Account and the Excess Funding
Account and shall instruct the Trustee or the Paying Agent to make, without
duplication, the following distributions:
(a) On each Semi-Annual Payment Date, on each Special Payment Date and
on each Distribution Date following an Asset Composition Event, all amounts
on deposit in the Interest Funding Account 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, the Principal Funding Account Balance, the amount on deposit in the
Excess Funding Account and any amounts in the Interest Funding Account
after the payment of accrued interest on the Certificates shall be
distributed to
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Certificateholders 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, 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,
first, from amounts on deposit in the Interest Funding Account and, second,
from amounts on deposit in the Excess Funding Account.
On each Distribution Date following an Asset Composition Event, the
Servicer shall instruct the Trustee to distribute to the Certificateholders the
Asset Composition Premium to the extent funds are available therefor after
making all required distributions and deposits with respect to the Certificates
as provided above under "Distributions from the Collection Account; Reserve
Fund".
DEFAULTED RECEIVABLES AND RECOVERIES
"Defaulted Receivables" on any Determination Date are (i) all Receivables
which were charged off as uncollectible in respect of the immediately preceding
Collection Period and (ii) 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 (a) the principal amount of
Receivables that became Defaulted Receivables during the preceding Collection
Period less (b) the full amount of any Defaulted Receivables subject to
reassignment to the Seller or purchase by the Servicer for such Collection
Period unless certain events of bankruptcy, insolvency, or receivership have
occurred with respect to either of the Seller or the Servicer, in which event
the Defaulted Amount will not be reduced for those Defaulted Receivables.
Receivables will be charged off as uncollectible in accordance with the
Servicer's customary and usual policies and procedures for servicing its own
comparable revolving dealer wholesale loan accounts. A portion of the Defaulted
Amount equal to the product of (x) the Defaulted Amount for such Collection
Period and (y) the Floating Allocation Percentage for such Collection Period
will be allocated to the Certificateholders. The portion of the Defaulted Amount
allocated to the Certificateholders is referred to as the "Investor Default
Amount".
If the 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 Seller's Interest will be reduced by the
amount of the adjustment or charge-off. After any such reduction in the amount
of the Seller'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 Seller's Interest would reduce the Seller'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 Seller 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
If the Available Subordinated Amount is reduced to zero, and on any
Distribution Date the Deficiency Amount is greater than zero, the Invested
Amount will be reduced by the Deficiency Amount, but not by more than the
Investor Default Amount for such Distribution Date (an "Investor Charge-Off").
Any reduction in the Invested Amount will have the effect of slowing or reducing
the return of principal to the Certificateholders. If the Invested Amount has
been reduced by any Investor Charge-Offs, 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 1994-1 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.
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OPTIONAL REPURCHASE
On any Distribution Date occurring after the Invested Amount of the
Certificates is reduced to 10% of the initial outstanding principal amount of
the Certificates or less, the Seller will have the option, subject to certain
conditions, to repurchase the Certificateholders' Interest. The purchase price
will be equal to the Reassignment Amount. The purchase price will be deposited
in the Collection Account in immediately available funds on the Distribution
Date on which the Seller 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 the Certificates. In the event that the Seller fails for any
reason to deposit such purchase price, payments will continue to be made to the
Certificateholders 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, Principal Collections
allocable to the Certificateholders' Interest will no longer be paid to FCAR or
allocated to any other Series but instead will be distributed to
Certificateholders monthly on each Distribution Date, except as described below,
and the Controlled Distribution Amount will no longer apply to distributions of
principal on the Certificates. An "Early Amortization Event" refers to any of
the following events:
1. failure on the part of FCAR, the 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;
2. any representation or warranty made by Ford Credit in the
Receivables Purchase Agreement or by FCAR in the Pooling and Servicing
Agreement or any information required to be given by FCAR 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 are materially and adversely affected; provided,
however, that an Early Amortization Event shall not be deemed to occur
thereunder if FCAR 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;
3. the occurrence of certain events of bankruptcy, insolvency or
receivership relating to any of Ford Credit, FCAR or Ford;
4. the Trust or FCAR becomes an investment company within the meaning
of the Investment Company Act of 1940, as amended;
5. a failure by FCAR 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;
6. 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;
7. any Servicer Default with respect to the Certificates occurs;
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8. 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;
9. on any Determination Date, the average of the Monthly Payment Rates
for the three 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 %;
10. the termination of the Interest Rate Swap in accordance with its
terms; and
11. the failure to pay the outstanding principal amount of the
Certificates by the Expected Final Payment Date.
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 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 may terminate and
the Revolving Period recommence. If an Early Amortization Period results from
the failure by FCAR to convey Receivables in Additional Accounts to the Trust as
described in paragraph 5 above during the Revolving Period and no other Early
Amortization Event has occurred, the Early Amortization Period resulting from
such failure will terminate and the Revolving Period will recommence (unless the
scheduled termination date of the Revolving Period has occurred) as of the end
of the first Collection Period during which the Seller would no longer be
required to convey Receivables to the Trust. The Seller may no longer be
required to convey Receivables as described above as a result of a reduction in
the Invested Amount occurring due to principal payments made on the Certificates
and the certificates of other 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 and
certificates of each other outstanding Series representing more than 50% of the
aggregate outstanding principal amount of the certificates of each such Series
(or, with respect to 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 and the proceeds of any collections on the Receivables in the
Collection Account allocable to the Certificateholders' Interest are not
sufficient to pay the aggregate unpaid principal balance of the Certificates in
full plus accrued and unpaid interest thereon, Certificateholders 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 is sufficient
to pay the aggregate unpaid principal balance of the Certificates in full plus
accrued and unpaid interest thereon.
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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 Seller elects to terminate the Trust at such time, and (b) December
31, 2012. 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 will be due and payable no later than the [ ],
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 110% 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 Series 1994-1 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.
INDEMNIFICATION
The Pooling and Servicing Agreement provides that the 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 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 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 Seller, the Servicer nor
any of their directors, 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 Seller, the Servicer nor
any of their directors, 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 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 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 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 Servicer's reasonable judgment, no Early Amortization
Event will occur as a result of the change and (ii) the change is
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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 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 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.
SERVICER COVENANTS
In the Pooling and Servicing Agreement the 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 Seller or
the Servicer discovers, or receives written notice, that any covenant of the
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 all certificateholders in any Receivable or Account, Ford Credit,
as Servicer, will purchase such Receivable or all Receivables in such Account,
as applicable. If Ford Credit is the Servicer, such purchase will be made on the
Determination Date following the expiration of the 30 day cure period and the
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 Servicer constitutes the sole remedy
available to the certificateholders if such covenant or warranty of the Servicer
is not satisfied and the Trust's interest in any such purchased Receivables
shall be automatically assigned to the Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The 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 with respect to any Distribution Date (the
"Monthly Servicing Fee") generally will 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 second preceding Collection Period. The remainder of the Servicing Fee shall
be paid by the Seller and the certificateholders of other Series. The Monthly
Servicing Fee shall be payable to the Servicer solely to the extent amounts are
available for distribution therefor in accordance with the terms of the Pooling
and Servicing Agreement.
The Servicer will be permitted to waive its right to receive the Servicing
Fee on any Distribution Date, so long as it believes that sufficient Interest
Collections will be available on a future Distribution Date to pay the
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Monthly Servicing Fee relating to such waived Servicing Fee, in which case the
Servicing Fee and the Monthly Servicing Fee for such Distribution Date shall be
deemed to be zero.
The 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 SERVICER
The 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 Servicer has assumed the
Servicer's responsibilities and obligations under the Pooling and Servicing
Agreement.
Any person into which, in accordance with the Pooling and Servicing
Agreement, the Servicer may be merged or consolidated or any person resulting
from any merger or consolidation to which the Servicer is a party, or any person
succeeding to the business of the Servicer, will be the successor to the
Servicer under the Pooling and Servicing Agreement.
SERVICER DEFAULT
In the event of any Servicer Default, the Trustee, by written notice to the
Servicer, may terminate all of the rights and obligations of the Servicer, as
servicer, under the Pooling and Servicing Agreement and in and to the
Receivables and the proceeds thereof and appoint a new Servicer (a "Service
Transfer") The rights and interest of the Seller under the Pooling and Servicing
Agreement in the Seller's Interest will not be affected by any Service Transfer.
The Trustee shall as promptly as possible appoint a successor Servicer and if no
successor Servicer has been appointed by the Trustee and has accepted such
appointment by the time the Servicer ceases to act as Servicer, all rights,
authority, power and obligations of the Servicer under the Pooling and Servicing
Agreement shall pass to and be vested in the Trustee. Prior to any Service
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 Servicer for servicing compensation not in
excess of the Servicing Fee plus certain excess amounts payable to the Seller.
A "Servicer Default" refers to any of the following events:
1. failure by the 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 Servicer is required to do so under the Pooling
and Servicing Agreement, which is not cured within a five business day
grace period;
2. failure on the part of the Servicer duly to observe or perform any
other covenants or agreements of the Servicer in the Pooling and Servicing
Agreement (exclusive of breaches of covenants in respect of which the
Servicer repurchases the related Receivables, as described under "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 Servicer delegates its duties under the Pooling and
Servicing Agreement, except as specifically permitted thereunder;
3. any representation, warranty or certification made by the 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
4. the occurrence of certain events of bankruptcy, insolvency or
receivership with respect to the Servicer.
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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 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
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 Servicer shall provide the Trustee, any Enhancement
Provider, the Seller 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 Servicer shall immediately notify the Trustee in writing of any
Servicer default reports.
On each Distribution Date (including each Distribution Date that
corresponds to a Semi-Annual Payment Date (including the Expected Final Payment
Date) or Special Payment Date), the Trustee will forward (or cause to be
forwarded ) to each Certificateholder 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 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 or an Early Amortization Period has commenced): (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 1994-1 Allocation
Percentage, the Floating Allocation Percentage and the Principal Allocation
Percentage for such Collection Period; (c) the total amount, if any, distributed
on the Certificates; (d) the amount of such distribution allocable to principal
on the Certificates; (e) the amount of such distribution allocable to interest
on the Certificates; (f) the Investor Default Amount for such Distribution Date;
(g) the 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 Controlled Distribution Amount; (k) the
Invested Amount, the Excess Funding Account balance and the outstanding
principal balance of the Certificates for such distribution (after giving effect
to all distributions which will occur on each Distribution Date); (l) the "pool
factor" for the Certificates as of the Determination Date with respect to such
Distribution Date (consisting of an eleven-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 portion of the Initial Invested Amount); (m) the Available Subordinated Amount
for such Determination Date; (n) the Reserve Fund balance for such date; and (o)
the Principal Funding Account Balance and the Interest Funding Account Balance
with respect to such date.
On or before January 31 of each calendar year, beginning with January 31,
1995, 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 Tax Matters".
EVIDENCE AS TO COMPLIANCE
The Pooling and Servicing provides that on or before April 30 of each
calendar year the Servicer will cause a firm of nationally recognized
independent public accountants (who will also render other services to the
Servicer or the Seller) 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 Servicer to the effect that the Servicer has fully performed, or caused to
be fully performed its obligations in all material respects under the Pooling
and
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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 Seller, the
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 the certificateholders.
The Pooling and Servicing Agreement may be amended by the Seller, the
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
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 record the
Trustee will afford such certificateholders access during business hours to the
current list of certificateholders for purposes of communicating with other
certificateholders 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
Chemical Bank, a New York banking corporation, as successor trustee to
Manufacturers Hanover Trust Company, 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 Seller, the 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 rights,
powers, duties and obligations solely at the direction of the Trustee.
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The Trustee may resign at any time, in which event the Seller will be
obligated to appoint a successor Trustee. The 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 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 Seller all of its right, title and interest in and to all of
the Receivables and the Collateral 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 Seller will transfer 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 Seller,
Ford Credit has and will continue to indicate in its computer files that the
Receivables have been sold or transferred to the Seller, and that such
Receivables have been transferred by the Seller 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 Seller, but the computer records of Ford
Credit have been marked to evidence such sale or transfer. Ford Credit will file
UCC financing statements with respect to the Receivables meeting the
requirements of Michigan state law. See "Special Considerations -- Certain Legal
Aspects" and "Certain Legal Aspects of the Receivables -- Transfer of
Receivables".
REPRESENTATIONS AND WARRANTIES
Ford Credit has or will make certain representations and warranties to the
Seller to the effect that, among other things, (a) as of the Initial Closing
Date, the Closing Date and each Series Issuance 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 the 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 has or will also make representations and warranties to the
Seller relating to the Receivables to the effect, among other things, that (a)
as of the Initial Closing Date, the Closing Date and each Series Issuance 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 Seller on the Initial Cut-Off Date, the Series Cut-Off Date or any
Additional Cut-Off Date for the purpose of facilitating the administration and
reporting obligations of the 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 Seller accept retransfer of such Ineligible Receivable
pursuant to the Pooling and Servicing Agreement, then Ford Credit shall
repurchase such Ineligible Receivable from the Seller on the date of such
retransfer. The purchase price for such Ineligible Receivable shall be the face
amount thereof, of
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which at least the amount of any cash deposit required to be made by the Seller
under the Pooling and Servicing Agreement in respect of the retransfer of such
Ineligible Receivable shall be paid in cash.
Ford Credit has or will also make representations and warranties to the
Seller to the effect, among other things, that as of the Initial Closing Date,
the Closing Date and each Series Issuance 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 Seller of all right, title and interest of Ford Credit in and to the
Receivables, whether then existing or thereafter created in the Accounts, the
Collateral 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 Seller 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 Seller is required to deposit under the Pooling and Servicing
Agreement in connection with such retransfer.
Ford Credit will agree to indemnify the Seller and to hold the Seller
harmless from and against any and all losses, damages and expenses (including
reasonable attorneys' fees) suffered or incurred by the Seller 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 Seller for any loss,
liability or expense incurred by the Seller 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 Collateral Security".
In addition, Ford Credit has expressly acknowledged and consented to the
Seller'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 Seller and will
promptly give notice of such event to the Seller and to the Trustee.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
On the Initial Closing Date, Ford Credit sold and assigned the Receivables
to the Seller, which Receivables were immediately sold and assigned to the
Trust. The Seller has represented and warranted and will represent and warrant
on the 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 Seller 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
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ownership interest in the Receivables, in existence at the time of the formation
of 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 Seller
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 "Description of the Certificates --
Representations and Warranties".
Each of Ford Credit and the Seller 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 Seller or by the Seller 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 Seller 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 Seller 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 Seller 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 Seller, and under the Pooling and
Servicing Agreement the Seller 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 Seller has also covenanted that it will not sell, pledge,
assign, transfer or grant any lien on any Receivable or, except as described
under "Description of the Certificates -- Supplemental Certificates", the
Seller's Certificate (or any interest therein) other than to the Trust. In
addition, while Ford Credit is the 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 Seller in the Receivables Purchase
Agreement that the sale of the Receivables by it to the Seller is a valid sale
of the Receivables to the Seller. In addition, Ford Credit and the Seller have
agreed to treat the transactions described herein as a sale of the Receivables
to the Seller, and Ford Credit has or will take all actions that are required
under Michigan law to perfect the Seller'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 Seller 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 Seller 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 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 Seller, 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 Seller has warranted to the Trust that the transfer of the Receivables
to the Trust is a sale of the Receivables to the Trust. The Seller 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 Seller has warranted to
the Trust that the
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Trust will at all times have a first priority perfected ownership interest
therein and, with certain exceptions, the proceeds thereof. Nevertheless, a tax
or government lien on property of Ford Credit or the Seller 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 certificate of incorporation provides
that, under certain circumstances, FCAR is required to have 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 two independent directors. 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 Seller 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 Seller's becoming a debtor in a bankruptcy case.
Notwithstanding such steps, if the Seller were to become a debtor in a
bankruptcy case, and a bankruptcy trustee for the Seller or the Seller as debtor
in possession or a creditor of the Seller were to take the position that the
transfer of the Receivables from the Seller 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 Seller does not intend to file, and Ford Credit will agree that it will
not cause the Seller to file, a voluntary application for relief under the
Bankruptcy Code or any similar applicable state law with respect to the Seller
so long as the Seller is solvent and does not foresee becoming insolvent.
If Ford Credit or the Seller 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 Seller
and, pursuant to the Pooling and Servicing Agreement, only collections on
Receivables theretofore sold to the Seller 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 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 the applicable Controlled Distribution Amount.
The occurrence of certain events of bankruptcy, insolvency or receivership
with respect to the Servicer will result in a Servicer Default, which Servicer
Default, in turn, will result in an Early Amortization Event. If no other
Servicer Default other than the commencement of such bankruptcy or similar event
exists, a trustee-in-bankruptcy of the Servicer may have the power to prevent
either the Trustee or the certificateholders from appointing a successor
Servicer.
Payments made in respect of repurchases of Receivables by Ford Credit or
the Seller pursuant to the Pooling and Servicing Agreement may be recoverable by
Ford Credit or the Seller, as debtor in possession, or by a creditor or a
trustee-in-bankruptcy of Ford Credit or the Seller as a preferential transfer
from Ford Credit or the Seller if such payments are made within one year prior
to the filing of a bankruptcy case in respect of Ford Credit.
CERTAIN TAX MATTERS
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a general discussion of United States federal income tax
consequences of the purchase, ownership and disposition of the Certificates.
This discussion does not purport to deal with all aspects of United States
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 United States 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 United States federal income tax consequences of 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
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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 Seller 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 nontax accounting
treatment of the transaction, the Seller will treat the Pooling and Servicing
Agreement, for certain nontax purposes, as effecting a transfer of an ownership
interest in the Receivables and not as creating a debt obligation.
A basic premise of United States 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 United States federal income tax law,
even though the participants in the transaction have characterized it
differently for nontax 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, special tax counsel to
the Seller and the Trust ("Tax Counsel"), is of the opinion that the Seller will
properly be treated as the owner of the Receivables for United States federal
income tax purposes and, accordingly, the Certificates will properly be
characterized for United States federal income tax purposes as debt that is
secured by the Receivables.
Treatment of the Trust. The Trust could be viewed for United States 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 United States 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 United States federal income
tax.
As used herein, the term "U.S. Certificateholder" means a beneficial owner
of a Certificate that is for United States federal income tax purposes (i) a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source or (iv) any other person whose income or gain in respect of a Certificate
is effectively connected with the conduct of a United States trade or business.
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 United
States federal income tax purposes and are not issued with original issue
discount, interest thereon will be taxable as ordinary income for United States
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.
The Trustee will be required to report annually to the IRS, and to each
Certificateholder of record, the amount of interest paid (and original issue
document accrued, if any) on the Certificates (and the amount withheld for
United States federal income taxes, if any) for each calendar year, except as to
exempt holders
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(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
nonresidents). 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.
U.S. Certificateholders may generally elect to include in income all
interest (including stated interest, 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.
Market Discount. If a U.S. Certificateholder purchases a 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), 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 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 (i) the amount of such payment or realized gain
or (ii) 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 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 to the extent the interest expense
exceeds an allocable portion of market discount. A U.S. Certificateholder may
elect to include market discount in income currently as it accrues, in which
case the rules described above regarding the treatment as ordinary income of
gain upon the disposition of the Certificate and upon the receipt of certain
cash payments and regarding the deferral of interest deductions will not apply.
Generally, such currently included market discount is treated as ordinary
interest for United States federal income tax purposes.
Premium. If a U.S. Certificateholder purchases a Certificate for an amount
that is greater than the principal balance of the Certificate after the purchase
date, 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.
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 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
included in income (and accrued market discount, if any, that the U.S.
Certificateholder has included in income) and decreased by the amount of any
principal payments received and amortizable bond premium taken with respect to
such Certificate. Such gain or loss generally will be long-term capital gain or
loss if the Certificate were held for more than one year.
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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
United States 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 United States federal income tax purposes, the arrangement among the
Seller, the Certificateholders might be classified for United States 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 partnership were nevertheless not taxable as a corporation
(because of an exception for an entity whose income is interest income that is
not derived in the conduct of a financial business) it would not be subject to
United States 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 Certificateholder 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 are 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 United States 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 Seller will treat the Certificates as indebtedness for United
States 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 United States federal
income tax purposes. Assuming the Certificates are debt:
(a) interest paid to a Non-U.S. Certificateholder will be exempt from
U.S. 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
Seller and is not a controlled foreign corporation with respect to the
Seller). 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 U.S. 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
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<PAGE> 66
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 (x)
the applicable form is delivered pursuant to applicable procedures and is
properly transmitted to the United States entity otherwise required to
withhold tax and (y) none of the entities receiving the form has actual
knowledge that such owner is a U.S. person or that any certification on the
form is false;
(b) a Non-U.S. Certificateholder will not be subject to United States
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 United States 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 Seller 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
nonresident alien or foreign corporation might be required to file a U.S.
individual or corporate income tax return and pay tax on its share of
partnership income at regular U.S. 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.
STATE AND LOCAL TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing the
Receivables generally will be centered in Michigan. The State of Michigan
imposes a state individual income tax and a single business tax which is based
partially upon the net income of corporations, partnerships and other entities
doing business in the State of Michigan. This discussion is based upon present
provisions of Michigan statutes and the regulations promulgated thereunder, and
applicable judicial or ruling authority, all of which are subject to change,
which change may be retroactive. No ruling on any of the issues discussed below
will be sought from the Michigan Department of Treasury.
If the Certificates are treated as debt for United States federal income
tax purposes, in the opinion of J.D. Bringard, Esq., Vice President -- General
Counsel of the Seller ("Michigan Tax Counsel"), this treatment will also apply
for Michigan tax purposes. Pursuant to this treatment, the Trust will not be
subject to the Michigan single business tax and Certificateholders not otherwise
subject to Michigan tax would not become subject to such tax solely because of
their ownership of the Certificates. Certificateholders already subject to tax
in Michigan, however, could be required to pay tax on the income from the
Certificates.
In the alternative, if the Certificates were treated as interests in a
partnership (not taxable as a corporation) for United States federal income tax
purposes, in the opinion of Michigan Tax Counsel, the same treatment would also
apply for Michigan tax purposes. Such a partnership would be treated as doing
business in Michigan and, as a result, would be subject to the Michigan single
business tax possibly resulting in reduced distributions to Certificateholders.
The Certificateholders would not be subject to Michigan single business tax on
the partnership income.
Individual Certificateholders, whether Michigan residents or non-residents,
who were partners in such a partnership would be subject to Michigan income tax
on the income from the partnership. Under current law
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<PAGE> 67
corporate Certificateholders are not subject to Michigan income tax.
Certificateholders not otherwise subject to tax in Michigan would not become
subject to such tax on income other than that derived from the Certificates
solely because of their ownership of the Certificates.
If the Certificates were treated as interest in an association taxable as a
corporation or a "publicly traded partnership" taxable as a corporation, then
the entity could be subject to the Michigan single business tax. Such taxes
could result in reduced distributions to Certificateholders. Certificateholders
not otherwise subject to tax in Michigan would not become subject to such tax
solely because of their ownership of the Certificates.
Because income and franchise tax laws of each state and locality vary, it
is impossible to predict the income and franchise tax consequences to the
Certificateholders in all of the state and local taxing jurisdictions,
particularly if the Certificates were treated as interests in a partnership (not
taxable as a corporation). Certificateholders are urged to consult their own tax
advisors with respect to state income and franchise taxes.
ERISA CONSIDERATIONS
GENERAL
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan from engaging in certain
transactions involving "plan assets" with persons that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to the plan. A
violation of these "prohibited transaction" rules may generate excise tax and
other liabilities under ERISA and the Code for such person. For example, a
prohibited transaction would arise, unless an exemption were available, if the
Certificates were viewed as debt of the Seller and the Seller were a
disqualified person or party in interest with respect to a plan that acquired
Certificates.
Moreover, additional prohibited transactions could arise if the assets of
the Trust were deemed to constitute assets of any plan that owned Certificates.
The Department of Labor ("DOL") has issued a final regulation (the "Plan Assets
Regulation") concerning the definition of what constitutes the "plan assets" of
an employee benefit plan subject to ERISA or the Code, or an individual
retirement account ("IRA") (collectively referred to as "Benefit Plans"). Under
the Plan Assets Regulation the assets and properties of certain corporations,
partnerships and certain other entities in which a Benefit Plan acquires an
"equity interest" could be deemed to be assets of the Benefit Plan in certain
circumstances. Accordingly, if Benefit Plans purchase Certificates, the Trust
could be deemed to hold plan assets of such Benefit Plan unless one of the
exceptions under the Plan Assets Regulation 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. A publicly-offered security is a security that is (i) freely
transferable, (ii) part of a class of securities that is owned by 100 or more
investors independent of the issuer and of one another and (iii) either is (A)
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.
It is anticipated that the Certificates will meet the criteria of the
Publicly-Offered Securities Exemption as set forth above. The Underwriters
expect (although no assurance can be given) that the Certificates will be held
by at least 100 independent persons at the conclusion of the offering; there are
no restrictions imposed on the transfer of the Certificates; and the
Certificates will be sold as part of an offering pursuant to an effective
registration statement under the Securities Act, and then will be timely
registered under the Exchange Act. The Underwriters will notify the Trustee as
to whether or not the Certificates will be held by 100 independent
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<PAGE> 68
persons at the conclusion of the offering. The Seller 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 fail to meet the criteria of the Publicly-Offered
Securities Exemption and the Trust's assets are deemed to include assets of
Benefit Plans that are holders of 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 three class
exemptions issued by the DOL that may apply in such event: DOL Prohibited
Transaction Exemption 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)
and 90-1 (Class Exemption for Transactions Involving Insurance Company Pooled
Separate Accounts). 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's assets.
REVIEW BY BENEFIT PLAN FIDUCIARIES
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is especially important that any Benefit
Plan fiduciary who proposes to cause a Benefit Plan to purchase Certificates
should consult with its own counsel with respect to the potential consequences
under ERISA and the Code of the Benefit Plan's acquisition and ownership of
Certificates. Assets of a Benefit Plan should not be invested in the
Certificates unless it is clear that the assets of the Trust will not be plan
assets or unless it is clear that a prohibited transaction class exemption will
apply and exempt all potential prohibited transactions.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement"), FCAR has agreed to cause the Trust to sell to
the underwriters named below (the "Underwriters"), and each of the Underwriters
has severally agreed to purchase the principal amount of Certificates set forth
opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITERS OF CERTIFICATES
----------------
<S> <C>
................................................ $ [ ]
----------------
Total............................................... $ [ ]
================
</TABLE>
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, and to certain dealers at such price less a
concession not in excess 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 [ %] 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.
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<PAGE> 69
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Seller by J.D. Bringard, Esq., Vice President-General Counsel of the
Servicer, and for the Underwriters by Brown & Wood. Certain United States
federal income tax matters will be passed upon for the Seller and the Trust by
Brown & Wood.
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<PAGE> 70
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Accounts.............................................................................. 1
Accumulation Period................................................................... 10
Accumulation Period Commencement Date................................................. 10
Accumulation Period Length............................................................ 10
Addition Date......................................................................... 35
Additional Accounts................................................................... 38
Additional Cut-Off Date............................................................... 35
Adjustment Date....................................................................... 40
Adjustment Payment.................................................................... 50
Aggregate Available Subordinated Amount............................................... 42
Asset Composition Event............................................................... 8
Asset Composition Premium............................................................. 8
Asset Correction Amount............................................................... 8
Auction Vehicles...................................................................... 21
Available Certificateholder Principal Collections..................................... 48
Available Seller's Collections........................................................ 44
Available Seller's Interest Collections............................................... 44
Available Seller's Principal Collections.............................................. 44
Available Subordinated Amount......................................................... 45
Bankruptcy Code....................................................................... 61
Benefit Plans......................................................................... 66
Cede.................................................................................. 2
CEDEL................................................................................. 5
CEDEL Participants.................................................................... 31
Certificateholder Interest Collections................................................ 46
Certificateholders' Interest.......................................................... 5
Certificate Owners.................................................................... 2
Certificate Rate...................................................................... 5
Certificates.......................................................................... 1
Citibank.............................................................................. 6
Closing Date.......................................................................... 5
Code.................................................................................. 61
Collateral Security................................................................... 3
Collection Account.................................................................... 39
Collection Period..................................................................... 7
Commission............................................................................ 2
Controlled Amortization Amount........................................................ 48
Controlled Distribution Amount........................................................ 48
Cooperative........................................................................... 31
Dealer Overconcentrations............................................................. 37
Dealers............................................................................... 4
Defaulted Amount...................................................................... 50
Defaulted Receivables................................................................. 50
Deficiency Amount..................................................................... 44
Definitive Certificates............................................................... 32
Depositary............................................................................ 32
Depository............................................................................ 12
Determination Date.................................................................... 12
Distribution Date..................................................................... 8
Distribution Date Statement........................................................... 56
</TABLE>
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<PAGE> 71
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DOL................................................................................... 66
Draw Amount........................................................................... 45
DTC................................................................................... 2
Early Amortization Event.............................................................. 51
Early Amortization Period............................................................. 11
Eligible Accounts..................................................................... 4
Eligible Deposit Account.............................................................. 39
Eligible Institution.................................................................. 39
Eligible Investments.................................................................. 39
Eligible Portfolio.................................................................... 24
Eligible Receivable................................................................... 4
Enhancement........................................................................... 3
Enhancement Provider.................................................................. 36
ERISA................................................................................. 14
Euroclear............................................................................. 5
Euroclear Operator.................................................................... 31
Euroclear Participant................................................................. 31
Excess Principal Collections.......................................................... 43
Excess Reserve Fund Required Amount................................................... 47
Excess Seller's Percentage............................................................ 44
Excess Servicing...................................................................... 47
Exchange Act.......................................................................... 2
Expected Final Payment Date........................................................... 8
FCAR.................................................................................. 1
Floating Allocation Percentage........................................................ 42
Ford.................................................................................. 3
Ford Credit........................................................................... 1
Ford Holdings......................................................................... 26
Holders............................................................................... 33
Incremental Subordinated Amount....................................................... 45
Index Maturity........................................................................ 40
Indirect Participants................................................................. 30
Ineligible Receivables................................................................ 35
Initial Closing Date.................................................................. 34
Initial Cut-Off Date.................................................................. 3
Initial Invested Amount............................................................... 5
Initial Principal Amount.............................................................. 4
Initial Swap Subordinated Amount...................................................... 46
Insolvency Laws....................................................................... 19
Installment Balance................................................................... 23
Installment Balance Amount............................................................ 37
Interest Collections.................................................................. 4
Interest Funding Account.............................................................. 8
Interest Funding Account Balance...................................................... 49
Interest Period....................................................................... 40
Interest Rate Swap.................................................................... 13
Invested Amount....................................................................... 42
Investment Proceeds................................................................... 47
Investor Charge-Off................................................................... 50
Investor Default Amount............................................................... 50
IRS................................................................................... 62
</TABLE>
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
LIBOR................................................................................. 40
London Business Day................................................................... 40
Michigan Tax Counsel.................................................................. 65
Miscellaneous Payments................................................................ 42
Monthly Interest...................................................................... 45
Monthly Principal..................................................................... 48
Monthly Servicing Fee................................................................. 54
Morgan................................................................................ 6
Net Trust Swap Payment................................................................ 14
Net Trust Swap Receipt................................................................ 14
New Issuance.......................................................................... 6
New Vehicle........................................................................... 21
Non-Vehicle Collateral Security....................................................... 17
Overconcentration Amount.............................................................. 37
Participants.......................................................................... 30
Plan Assets Regulation................................................................ 67
Pool Balance.......................................................................... 7
Pooling and Servicing Agreement....................................................... 3
Principal Allocation Percentage....................................................... 42
Principal Collections................................................................. 4
Principal Funding Account............................................................. 10
Principal Funding Account Balance..................................................... 49
Principal Receivables................................................................. 6
Principal Shortfalls.................................................................. 43
Principal Terms....................................................................... 34
Publicly Offered Security Exception................................................... 66
Rating Agency......................................................................... 7
Receivables........................................................................... 19
Receivables Purchase Agreement........................................................ 1
Record Date........................................................................... 4
Registration Statement................................................................ 29
Removal Date.......................................................................... 2
Removal Notice........................................................................ 38
Removed Accounts...................................................................... 38
Required Participation Amount......................................................... 39
Required Participation................................................................ 38
Percentage............................................................................ 38
Required Subordinated Amount.......................................................... 12
Reserve Fund.......................................................................... 47
Reserve Fund Deposit Amount........................................................... 47
Reserve Fund Required Amount.......................................................... 47
Revolving Period...................................................................... 9
Securities Act........................................................................ 2
Seller................................................................................ 1
Seller's Certificate.................................................................. 33
Seller's Interest..................................................................... 1
Seller's Participation Amount......................................................... 44
Seller's Percentage................................................................... 44
Semi-Annual Payment Date..............................................................
Series................................................................................ 1
Series 1992-1......................................................................... 6
</TABLE>
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<PAGE> 73
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1992-2................................................................................ 6
Series 1992-3......................................................................... 6
Series 1994-1......................................................................... 3
Series 1994-1 Allocation Percentage................................................... 42
Series Accounts....................................................................... 8
Series Cut-Off Date................................................................... 9
Series Issuance Date.................................................................. 35
Service Transfer...................................................................... 55
Servicer.............................................................................. 1
Servicing Fee......................................................................... 54
Servicing Fee Rate.................................................................... 54
Special Payment Date.................................................................. 11
Status................................................................................ 24
Subordinated Percentage............................................................... 12
Supplement............................................................................ 6
Supplemental Certificate.............................................................. 33
Swap Counterparty..................................................................... 13
Tax Counsel........................................................................... 62
Tax Opinion........................................................................... 34
Termination Date...................................................................... 53
Terms and Conditions.................................................................. 31
Transfer Date......................................................................... 35
Transfer Deposit Amount............................................................... 36
Trust................................................................................. 1
Trust Available Subordinated Amount................................................... 42
Trust Invested Amount................................................................. 42
Trustee............................................................................... 3
UCC................................................................................... 16
Unallocated Principal Collections..................................................... 43
Underwriters.......................................................................... 16
Underwriting Agreement................................................................ 67
Used Vehicle.......................................................................... 21
U.S. Wholesale Portfolio.............................................................. 21
Vehicles.............................................................................. 3
</TABLE>
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ANNEX 1
OTHER ISSUANCES OF INVESTOR CERTIFICATES
This Annex I sets forth the principal characteristics of Series 1992-1,
Series 1992-2 and Series 1992-3. For more specific information with respect to
any Series, any prospective investor should contact FCAR at (313) 594-7742. FCAR
will provide, without charge, to any prospective purchaser, a copy of the
Disclosure Document with respect to such Series.
<TABLE>
<S> <C>
Series 1992-1
Initial Principal Amount............. $1,000,000,000
Scheduled Interest Payment Date...... The fifteenth day of each January and July (or, if
such day is not a business day, the next succeeding
business day)
Current Principal Amount............. $1,000,000,000
Required Participation Percentage.... 104%
Initial Swap Subordinated Amount..... $16,400,000
Revolving Period..................... December 30, 1991 to the earlier of July 31, 1996 or
an Early Amortization Event
Expected Payment Date................ January 1997 Distribution Date
Termination Date..................... January 1999 Distribution Date
Series 1992-2
Initial Principal Amount............. $700,000,000
Scheduled Interest Payment Date...... The fifteenth day of each April and October (or, if
such day is not a business day, the next succeeding
business day)
Current Principal Amount............. $700,000,000
Required Participation Percentage.... 104%
Initial Swap Subordinated Amount..... $14,350,000
Revolving Period..................... March 31, 1992 to the earlier of October 31, 1996 or
an Early Amortization Event
Expected Payment Date................ April 1997 Distribution Date
Termination Date..................... April 1999 Distribution Date
Series 1992-3
Initial Principal Amount............. $1,000,000,000
Scheduled Interest Payment........... The fifteenth day of each April and October (or, if
such day is not a business day, the next succeeding
business day)
Current Principal Amount............. $1,000,000,000
Required Participation Percentage.... 104%
Initial Swap Subordinated Amount..... $10,000,000
Revolving Period..................... September 20, 1992 to the earlier of Accumulation
Period Commencement Date or an Early Amortization
Event
Expected Payment Date................ October 1995 Distribution Date
Termination Date..................... October 1997 Distribution Date
</TABLE>
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GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Certificates
(the "Global Securities") will be available only in book-entry form. Investors
in the Global Securities may hold such Global Securities through any of The
Depository Trust Company ("DTC"), CEDEL or Euroclear. The Global Securities will
be tradeable as home market instruments in both the European and U.S. domestic
markets. Initial settlements and all secondary trades will settle in same-day
funds.
Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations and prior asset backed certificates issues.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of CEDEL and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
CEDE & CO. as nominee of DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, CEDEL and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to prior asset backed certificates issues.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior asset
backed certificates issues in same-day funds.
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and CEDEL or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a CEDEL Participant or a Euroclear Participant, the purchaser will
send instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear
Participant at least one business day prior to settlement. CEDEL or Euroclear
will instruct the respective Depositary, as the-case may be, to receive the
Global Securities against payment. Payment will
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<PAGE> 76
include interest accrued on the Global Securities from and including the last
coupon payment date to and excluding the settlement date, on the basis of a
calendar year consisting of twelve 30-day calendar months. Payment will then be
made by the respective Depositary of the DTC Participant's account against
delivery of the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the CEDEL
Participant's or Euroclear Participant's account. The securities credit will
appear the next day (European time) and the cash debt will be back-valued to,
and the interest on the Global Securities will accrue from, the value date
(which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the CEDEL or Euroclear cash debt will be valued instead as of the actual
settlement date.
CEDEL Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within CEDEL or Euroclear. Under this approach,
they may take on credit exposure to CEDEL or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit to
them, CEDEL Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, CEDEL Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each CEDEL Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of CEDEL Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between CEDEL or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, CEDEL Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to CEDEL or Euroclear through a CEDEL Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, CEDEL or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the Global
Securities to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment to and excluding the settlement date on the basis of a calendar
year consisting of twelve 30-day calendar months. The payment will then be
reflected in the account of the CEDEL Participant or Euroclear Participant the
following day, and receipt of the cash proceeds in the CEDEL Participant's or
Euroclear Participant's account would be back-valued to the value date (which
would be the preceding day, when settlement occurred in New York). Should the
CEDEL Participant or Euroclear Participant have a line of credit with its
respective clearing system and elect to be in debt in anticipation of receipt of
the sale proceeds in its account, the back-valuation will extinguish any
overdraft incurred over that one-day period. If settlement is not completed on
the intended value date (i.e., the trade fails), receipt of the cash proceeds in
the CEDEL Participant's or Euroclear Participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use CEDEL or Euroclear and that purchase Global
Securities from DTC Participants for delivery to CEDEL Participants or Euroclear
Participants should note that these trades would
75
<PAGE> 77
automatically fail on the sale side unless affirmative action were taken. At
least three techniques should be readily available to eliminate this potential
problem:
(a) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the day trade is reflected in their CEDEL or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their CEDEL or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the CEDEL Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through CEDEL or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original interest discount) on registered debt issued by
U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
U.S. entity required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the following steps to
obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons can obtain a complete exemption from
the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must
be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a
U.S. branch, for which the interest income is effectively connected with
its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners
residing in a country that has a tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides only for a reduced rate, withholding tax will be imposed at
that rate unless the filer alternatively files Form W-8. Form 1001 may be
filed by the Certificate Owner or his agent.
Exemption of U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of
a Global Security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom
it holds (the clearing agency, in the case of persons holding directly on
the books of the clearing agency). Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
76
<PAGE> 78
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY FORD CREDIT OR THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Reports to Certificateholders......... 2
Prospectus Summary.................... 3
Special Considerations................ 16
Ford Credit Auto Receivables
Corporation and the Trust........... 19
Use of Proceeds....................... 21
The Dealer Floorplan Financing
Business............................ 21
The Accounts.......................... 24
Ford Motor Credit Company............. 26
Maturity and Principal Payment
Considerations...................... 27
Description of the Certificates....... 27
Description of the Receivables
Purchase Agreement.................. 58
Certain Legal Aspects of the
Receivables......................... 59
Certain Tax Matters................... 61
ERISA Considerations.................. 66
Underwriting.......................... 67
Legal Matters......................... 68
Index of Principal Terms.............. 69
Annex 1............................... 73
Global Clearance, Settlement and Tax
Documentation Procedures............ 74
</TABLE>
------------------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS EFFECTING
TRANSACTIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
FORD CREDIT AUTO
LOAN MASTER TRUST
$
SERIES 1994-1,
% AUTO LOAN
ASSET BACKED CERTIFICATES
(LOGO)
FORD CREDIT AUTO
RECEIVABLES CORPORATION
SELLER
FORD MOTOR CREDIT COMPANY
SERVICER
-----------------------
PROSPECTUS
-----------------------
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 79
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:
<TABLE>
<S> <C>
SEC Filing Fees............................................................ $344.83
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................................................................. $
=======
</TABLE>
- -------------------------
* To be provided by Amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Five, Section (a) of the Certificate of Incorporation of the
Depositor sets forth certain rights of the directors and officers of the
Depositor to indemnification. In addition, Section 145 of the General
Corporation Law of Delaware provides as follows:
145. Indemnification of officers, directors, employees and agents;
insurance --
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employees or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, or itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
II-1
<PAGE> 80
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsection (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2)
if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses incurred by an officer or director in defending a civil
or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this
section. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the Corporation shall
include any service as a director, officer, employee, or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
II-2
<PAGE> 81
(j) The indemnification and advancement of expenses provided, or
granted pursuant to this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Article Five of the Certificate of Incorporation of Ford Credit Auto
Receivables Corporation provides as follows:
(a) A director of the corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the
corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived an
improper personal benefit.
If the Delaware General Corporation Law is amended after approval by the
stockholders of this Article Fifth to authorize corporate section further
eliminating or limiting the personal liability of directors, then the liability
of a director of the corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
(b) Any repeal or modification of paragraph (a) of this Article Fifth
by the stockholders of the corporation shall not adversely affect any right
or protection of a director of the corporation existing at the time of such
repeal or modification.
(c) (i) Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative, investigative or otherwise (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he
or she is the legal representative, is or was a director, officer or
employee of the corporation or is or was serving at the request of the
corporation as a director, officer or employee of another corporation or of
a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director, officer
or employee or in any other capacity while serving as a director, officer
or employee, shall be indemnified and held harmless by the corporation to
the fullest extent authorized by the Delaware General Corporation Law, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the corporation
to provide broader indemnification rights than said law permitted the
corporation to provide prior to such amendment), against all expense,
liability and loss (including penalties, fines, judgments, attorneys' fees,
amounts paid or to be paid in settlement and excise taxes imposed on
fiduciaries with respect to (i) employee benefit plans, (ii) charitable
organizations or (iii) similar matters) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue
as to a person who has ceased to be a director, officer or employee and
shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that the corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or
part thereof) initiated by such person (other than pursuant to subparagraph
(c)(ii) of this Article Fifth) only if such proceeding (or part thereof)
was authorized by the Board of Directors of the corporation. The right to
indemnification conferred in this subparagraph (c)(i) of Article Fifth
shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in
advance of its final disposition, provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by
a director or officer in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such
person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding shall be made only upon delivery to the corporation of an
undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall
II-3
<PAGE> 82
ultimately be determined that such director or officer is not entitled to
be indemnified under this subparagraph (c)(i) of Article Fifth or
otherwise.
(ii) if a claim which the corporation is obligated to pay under
subparagraph (c)(i) of this Article Fifth is not paid in full by the
corporation within 60 days after a written claim has been received by
the corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and,
if successful in whole or in part, the claimant shall be entitled to be
paid also the expense of prosecuting such claim. It shall be a defense
to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the corporation) that the claimant has not met the standards
of conduct which make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its Board
of Directors, independent legal counsel or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because
he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel
or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of
conduct.
(iii) The provisions of this paragraph (c) of Article Fifth shall
cover claims, actions, suits and proceedings, civil or criminal, whether
now pending or hereafter commenced, and shall be retroactive to cover
acts or omissions or alleged acts or omissions which heretofore have
taken place. If any part of this paragraph (c) of Article Fifth should
be found to be invalid or ineffective in any proceeding, the validity
and effect of the remaining provisions shall not be affected.
(iv) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition
conferred in this paragraph (c) of Article Fifth shall not be exclusive
of any other right which any person may have or hereafter acquire under
any statute, provision of the Certificate of Incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
(v) The corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or
not the corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General
Corporation Law.
(vi) The corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification, and
rights to be paid by the corporation the expenses incurred in defending
any proceeding in advance of its final disposition, to any agent of the
corporation to the fullest extent of the provisions of this paragraph
(c) of Article Fifth with respect to the indemnification and advancement
of expenses of directors, officers and employees of the corporation.
Similar indemnification provisions in Section 5 of Article Ninth of the
Certificate of Incorporation of both Ford Motor Company and Ford Motor Credit
Company are applicable to directors, officers and employees of the Seller who
serve as such at the request of Ford Motor Company or Ford Motor Credit Company.
The Seller is insured for liabilities it may incur pursuant to Article
Fifth of its Certificate of Incorporation relating to the indemnification of its
directors, officers and employees. In addition, directors, officers and certain
key employees are insured against certain losses which may arise out of their
employment and which
II-4
<PAGE> 83
are not recoverable under the indemnification provisions of the Sellers
Certificate of Incorporation. The premium for both insurance coverages is paid
by Ford Motor Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<S> <C>
1.1 -- Form of Underwriting Agreement.
3.1 -- Certificate of Incorporation of the Registrant.*
3.2 -- By-Laws of the Registrant.**
4.1 -- Pooling and Servicing Agreement among the Registrant, the 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 J.D. Bringard, Esq. with respect to certain matters involving the
Certificates.**
8.1 -- Opinion of Brown & Wood with respect to certain federal income tax matters.
8.2 -- Opinion of J.D. Bringard, Esq. with respect to tax matters under Michigan law.
10.1 -- Form of Interest Rate Swap Agreement.**
24.1 -- Consent of J.D. Bringard, Esq. (included in opinions filed as Exhibits 5.1 and
8.2).
24.2 -- Consent of Brown & Wood (included in opinion filed as Exhibit 8.1).
25.1 -- Powers of Attorney (including corporate resolutions).
</TABLE>
- -------------------------
* Incorporated by reference to same exhibit in Registration Statement No.
33-44432.
** To be filed by Amendment.
(b) Financial Statement Schedules:
Not applicable with respect to the Registrant.
ITEM 17. UNDERTAKINGS.
A. FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
B. UNDERTAKING IN RESPECT OF INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the 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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-5
<PAGE> 84
C. UNDERTAKING IN RESPECT OF SECURITIES ACT LIABILITY.
For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497 (h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
For the purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-6
<PAGE> 85
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Detroit, State of
Michigan, on the 21st day of July, 1994.
FORD CREDIT AUTO RECEIVABLES
CORPORATION
By W.E. ODOM*
------------------------------------
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
WILLIAM E. ODOM* Chairman of the Board and Director July 21, 1994
- -----------------------------------
(William E. Odom)
DIRECTOR:
EDSEL B. FORD II* President and Director July 21, 1994
- -----------------------------------
(Edsel B. Ford II)
PRINCIPAL FINANCIAL OFFICER:
KENNETH J. COATES* Executive Vice President -- July 21, 1994
- ----------------------------------- Finance and Director
(Kenneth J. Coates)
PRINCIPAL ACCOUNTING OFFICER:
PAUL W. LEWIS* Controller July 21, 1994
- -----------------------------------
(Paul W. Lewis)
*By /s/ HURLEY SMITH
- -----------------------------------
(Hurley Smith, Attorney-in-Fact)
</TABLE>
II-7
<PAGE> 86
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<S> <C>
1.1 -- Form of Underwriting Agreement.
3.1 -- Certificate of Incorporation of the Registrant.*
3.2 -- By-Laws of the Registrant.*
4.1 -- Pooling and Servicing Agreement among the Registrant, the 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 J.D. Bringard, Esq. with respect to certain matters involving the
Certificates.**
8.1 -- Opinion of Brown & Wood with respect to certain federal income tax matters.
8.2 -- Opinion of J.D. Bringard, Esq. with respect to tax matters under Michigan law.**
10.1 -- Form of Interest Rate Swap Agreement.**
24.1 -- Consent of J.D. Bringard, Esq. (included in opinions filed as Exhibits 5.1 and
8.2).
24.2 -- Consent of Brown & Wood (included in opinion filed as Exhibit 8.1).
25.1 -- Powers of Attorney (including corporate resolutions).
</TABLE>
- -------------------------
* Incorporated by reference to same exhibit in Registration Statement No.
33-44432.
** To be filed by Amendment.
<PAGE> 1
EXHIBIT 1.1
FORD CREDIT AUTO LOAN MASTER TRUST
SERIES 1994-1, ___% ASSET BACKED CERTIFICATES
FORD CREDIT AUTO RECEIVABLES CORPORATION
(SELLER)
, 1994
UNDERWRITING AGREEMENT
[UNDERWRITERS]
Dear Sirs:
1. Introductory. Ford Credit Auto Receivables Corporation, a Delaware
corporation (the "Seller"), proposes to sell $____________ principal amount of
its Series 1994-1, ___% Asset Backed Certificates (the "Certificates") of the
Ford Credit Auto Loan Master Trust (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 pursuant to wholesale automobile
loan revolving credit agreements and the related Collateral Security and
certain monies due thereunder on or after _________, 1994 (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 "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 (the "Agreement")
dated as of December 31, 1991, among the Seller, the Servicer and Chemical
Bank, as Successor to Manufacturers Hanover Trust Company, as trustee (the
"Trustee") and the Series 1994-1 Supplement to the Agreement to be dated as of
_______, 1994 (the "Supplement"), among the Seller, Servicer
<PAGE> 2
and the Trustee. The Agreement and the Supplement are collectively referred to
as the "Pooling and Servicing Agreement." In connection with the issuance of
the Certificates the Trust and Ford Credit will enter into an interest rate
swap agreement to be dated as of _________ ,1994 (the "Interest Rate Swap").
Capitalized terms used herein and not otherwise defined shall have the
meanings given them in the Pooling and Servicing Agreement.
2. Representations and Warranties of the Seller. The Seller represents and
warrants to and agrees with the several underwriters named in Schedule I hereto
(the "Underwriters") (if there is only one Underwriter listed in Schedule I,
then "Representatives" and "Underwriters" shall each refer to such Underwriter)
that:
(a) A registration statement on Form S-3 (No. 33-____________), including
a prospectus, on Form S-3, in respect of the Series 1994-1 Certificates has
been filed with the Securities and Exchange Commission (the "Commission") in
the form heretofore delivered to the Underwriters, and may have been, and is
proposed to be amended. Such registration statement as amended at the time
when it becomes effective, including the exhibits thereto and any material
incorporated by reference therein, is hereinafter referred to as the
"Registration Statement," and such prospectus, as then amended, is hereinafter
referred to as the "Prospectus." For the purposes of this Agreement,
"Effective Time" means the date and time as of which such Registration
Statement is declared effective by the Commission; "Effective Date" means the
date of the Effective Time; "Registration Statement" means such registration
statement or more recent amendment at the Effective Time, including any
documents incorporated by reference therein at such time; and "Prospectus"
means such final prospectus relating to the Certificates as first filed with
the Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the Rules and
Regulations. Reference made herein to any Prospectus shall be deemed to refer
to and include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act, as of the date of such Prospectus, and any
reference to any amendment or supplement to any Prospectus shall be deemed to
refer to and include any document filed under the Securities Exchange Act of
1934 (the "Exchange Act") after the date of such Prospectus and incorporated by
reference therein as of the date of such amendment or supplement; any reference
to any amendment to the Registration Statement shall be deemed to include any
report of the Seller filed with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act after the Effective Time that is incorporated by
reference in the
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<PAGE> 3
Registration Statement. The conditions for use of Form S-3, as set forth in
the General Instructions thereto, have been satisfied.
(b) On the Effective Date, the Registration Statement will conform, 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 will not, as of the Effective
Date, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statement or omission made in reliance upon and
in conformity with information furnished in writing to the Seller by the
Underwriters expressly for use in the Registration Statement relating to such
Certificates. On the date of this Agreement, the Registration Statement
conforms, and at the Effective Time the Registration Statement and the
Prospectus will conform, in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder (the "Rules and
Regulations"), and, except as aforesaid, neither of such documents includes, or
will include, any untrue statement of a material fact or omits, or will omit,
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) The consummation by the Seller of the transactions contemplated by
this Agreement, the Receivables Purchase Agreement and the Pooling and
Servicing 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, or result in the creation of any lien, charge, or
encumbrance upon any of the property or assets of the Seller pursuant to the
terms of, any indenture, mortgage, deed of trust, loan agreement, guarantee,
lease financing agreement, or similar agreement or instrument under which the
Seller is a debtor or guarantor.
(d) This Agreement has been duly authorized, executed and delivered by the
Seller.
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 herein set forth, the Seller agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Seller, the aggregate principal amounts of the Certificates
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<PAGE> 4
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.
Against payment of the purchase price in immediately available funds drawn to
the order of the Seller, the Seller will deliver the Certificates to the
Representatives, for the account of the Underwriters, at the office of _______
on ________, 1994 at 10:00 a.m., New York time, or at such other time not later
than seven full business days thereafter as the Representatives and the Seller
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, subject to the terms and conditions set forth
herein, 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 Seller. The Seller covenants and agrees with the
Underwriters:
(a) If required, file the Prospectus with the Commission pursuant to and
in accordance with subparagraph (3) of the Rule 424(b) not later than the time
specified therein. The Seller will advise the Underwriters promptly of any
such filing pursuant to Rule 424(b).
(b) To make no amendment or any supplement to the Registration Statement
or the Prospectus as amended or supplemented prior to the Closing Date, without
furnishing the Representatives with a copy of the proposed form thereof and
providing the Representatives with a reasonable opportunity to review the same;
and during such same period to advise the Representatives, promptly after it
receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus as amended or supplemented or any amended Prospectus has been filed
or mailed for filing, of the issuance of any stop order by the Commission, of
the suspension of the qualification of the 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
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<PAGE> 5
amended or supplemented or for additional information; and, in the event of the
issuance of any such stop order or of any order preventing or suspending the
use of any prospectus relating to the Certificates 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 Representatives
may reasonably request in order to qualify the Certificates for offering and
sale under the securities laws of such states as the Representatives 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 Seller shall not be required to qualify as a foreign
corporation to do business, or to file a general consent to service of process
in any jurisdiction, and provided further that the expense of maintaining any
such qualification more than one year from the Closing Date with respect to
such Certificates shall be at the Representatives' 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 Representatives may from time to time reasonably
request; and if, before a period of six months shall have elapsed after the
Effective Date and the delivery of a prospectus shall be at the time required
by law in connection with sales of any such 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 Representatives and to
prepare and furnish to the Representatives as the Representatives may from time
to time reasonably request an amendment or a supplement to the Prospectus which
will correct such statement or omission or effect such compliance; and in case
any Underwriter is required by law to deliver a prospectus in connection with
sales of any of such Certificates at any time six months or more after the
Closing Date, upon the Representatives' request, but at the Expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies as the
Representatives may request of an amended or supplemented prospectus complying
with Section 10(a)(3) of the Act.
(e) To make generally available to Certificateholders of the Trust, in
each case as soon as practicable but not later than 60 days after the close of
the period covered thereby, an earnings statement of the Seller complying with
Rule 158 under
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<PAGE> 6
the Act and covering a period of at least twelve consecutive months beginning
after such Effective Date.
(f) The Seller will furnish to the Representatives copies of the
Registration Statement (one of which will be signed and will include all
exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as available
and in such quantities as the Representatives reasonably request.
(g) So long as any of the Certificates are outstanding, to furnish the
Representatives copies of all reports or other communications (financial or
other) furnished to Certificateholders of the Trust, and to deliver to the
Representatives during such same period, (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed with the
Commission and (ii) such additional information concerning the business and
financial condition of the Seller as the Representatives 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 subsection (h) and Section 9
hereof, the Underwriters will pay all their own costs and expenses, including,
without limitation, the cost of printing any agreement among underwriters,
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 ___________, Underwriters' counsel and (ii) the Seller 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 ______________, 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
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<PAGE> 7
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 Representatives 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 Seller shall cause Ford Credits
computer records relating to the Receivables contained in any Accounts to be
marked to show the Trusts absolute ownership of the Receivables, and from and
after the Closing Date neither the Seller nor the Servicer shall take any
action inconsistent with the Trust's ownership of such Receivables other than
as permitted by the Pooling and Servicing Agreement.
(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 Seller, the Seller 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 Seller
herein, to the accuracy of the statements of officers of the Seller made
pursuant to the provisions hereof, to the performance by the Seller of its
obligations hereunder and to the following additional conditions precedent:
(a) On or prior to the Closing Date, _______________ shall have furnished
to the Representatives a letter dated as of the Closing Date substantially in
the form and substance of the draft to which the Representatives previously
agreed.
(b) The Registration Statement shall have become effective not later than
4:00 p.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 Representatives; and
prior to the Closing Date no stop order suspending the effectiveness of the
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<PAGE> 8
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or, to the knowledge of the Seller, shall be
contemplated by the Commission.
(c) The Representatives shall have received as of the Closing Date an
officer's certificate signed by the Chairman of the Board, the President, the
Executive Vice President Finance or the Treasurer of the Seller representing
and warranting that, as of the Closing Date, the representations and warranties
of the Seller in this Agreement will be true and correct in all material
respects, that the Seller has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date in all material respects, that no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are contemplated by the Commission.
(d) Since the respective dates as of which information is given in the
Prospectus as amended or supplemented, there shall not have occurred any
material adverse change, or any development involving a prospective material
adverse change, in or affecting particularly the business or assets of the
Trust, Seller, Ford Credit or Ford Motor Company or any material adverse change
in the financial position or results or operations of the Trust, Seller, 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
Representatives' 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 which have resulted in the
declaration of a national emergency or a declaration of war which makes it
impracticable or inadvisable in the Representatives' 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) J.D. Bringard, Esq., Vice President - General Counsel of Ford Credit
and the Seller, or other counsel satisfactory to the Representatives in their
reasonable judgment, shall have furnished to the Representatives, his written
opinion, dated the Closing Date, in form reasonably satisfactory to the
Representatives in its reasonable judgment, to the effect that:
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<PAGE> 9
(i) The Seller has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, and is
duly qualified to transact business and is in good standing in each
jurisdiction in the United States of America in which the conduct of its
business or the ownership of its property requires such qualification.
(ii) This Agreement has been duly authorized, executed and delivered by
the Seller.
(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 Seller.
(iv) The consummation of the transactions contemplated by this
Agreement, the Pooling and Servicing Agreement, the Receivables Purchase
Agreement and the Interest Rate Swap Agreement, and the fulfillment of the
terms thereof, will not conflict with or result in a material breach of any
of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any material lien, charge or encumbrance upon
any of the property or assets of the Seller pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement, guarantee, lease
financing agreement or similar agreement or instrument known to such counsel
under which the Seller is a debtor or guarantor, nor will such action result
in any violation of the provisions of the Certificate of Incorporation or
the By-Laws of the Seller.
(v) The Certificates have been duly authorized and executed by the
Seller; 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
Seller prior to the Closing Date (other than the financial statements and
other accounting information contained in the Registration
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<PAGE> 10
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) The conditions to the use by the Seller of a registration
statement on Form S-3 under the Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the
Registration Statement and the Prospectus.
(viii) 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.
(ix) 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.
(x) Such counsel does not know of any contract or other document of a
character required to be filed as an exhibit to the Registration Statement
or required to be incorporated by reference into the Prospectus as amended
or supplemented or required to be described in the Registration Statement
or the Prospectus as amended or supplemented which is not filed or
incorporated by reference or described as required.
(xi) Such counsel does not know of any legal or governmental proceedings
pending to which the Seller is a party or of which any property of the
Seller is the subject, and no such proceedings are known by such counsel to
be threatened or contemplated by governmental authorities or threatened by
others, other than as set forth or contemplated in the Prospectus as amended
or supplemented and other than such proceedings which, in his opinion, will
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<PAGE> 11
not have a material adverse effect upon the general affairs, financial
position, net worth or results of operations (on an annual basis) of the
Seller and will not materially and adversely affect the performance by the
Seller of its obligations under, or the validity and enforceability of, the
Pooling and Servicing Agreement, the Receivables Purchase Agreement or the
Certificates.
(xii) 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.
(xiii) The Seller 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 corporate action.
(xiv) Prior to any sale or assignment thereof by the Seller to the
Trust, the Seller was the sole owner of all right, title and interest in,
and had good and marketable title to, the Receivables and the Collateral
Security transferred by it to the Trust. The assignment of the Receivables
and the Collateral Security, 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 which 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.
(xv) Immediately prior to the transfer of the Receivables to the
Trustee, the Seller's interest in the Receivables, the Collateral 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 Seller to the Trustee is a sale, the
interest of the Trustee in the Receivables, the Collateral 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
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<PAGE> 12
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 Seller to the Trustee of a valid
security interest in the Receivables, the Collateral 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 Collateral Security, the security interests
in the Vehicles securing the Receivables and the proceeds of each of the
foregoing against third parties.
(xvi) The Seller 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.
(xvii) The statements in the Prospectus under the heading "Certain Tax
Matters--State and Local Tax Consequences" 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) J.D. Bringard, Esq., Vice President - General Counsel of Ford Credit
and the Seller, or other counsel satisfactory to the Representatives in their
reasonable judgment, shall have furnished to the Representatives his written
opinion, dated as of the Closing Date, in form satisfactory to the
Representatives 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
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<PAGE> 13
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 Agreement have been duly authorized,
executed and delivered by, and each constitutes a valid and binding
obligation of, Ford Credit.
(iv) The consummation of the transactions contemplated by the Pooling
and Servicing Agreement, the Receivables Purchase Agreement, the Interest
Rate Swap Agreement 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 of which any
property of Ford Credit is the subject, and no such proceedings are known
by such counsel to be threatened or contemplated by governmental
authorities or threatened by others, other than as set forth or
contemplated in the Prospectus as amended or supplemented and other than
such proceedings which, in his opinion, will not have a material adverse
effect upon the general affairs, financial position, net worth or results
of operations (on an annual basis) of Ford Credit and its subsidiaries
considered as a whole and will not materially and adversely affect the
performance by Ford Credit of its obligations under, or the validity and
enforceability of, the Pooling and Servicing Agreement, the Receivables
Purchase Agreement,
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the Interest Rate Swap Agreement 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
Seller pursuant to the Receivables Purchase Agreement and duly authorized
such sale and assignment to the Seller by all necessary corporate action.
(vii) The statements in the Prospectus under the caption "Special
Considerations--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 Seller,
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 Seller by Ford Credit.
(x) All filings necessary under applicable law to perfect both the
sale of the Receivables by Ford Credit to the Seller pursuant to the
Receivables Purchase Agreement have been made and, provided that neither
Ford Credit nor the Seller 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 Seller pursuant to the Receivables Purchase Agreement or to the Trustee
as Trustee of the Trust 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
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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 Agreement 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 Seller 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 Seller is a party or
of which any property of either Ford Credit or the Seller is the subject,
and no such proceedings are known by such counsel to be threatened or
contemplated by governmental authorities or threatened by others (1)
seeking to prevent the issuance of the 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 Agreement or the Indemnification Agreement, or (2) seeking adversely
to affect the federal income tax attributes of the Certificates as
described in the Prospectus under the heading "Certain Federal Income Tax
Consequences."
(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
Agreement or Indemnification Agreement, including, without limitation, 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 Agreement or
Indemnification Agreement by Ford Credit or the Seller, 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 Seller, as
the case may be, the failure with which to comply could have a material
adverse effect on
15
<PAGE> 16
Ford Credit and its subsidiaries considered as a whole or the Seller, as the
case may be.
(h) ____________ (or such other counsel satisfactory to the
Representatives) shall have furnished their written opinion, dated the Closing
Date, with respect to the characterization of the transfer of the Receivables
by Ford Credit to the Seller as a sale, and with respect to the
characterization of the transfer of the Receivables from the Seller to the
Trust, to the Representatives and to Ford Credit, and such opinion shall be in
substantially the form previously discussed with the Representatives and their
counsel and in any event satisfactory in form and in substance to the
Representatives and their counsel and to Ford Credit.
(i) ____________, special federal tax counsel to the Seller, shall have
furnished to the Representatives their written opinion, dated as of the Closing
Date, in form and in substance satisfactory to the Representatives in its
reasonable judgment, to the effect that the statements in the Registration
Statement and Prospectus under the headings "Certain Tax Matters" 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 Representatives shall have received an opinion of _____________
addressed to the Representatives, dated the Closing Date, with respect to the
validity of the Certificates and such other related matters as the
Representatives shall require and the Seller shall have furnished or caused to
be furnished to such counsel such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(k) The Representatives shall have received an opinion addressed to the
Representatives, the Seller and the Servicer of _________________, counsel to
the Trustee, dated the Closing Date and satisfactory in form and substance to
the Representatives and to counsel to the Underwriters, to the effect that:
(i) The Trustee has been duly incorporated and is validly existing as
a corporation in good standing under the laws of New York 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 Agreement.
16
<PAGE> 17
(ii) The Pooling and Servicing Agreement and the Interest Rate Swap
Agreement 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
Seller and the Servicer, the Pooling and Servicing Agreement and the
Interest Rate Swap Agreement each constitutes a legal, valid and binding
obligation of the Trustee, enforceable against the Trustee in accordance
with its terms, except (1) the enforceability thereof may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights, and (2) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(iii) The 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 Agreement nor the
consummation of any of the transactions by the Trustee contemplated thereby
required the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with respect to, any
governmental authority or agency under any existing federal or New York
State law governing the trust powers of the Trustee, except such as have
been obtained, made or taken.
(l) The Representatives 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 Seller and
the Servicer in which such officers shall state that, to the best of their
knowledge after reasonable investigation, the representations and warranties of
the Seller and the Servicer contained in the Pooling and Servicing Agreement
and the representations and warranties of Ford Credit and the Seller contained
in the Receivables Purchase Agreement are true and correct in all material
respects, that Ford Credit, the Seller or the Servicer, as the case may be, has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied under such agreements at 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
17
<PAGE> 18
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 Corporation and Moody's Investors Service, Inc.
7. Indemnification and Contribution. (a) The Seller will indemnify and hold
each Underwriter harmless against any losses, claims, damages, or liabilities,
joint or several, to which such Underwriter may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Seller
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Seller by any Underwriter through the Representatives specifically for
use therein; and provided further, that the Seller shall not be liable to any
Underwriter or any person controlling any Underwriter under the indemnity
agreement in this subsection (a) with respect to any of such documents to the
extent that any such loss, claim, damage or liability of the Underwriters or
such controlling person results from the fact that such Underwriter sold the
Certificates to a person to whom there was not sent or given, at or prior to
the written confirmation of such sale, a copy of the Prospectus or of the
Prospectus as then amended or supplemented (excluding documents incorporated by
reference), whichever is most recent, if the Seller has previously furnished
copies thereof to such Underwriter.
The indemnity agreement in this subsection (a) shall be in addition to any
liability which the Seller may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act.
(b) Each Underwriter will indemnify and hold harmless the Seller against
any losses, claims, damages or liabilities to
18
<PAGE> 19
which the Seller may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus or
any amendment or supplement thereto, or any related preliminary prospectus, or
arise out of or are based upon the omission or the alleged omissions to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Seller by such Underwriter through the
Representatives specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Seller in connection with
investigating or defending any such action or claim.
The indemnity agreement in this subsection (b) shall be in addition to any
liability which each Underwriter may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls the Seller
within the meaning of the Act.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) of written notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above notify the indemnifying party of the
commencement thereof, and in the event that such indemnified party shall not so
notify the indemnifying party within 30 days following receipt of any such
notice by such indemnified party, the indemnifying party shall have no further
liability under such subsection to such indemnified party unless the
indemnifying party shall have received other notice addressed and delivered in
the manner provided in Section 10 hereof of the commencement of such 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 subsection. In case any such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party in its reasonable judgment, and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under such
subsection for any legal or other expenses subsequently incurred by such
indemnified party in
19
<PAGE> 20
connection with the defense thereof other than reasonable costs of
investigation.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Seller 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 Seller on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative benefits received by the Seller on the one hand and the underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Seller
bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus as amended or supplemented with respect to the 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 Seller or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission, including, with respect to any Underwriter, the extent
to which such losses, claims, damages or liabilities (or actions in respect
thereof) result from the fact that such Underwriter sold such Certificates to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus or the Prospectus as then
supplemented or amended (excluding documents incorporated by reference),
whichever is more recent, if the Seller has previously furnished copies thereof
to such Underwriter. The Seller and the Underwriters, severally and not
jointly, agree that it would not be just and equitable if contribution pursuant
to this subsection (d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to
20
<PAGE> 21
above in this subsection (d). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the 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 Seller (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 Seller 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 not been met, then the Seller 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 Seller as provided herein, the Seller will be liable to
reimburse the Underwriters, through the Representatives, 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 Seller 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
Representatives may make arrangements satisfactory to the Seller for the
purchase of such Certificates by other persons, including the
21
<PAGE> 22
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 Seller 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 Seller, 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
to the Representatives or the Underwriters, will be mailed, delivered or sent
by facsimile transmission and confirmed to Merrill Lynch & Co., World Financial
Center, North Tower, 250 Vesey Street, New York, New York 10281-1315 Attention:
_____________- facsimile number ___________; if sent to the Seller, will be
mailed, delivered or sent by facsimile transmission, and confirmed to it at
Ford Credit Auto Receivables Corporation, The American Road, Dearborn, Michigan
48121, attention of the Secretary - facsimile number _______________.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the Underwriters and the Seller 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.
22
<PAGE> 23
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
CORPORATION
By:___________________________
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
[UNDERWRITER]
_______________________________
Acting on their own behalf and
as Representatives of the
several Underwriters.
<PAGE> 24
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
CORPORATION
By:___________________________
Name:
Title:
Accepted in New York, New York,
as of the date hereof:
[UNDERWRITER]
_______________________________
Acting on their own behalf and
as Representatives of the
several Underwriters.
<PAGE> 25
SCHEDULE I
<TABLE>
<S> <C>
[UNDERWRITER] . . . . . . . . . . . . . . . . . . . . $___________________
[UNDERWRITER] . . . . . . . . . . . . . . . . . . . . $___________________
[UNDERWRITER] . . . . . . . . . . . . . . . . . . . . $___________________
[UNDERWRITER] . . . . . . . . . . . . . . . . . . . . $___________________
[UNDERWRITER] . . . . . . . . . . . . . . . . . . . . $___________________
</TABLE>
<PAGE> 1
EXHIBIT 4.2
FORD CREDIT AUTO RECEIVABLES CORPORATION
Seller
FORD MOTOR CREDIT COMPANY
Servicer
and
CHEMICAL BANK
Trustee
SERIES 1994-1 SUPPLEMENT
Dated as of ___________ __, 1994
to
POOLING AND SERVICING AGREEMENT
Dated as of December 31, 1991
$_____________
FORD CREDIT AUTO LOAN MASTER TRUST
SERIES 1994-1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Creation of the Series 1994-1 Certificates
<S> <C>
SECTION 1.01. Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Definitions
SECTION 2.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE III
Servicing Fee
SECTION 3.01. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
Rights of Series 1994-1 Certificateholders and
Allocation and Application of Collections
SECTION 4.01. Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.02. Monthly Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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 Series 1994-1 Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.08. Application of Reserve Fund and Available Subordinated Amount . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.09. Investor Charge-Offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
ARTICLE V
Distributions and Reports to
Series 1994-1 Certificateholders
<S> <C>
SECTION 5.01. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.02. Reports and Statements to Series 1994-1
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VI
Amortization Events
SECTION 6.01. Additional Amortization Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII
Optional Repurchase
SECTION 7.01. Optional Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
Final Distributions
SECTION 8.01. Sale of Certificateholders' Interest
Pursuant to Section 2.03 of the
Agreement; Distributions Pursuant
to Section 7.01 of the Series Supple-
ment or Section 2.03 or 12.02(c) of
the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8.02. Distribution of Proceeds of Sale,
Disposition or Liquidation of the
Receivables Pursuant to Section 9.02
of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX
Miscellaneous Provisions
SECTION 9.01. Execution and Delivery of the Interest
Rate Swap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.02. Registration of the Series 1994-1
Certificates under the Securities
Exchange Act of 1934 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.03. Ratification of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.04. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
ii
<PAGE> 4
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of 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 Interest Rate Swap
Schedule 1 List of Series 1994-1 Accounts
</TABLE>
iii
<PAGE> 5
SERIES 1994-1 SUPPLEMENT dated as of _________ __, 1994 (the "Series
Supplement"), among FORD CREDIT AUTO RECEIVABLES CORPORATION, a Delaware
corporation, as Seller, FORD MOTOR CREDIT COMPANY, a Delaware corporation, as
Servicer, and CHEMICAL BANK, a New York banking corporation, as Trustee.
Pursuant to Section 6.03 of the Pooling and Servicing Agreement dated as of
December 31, 1991 (as amended and supplemented, the "Agreement"), among the
Seller, the Servicer and the Trustee, the Seller 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 Seller and the Trustee shall create
a new Series of Investor Certificates and specify the Principal Terms thereof.
ARTICLE I
Creation of the Series 1994-1 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 1994-1, _____% 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.
"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
<PAGE> 6
to occur of (a) the commencement of an Early Amortization Period or (b) the
Expected Final Payment Date.
"Accumulation Period Commencement Date": The date which is, with respect
to an Accumulation Period Length of (i) one calendar month, the first day of
the ________ 199__ Collection Period, (ii) two calendar months, the first day
of the ________ 199__ Collection Period, (iii) three calendar months, the
first day of the ________ 199__ Collection Period, (iv) four calendar months,
the first day of the ________ 199__ Collection Period and (v) five calendar
months, the first day of the ________ 199__ Collection Period; provided,
however, that the Accumulation Period Commencement Date shall be (x) ________
__, 199__, 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": ________ __, 199_.
"Accumulation Period Length": As determined by the 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 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 6.01.
"Additional Interest" shall have the meaning specified in Section 4.02(a).
"Adjustment Date" shall mean the second London Business Day preceding the
first day of each Interest Period.
"Aggregate Available Subordinated Amount" shall mean the sum of the
Available Subordinated Amount and the Swap Available Subordinated Amount.
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<PAGE> 7
"Allocable Miscellaneous Payments" shall mean, with respect to any
Distribution Date, the product of (a) the Series 1994-1 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 Composition Premium" shall mean, with respect to any portion of the
Asset Correction Amount comprising principal, the excess (discounted as
described below), if any, of (a) the amount of interest that would have accrued
at the Certificate Rate on such principal portion of the Asset Correction
Amount from the period commencing with and including the Distribution Date on
which such amount was distributed to but excluding the Expected Final Payment
Date over (b) the amount of interest that would accrue on such principal
portion of the Asset Correction Amount 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 shall be discounted at the
Asset Composition Discount Rate from the Expected Final Payment Date to such
Distribution Date.
"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 1994-1 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 Seller's Collections" shall mean, with respect to any Deposit
Date, the sum of (a) the Available Sellers Non-Principal Collections for such
Deposit Date and (b) the Available Seller's Principal Collections for such
Deposit Date; provided, however, that the Available Sellers 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.
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<PAGE> 8
"Available Seller'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 Seller's percentage for the related Collection Period over
(ii) the Excess Seller's Percentage for such Collection Period by (b)
Non-Principal Collections for such Deposit Date.
"Available Seller'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 Seller's Percentage for the related Collection Period over
(ii) the Excess Seller'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 Seller
pursuant to Section 4.10(c), plus (D) any amounts distributed as Asset
Composition Premium pursuant to Section 4.07(b) on the preceding
Distribution Date minus (E) the Incremental Subordinated Amount for such
preceding Determination Date, plus (F) 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 Seller or allocated to one or
more Series; and
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;
4
<PAGE> 9
provided, however, that once the Accumulation Period or any Early
Amortization Period (other than an Early Amortization Period 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.
"Calculation Agent" shall mean the Trustee or any other Calculation Agent
selected by the Seller which is reasonably acceptable to the Trustee.
"Certificate Rate: ____% per annum.
"Certificateholders Monthly Servicing Fee" shall have the meaning specified
in Section 3.01.
"Closing Date" shall mean ________ __, 199__.
"Controlled Amortization Amount" shall mean the quotient 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.
"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 6.01 of this Series Supplement.
"Early Amortization Period" shall mean an Early Amortization Period with
respect to Series 1994-1.
"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).
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<PAGE> 10
"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 1994-1 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 Seller'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 Seller'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
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<PAGE> 11
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) (vi) with respect to such
Distribution Date.
"Expected Final Payment Date" shall mean the ________ 199__ 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 (E) or (F), 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 Invested Amount" shall mean the initial principal amount of the
Series 1994-1 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 $_____________.
7
<PAGE> 12
"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 __, dated as of ________ __, 199__,
between the Swap Counterparty and the Trust in connection with Series 1994-1.
"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 1994-1 Certificateholders 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 1994-1 Accounts, together with an
amount equal to the Series 1994-1 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.
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<PAGE> 13
"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 Seller'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 1994-1) pro
rata on the basis of such floating allocation percentages and principal
allocation percentages.
LIBOR: As to any date of determination, the rate for United States dollar
deposits for one month which appear on the Telerate Screen Page 3750 (as
defined below) as of 11:00 A.M., London time such date. "Telerate Screen LIBO
Page 3750" means the display designated as page 3750 on the Telerate Service
(or such other page as may replace page 3750 on that service for the purpose of
displaying London inter-bank offered rates of major banks). If such rate does
not appear on such page (or such other page as may replace that page on that
service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be selected by the Depositor after
consultation with the Trustee), the rate will be the Reference Bank Rate.
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<PAGE> 14
"LIBOR Business Day" shall mean any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in the State of New York or
in the city of London, England are required or authorized by law to be closed.
"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 Receivables Rate" shall mean as to any Semi-Annual Payment Date, the
average of the interest rates borne by the Receivables less the Servicing Fee
Rate (unless the Servicing Fee Rate is waived), as of the first day of the
month preceding the month of such Distribution Date, weighted on the basis of
the average amount outstanding during the six months preceding such Semi-Annual
Payment Date.
"Net Trust Swap Payment" shall mean, for any Collection Period, the monthly
payment, if any, made by the Trust to the Swap Counterparty pursuant to the
Interest Rate Swap to the extent that such monthly payment exceeds the monthly
payment made by 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 payment, if any, made by the Swap Counterparty to the Trust
pursuant to the Interest Rate Swap to the extent that such monthly payment
exceeds the monthly payment made by 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 receipt 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.
"Outstanding Series Invested Amount": 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
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<PAGE> 15
of Investor Certificates is not scheduled to end before the last day of the
________ ____ Collection Period.
"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.
"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 1994-1 Certificates (calculated on the basis of the outstanding
principal balance of the Series 1994-1 Certificates at the Certificate Rate
through the day preceding such Distribution Date), (iii) the amount of
Additional Interest, if any, for such Distribution Date and any Additional
Interest previously due but not distributed to the Series 1994-1
Certificateholders on a prior Distribution Date and (iv) the amount of the
Asset Composition Premium, if any, previously due but not previously
distributed to the Series 1994-1 Certificateholders.
"Required Participation Percentage" shall mean, with respect to Series
1994-1, ___%; provided, however, that the seller 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 each Rating Agency shall have notified
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<PAGE> 16
the seller or the Servicer that any such reduction 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.
"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.
"Seller's Collections" shall mean, with respect to any Collection Period,
the sum of (a) the Seller's Percentage of Non-Principal Collections for the
related Collection Period, plus (b) the Seller's Percentage of Principal
Collections for the related Collection Period.
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<PAGE> 17
"Seller'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%.
"Semi-Annual Payment Date" shall mean the 15th day of January and July (or,
if any such day is not a business day, the next succeeding business day)
commencing January __, 1995.
"Series Cut-Off Date" shall mean ________ __, 199__.
"Series 1994-1" shall mean the Series of Investor Certificates, the terms of
which are specified in this Series Supplement.
"Series 1994-1 Accounts" shall have the meaning specified in Section
4.04(e)(i).
"Series 1994-1 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 1994-1 Certificateholders" shall mean the Holders of Series 1994-1
Certificates.
"Series 1994-1 Certificateholders' Interest" shall mean that portion of the
Certificateholders' Interest evidenced by the Series 1994-1 Certificates.
"Series 1994-1 Certificates" shall mean any one of the certificates executed
by the Seller and authenticated by the Trustee, substantially in the form of
Exhibit A.
"Series 1994-1 Excess Principal Collections" shall mean that portion of
Excess Principal Collections allocated to Series 1994-1 pursuant to Section
4.11.
"Series 1994-1 Principal Shortfall" shall have the meaning specified in
Section 4.11.
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<PAGE> 18
"Servicing Fee Rate" shall mean, with respect to Series 1994-1, ____% 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) thereof).
"Subordinated Percentage" shall mean the percentage equivalent of a
fraction, the numerator of which is 10% and the denominator of which is the
excess of 100% over 10%.
"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 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 Seller's Collections applied to reduce the Swap Available
Subordinated Amount in accordance with Section 4.08(b).
"Swap Counterparty" shall mean _________________.
"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).
"Termination Date" shall mean the ________ 199__ Distribution Date.
"Termination Proceeds" shall mean any Termination proceeds arising out of
a sale of Receivables (or interests herein) pursuant to Section 12.02(c) of the
Agreement with respect to Series 1994-1.
"Trust Available Subordinated Amount" shall mean the sum of the Aggregate
Available Subordinated Amount for Series 1994-1 and the aggregate available
subordinated amounts for all other outstanding Series.
(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 1994-1, Standard &
Poor's and Moody's. As used in this Series Supplement and in the Agreement
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<PAGE> 19
with respect to Series 1994-1, "highest investment category" shall mean (i) in
the case of Standard & Poor's, AAA and A-1+, 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 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 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 1994-1 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 1994-1, 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 1994-1 Certificateholders with respect to any
Distribution Date (the "Certificateholders 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
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<PAGE> 20
of the Collection Period second preceding such Distribution Date; provided,
however, that with respect to the first Distribution Date, the
Certificateholders Monthly Servicing Fee shall be equal to $_________. The
remainder of the Monthly Servicing Fee shall be paid by the Seller and in no
event shall the Trust, the Trustee or the Series 1994-1 Certificateholders be
liable for the share of the Monthly Servicing Fee to be paid by the Seller; and
the remainder of the Servicing Fee shall be paid by the Seller and the Investor
Certificateholders of other Series and the Series 1994-1 Certificateholders
shall in no event be liable for the share of the Servicing Fee to be paid by
the Seller or the Investor Certificateholders of other Series. The
Certificateholders Monthly Servicing Fee shall be payable to the Servicer
solely to the extent amounts are available for distribution in accordance with
the terms of this Series Supplement.
The 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 Servicer believes
that sufficient Collections of Non-Principal Receivables will be available on
any future Distribution Date to pay the Certificateholders Monthly Servicing
Fee relating to the waived Monthly Servicing Fee. If the Servicer so waives
the Monthly Servicing Fee for any Distribution Date, the Monthly Servicing Fee
and the Certificateholders 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 Certificateholders 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 Certificateholders Monthly Servicing Fee is so paid,
the related portion of the Monthly Servicing Fee to be paid by the Seller shall
be paid by the Seller to the Servicer.
ARTICLE IV
Rights of Series 1994-1 Certificateholders and
Allocation and Application of Collections
SECTION 4.01. Allocations. Payments to Seller. (a) Collections of
Non-Principal Receivables and Principal Receivables, Miscellaneous Payments and
Defaulted Amounts, as they relate to Series 1994-1, shall be allocated and
distributed as set forth in this Article.
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(b) The Servicer shall instruct the Trustee to withdraw from the
Collection Account and pay to the Seller on the dates set forth below the
following amounts:
(i) on each Deposit Date:
(A) an amount equal to the Excess Seller'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 Seller's Percentage for the related
Collection Period of Principal Collections deposited in the Collection
Account for such Deposit Date, if the Seller's Participation Amount
(determined after giving effect to any Principal Receivables transferred
to the Trust on such Deposit 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); 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 Seller's Principal Collections for such Deposit Date,
if the Seller's Participation Amount (determined after giving effect to any
Principal Receivables transferred to the Trust on such Deposit Date) exceeds
the Trust 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 Seller's
Principal Collections shall be paid to the Seller 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 Seller's Principal
Collections.
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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 1994-1
Certificateholders' Interest pursuant to Section 7.01 of this Series Supplement
and proceeds from the sale, disposition or liquidation of Receivables pursuant
to Section 9.02 or 12.02 of the Agreement.
By way of clarification of Section 2.08(c) of the Agreement, any Principal
Receivables arising in a Removed Account after the Removal Date shall be the
subject of the Reassignment referred to in such Section 2.08(c) and shall
therefore not be included in the Trust, and Collections in respect of the
Receivables in such Ineligible 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 Ineligible 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 collections of principal, Defaulted
Receivables and Non-Principal Collections shall be allocated to the Seller;
(c) The 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 Seller'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. (a) The amount of monthly interest
("Monthly Interest") with respect to the Series 1994-1 Certificates on any
Distribution Date shall be an amount equal to one-twelfth of the product of (i)
the Certificate Rate and (ii) the outstanding principal balance of the Series
1994-1 Certificates as of the close of business on the preceding Distribution
Date (after giving effect to all repayments of principal made to
Certificateholders on such preceding Distribution Date, if any); provided,
however, with respect to the first Distribution Date, Monthly Interest shall be
equal to $_______. Monthly Interest shall be calculated on the basis of a
360-day year of twelve 30-day month.
On the Determination Date preceding each Distribution Date, the Servicer
shall determine the excess, if any (the
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"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 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 one-twelfth of the
product of (i) the Certificate Rate 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 1994-1
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 1994-1 Certificateholders 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 1994-1
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 1994-1 Certificates.
SECTION 4.04. Establishment of Reserve Fund and Funding Accounts. (a)(i)
The Servicer, for the benefit of the Series 1994-1 Certificateholders, 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,
Series 1994-1" and shall bear a designation clearly indicating that the funds
deposited therein are held for the benefit of the Series 1994-1
Certificateholders.
(ii) At the direction of the Servicer, funds on deposit in the Reserve
Fund shall at the direction of the Servicer be invested by the Trustee in
Eligible Investments selected by the Servicer that will mature so that such
funds will be available at the close of business on or before the Business Day
next
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preceding the following Distribution Date. All Eligible Investments shall be
held by the Trustee for the benefit of the Series 1994-1 Certificateholders.
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 Servicer, for the benefit of the Series 1994-1
Certificateholders, 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, Series 1994-1" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Series 1994-1 Certificateholders.
(ii) At the direction of the Servicer, funds on deposit in the Interest
Funding Account shall be invested by the Trustee in Eligible Investments
selected by the Servicer. All such Eligible Investments shall be held by the
Trustee for the benefit of the Series 1994-1 Certificateholders. 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 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
Semi-Annual Payment Date upon the maturity of any Eligible Investments are not
required to be invested overnight.
(c)(i) The Servicer, for the benefit of the Certificateholders, 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 Series 1994-1" and shall bear a designation clearly indicating that the
funds deposited therein are held for the benefit of the Series 1994-1
Certificateholders.
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(ii) At the direction of the Servicer, funds on deposit in the
Principal Funding Account shall be invested by the Trustee in Eligible
Investments selected by the 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 1994-1 Certificateholders. 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 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.
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 Servicer, for the benefit of the Series 1994-1
Certificateholders, 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, Series 1994-1" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Series 1994-1 Certificateholders.
(ii) At the direction of the Servicer, funds on deposit in the Excess
Funding Account shall be invested by the Trustee in Eligible Investments
selected by the 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 1994-1 Certificateholders. 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
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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 1994-1 Accounts") and in all proceeds thereof. The Series 1994-1
Accounts shall be under the sole dominion and control of the Trustee for the
benefit of the Certificateholders. If, at any time, any of the Series 1994-1
Accounts ceases to be an Eligible Deposit Account, the Trustee (or the 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 1994-1 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
1994-1 Account. Neither the Seller, the Servicer nor any person or entity
claiming by, through or under the Seller, the 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 1994-1 Account, except as expressly provided herein.
Schedule 1, which is hereby incorporated into and made part of this Series
Supplement, identifies each Series 1994-1 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 1994-1 Account is established pursuant to this Section, the
Servicer shall provide to the Trustee an amended Schedule 1, setting forth the
relevant information for such substitute Series 1994-1 Account.
(ii) Pursuant to the authority granted to the Servicer in Section 3.01
(a) of the Agreement, the 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 1994-1 Accounts for the purposes
of carrying out the Servicer's or Trustee's duties hereunder.
(f) Unless otherwise agreed to by the Rating Agencies, at no time may
greater than ___% of the outstanding principal balance of the Certificates be
invested in Eligible Investments
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(other than obligations of the United States government) of any single entity
or its Affiliates.
SECTION 4.05. Deficiency Amount. With respect to each Distribution Date,
on the related Determination Date, the 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 Certificateholders Monthly Servicing Fee for such Distribution
Date,
(v) the Investor Default Amount, if any, for such Distribution Date,
(vi) the Series 1994-1 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
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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 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 the Net Trust Swap
Receipt, 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, plus the amount of any Monthly Interest previously due but not
deposited in the Interest Funding Account or distributed to the Series
1994-1 Certificateholders 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 1994-1 Certificateholders 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 Certificateholders Monthly
Servicing Fee for such Distribution Date shall be distributed to the
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;
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(v) fifth, an amount equal to the Asset Composition Premium for such
Distribution Date, if any, plus the amount of any Asset Composition Premium
previously due but not distributed to the Series 1994-1 Certificateholders
on a prior Distribution Date, shall be distributed to the Series 1994-1
Certificateholders; and
(vi) sixth, 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 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 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
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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 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 Series 1994-1 Certificateholders. (a) The
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 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 1994-1
Certificateholders to pay accrued interest on the Series 1994-1
Certificates plus any accrued Additional Interest that has not been
previously distributed to the Series 1994-1 Certificateholders;
(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 1994-1 Certificates
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over the unreimbursed Investor Charge-Offs, shall be distributed to the
Series 1994-1 Certificateholders; and
(iii) on each Distribution Date following an Asset Composition Event,
the Asset Composition Amount will be distributed to Series 1994-1
Certificateholders as set forth in Section 4.12(b) of this Series
Supplement.
(b) On each Distribution Date following an Asset Composition
Event, the Asset Composition Premium shall be paid to Series 1994-1
Certificateholders pursuant to Section 4.06(a).
(c) The distributions to be made pursuant to this Section are
subject to the provisions of Sections 2.03, 9.02, 10.01 and 12.02 of the
Agreement and Sections 8.01 and 8.02 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 1994-1
Certificateholders 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 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 $_________.
(b) If there is a Required Subordination Draw Amount for such
Distribution Date, the Servicer shall, subject to the following paragraph,
apply or cause the Trustee to apply the Available Seller'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 Seller'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 1994-1
as described in Section
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4.05(a)(vi). The amount of the Available Sellers 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 Seller'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 1994-1 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 Seller's Collections on deposit
in the Collection Account on such Distribution Date, then such Available
Seller's Collections shall be allocated to such Series (including Series
1994-1) 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 Servicer shall cause the Trustee to distribute
such excess amount to the Seller 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 Seller'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 1994-1 Certificates, any funds remaining on
deposit in the Reserve Fund shall be paid to the Seller.
If for such Distribution Date the sum of the amount required to be deposited
into the Reserve Fund and the aggregate
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of the amounts required to be deposited into the reserve funds for all other
Series outstanding exceeds the Available Seller's collections that remain
available to make such deposits on such Distribution Date, then such remaining
Available Seller's Collections shall be allocated to such Series (including
Series 1994-1) 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 Seller'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 Seller's Collections available
to make such deposits for such Distribution Date, then such remaining Available
Seller's Collections shall be allocated to such Series (including Series
1994-1) 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 Seller'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 Seller on such
Distribution Date; provided that if the Trust Available Subordinated Amount for
the immediately preceding Determination Date exceeds the Seller'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 Seller's
Collections shall be deposited into the Reserve Fund to the extent of such
excess. Any remaining Available Seller's Principal Collections shall be paid
to the Seller.
SECTION 4.09. Investor Charge-Offs. If, on any Distribution Date on
which the Available Subordinated Amount on
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<PAGE> 34
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 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
Certificateholders Monthly Servicing Fee which have been previously waived
pursuant to Section 3.01 shall be distributed to the Servicer; and
(c) the balance, if any, shall be distributed to the Seller.
SECTION 4.11. Excess Principal Collections.
"Series 1994-1 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 1994-1
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
1994-1 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 1994-1 Principal Shortfall, with respect to any
Distribution
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<PAGE> 35
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 the sum of
all Eligible Investments and amounts on deposit in all Series Accounts
represents more than ___% of the Trust Assets 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.
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 Servicer shall
calculate the minimum additional amount that would be necessary to be paid out
of the Series 1994-1 Accounts on the next Distribution Date to achieve
compliance with the percentages set forth in Sections 4.12 (a)(i) and (ii),
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 1994-1
Certificates will become payable on such Distribution Date, and the 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)(i) and (ii) 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
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<PAGE> 36
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 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 Seller 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 1994-1. To the extent that the Invested Amount is
increased by any payment to the Seller or any allocation to one or more other
Series, the Seller'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
Seller 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 Seller 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
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<PAGE> 37
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 Seller. 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 Seller.
ARTICLE V
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<PAGE> 38
Distributions and Reports to
Series 1994-1 Certificateholders
SECTION 5.01. Distributions. (a) On each Distribution Date, the Trustee
shall distribute to each Series 1994-1 Certificateholder of record on the
preceding Record Date (other than as provided in Section 12.02 of the Agreement
respecting a final distribution) such Certificateholder's pro rata share (based
on the aggregate fractional undivided interests represented by the Series
1994-1 Certificates held by such Certificateholder) of the amounts on deposit
in the Series 1994-1 Accounts as is payable to the Series 1994-1
Certificateholders on such Distribution Date pursuant to Section 4.07.
(b) Except as provided in Section 12.02 of the Agreement with respect to a
final distribution, distributions to Series 1994-1 Certificateholders hereunder
shall be made by check mailed to each Series 1994-1 Certificateholder at such
Certificateholder's address appearing in the Certificate Register without
presentation or surrender of any Series 1994-1 Certificate or the making of any
notation thereon; provided, however, that with respect to Series 1994-1
Certificates registered in the name of a Depository, such distributions shall
be made to such Depository in immediately available funds.
SECTION 5.02. Reports and Statements to Series 1994-1 Certificateholders.
(a) At least two Business Days prior to each Distribution Date, the Servicer
will provide to the Trustee statements substantially in the forms of Exhibits
B-1 and B-2, and on each Distribution Date the Trustee shall forward to each
Series 1994-1 Certificateholder the statement substantially in the form of
Exhibit B-2 prepared by the Servicer setting forth certain information relating
to the Trust and the Series 1994-1 Certificates.
(b) A copy of each statement provided pursuant to paragraph (a) will be made
available for inspection at the Corporate Trust Office.
(c) On or before January 31, of each calendar year, beginning with calendar
year 199__, the Trustee shall furnish or cause to be furnished to each Person
who at any time during the preceding calendar year was a Series 1994-1
Certificateholder, a statement prepared by the Servicer containing the
information which is required to be contained in the statement to Series 1994-1
Certificateholders as set forth in paragraph (a) above, aggregated for such
calendar year or the applicable portion thereof during which such Person was a
Series 1994-1 Certificateholder, together with other information as is required
to be provided by an issuer of indebtedness under the Internal
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<PAGE> 39
Revenue Code and such other customary information as is necessary to enable the
Series 1994-1 Certificateholders (or Certificate Owners) to prepare their tax
returns. Such obligation of the Trustee shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by
the Trustee pursuant to any requirements of the Internal Revenue Code as from
time to time in effect.
ARTICLE VI
Amortization Events
SECTION 6.01. 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 1994-1
Certificateholders, be deemed to be an Early Amortization Event solely with
respect to Series 1994-1:
(a) on any Determination Date, the average of the Monthly Payment Rates for
the three preceding Collection Periods is less than 20%;
(b) 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 10% of the Pool Balance on such last day; or
(c) the Interest Rate Swap is terminated in accordance with its terms.
ARTICLE VII
Optional Repurchase
SECTION 7.01. Optional Repurchase. (a) On any Distribution Date occurring
after the date on which the Invested Amount is reduced to 10% of the principal
amount of the Certificates on the Closing Date or less, the Seller shall have
the option, subject to the condition set forth in paragraph (c), to purchase
the entire, but not less than the entire, Series 1994-1 Certificateholders'
Interest, at a purchase price equal to the Reassignment Amount for such
Distribution Date.
(b) The Seller shall give the Servicer and the Trustee at least 10 days'
prior written notice of the Distribution Date on which the Seller intends to
exercise such purchase option. Not later than 12:00 noon, New York City time,
on such
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<PAGE> 40
Distribution Date the Seller 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 8.01(b).
(c) If at the time the Seller exercises its purchase option hereunder the
Seller's long-term unsecured debt has a rating lower than the lowest investment
grade rating of the Rating Agency, the Seller 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 1994-1 Certificateholders' Interest purchased by the
Seller constitutes fair value for the consideration paid therefor and as to the
solvency of the Seller, the purchase of the Series 1994-1 Certificateholders'
Interest would not be considered a fraudulent conveyance under applicable law.
ARTICLE VIII
Final Distributions
SECTION 8.01. Sale of Certificateholders' Interest Pursuant to Section 2.03
of the Agreement; Distributions Pursuant to Section 7.01 of the Series
Supplement or Section 2.03 or 12.02(c) of the Agreement. (a) The amount to be
paid by the Seller to the Collection Account with respect to Series 1994-1 in
connection with a purchase of the Certificateholders' 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 7.01 or 8.01 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 or Asset Composition
Premium previously due but not deposited into the Interest Funding Account or
paid to Series 1994-1
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<PAGE> 41
Certificateholders on any prior Distribution Date, into the Interest Funding
Account, up to the Reassignment Amount for Series 1994-1 and (ii) second, pay
the remainder of any Termination Proceeds to the Seller.
(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 7.01 or 8.01 and all other
amounts on deposit therein shall be distributed in full to the Series 1994-1
Certificateholders 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 1994-1.
SECTION 8.02. Distribution of Proceeds of Sale, Disposition or Liquidation
of the Receivables Pursuant to Section 9.02 of the Agreement. (a) Not later
than 12:00 noon, New York City time, on the Distribution Date following the
date on which the Insolvency Proceeds are deposited into the Collection Account
pursuant to Section 9.02(b) of the Agreement, the Trustee shall first (in each
case, after giving effect to any deposits and distributions otherwise to be
made on such Distribution Date) deduct an amount equal to the Invested Amount
on such Distribution Date from the portion of the Insolvency Proceeds allocated
to the Series 1994-1 Allocation Percentage of Principal collections and deposit
such amount in the Principal Funding Account, provided that the amount of such
deposit shall not exceed the product of (x) the portion of the Insolvency
Proceeds allocated to the Series 1994-1 Allocation Percentage of Principal
Collections and (y) 100% minus the Excess Seller's Percentage with respect to
the related Collection Period. The remainder of the portion of the Insolvency
Proceeds allocated to the Series 1994-1 Allocation Percentage of Principal
Collections shall be allocated to the Seller's Interest and shall be released
to the Seller on such Distribution Date.
(b) Not later than 12:00 noon, New York City time, on such Distribution
Date, the Trustee shall first (in each case, after giving effect to any
deposits and distributions otherwise to be made on such Distribution Date)
deduct an amount equal to the sum of (i) Monthly Interest for such Distribution
Date, (ii) any Monthly Interest previously due but not deposited into the
Interest Funding Account on any prior Distribution Date, (iii) 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 on
a prior Distribution Date, from the portion of the Insolvency Proceeds
allocated to the Series 1994-1 Allocation Percentage of Non-Principal
Collections and deposit such amount in the Interest Funding Account, provided
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<PAGE> 42
that the amount of such distribution shall not exceed (x) the product of (A)
the portion of the Insolvency Proceeds allocated to the Series 1994-1
Allocation Percentage of Non-Principal Collections and (B) 100% minus the
Excess Seller's Percentage. The remainder of the portion of the Insolvency
Proceeds allocated to Non-Principal Collections shall be allocated to the
Seller's Interest and shall be released to the Seller on such Distribution
Date.
(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 this Section and all other amounts on
deposit therein shall be distributed in full to the Series 1994-1
Certificateholders on the Distribution Date on which funds are deposited
pursuant to this Section (or, if not so deposited on a Distribution Date, on
the immediately following Distribution Date) and any distribution made pursuant
to this Section shall be deemed to be a final distribution pursuant to Section
12.02 of the Agreement with respect to Series 1994-1.
ARTICLE IX
Miscellaneous Provisions
SECTION 9.01. 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 Seller 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 9.02. Registration of the Series 1994-1 Certificates under the
Securities Exchange Act of 1934. The Seller shall cause the Series 1994-1
Certificates to be registered under the Securities Exchange Act of 1934, as
amended, on or before ________ __, 199__ and thereafter maintain such
registration until the Series 1994-1 Certificates are no longer outstanding.
SECTION 9.03. 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 9.04. 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
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<PAGE> 43
original, but all of which together shall constitute one and the same
instrument.
SECTION 9.05. 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.
39
<PAGE> 44
IN WITNESS WHEREOF, the Seller, the 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
CORPORATION,
Seller
By:______________________________
Name:
Title:
FORD MOTOR CREDIT COMPANY,
Servicer
By:______________________________
Name:
Title:
CHEMICAL BANK,
Trustee
By:______________________________
Name:
Title:
40
<PAGE> 45
EXHIBIT A
FORM OF FACE OF CERTIFICATE
Initial
REGISTERED Principal Balance: */
$___________________
Certificate No. R-[ ] CUSIP NO. _________
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
FORD CREDIT AUTO LOAN MASTER TRUST
SERIES 1994-1
[_____%] AUTO LOAN
ASSET BACKED CERTIFICATES
evidencing a fractional undivided interest in certain
assets of the
FORD CREDIT AUTO LOAN MASTER TRUST
the corpus of which consists primarily of wholesale (i.e., dealer floorplan)
receivables (the "Receivables") generated 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") meeting certain
eligibility criteria. This certificate (a "Certificate") does not represent
any interest in, or obligation of, Ford Credit Auto Receivables Corporation
("FCAR" or the "Seller"), Ford Credit or any affiliate thereof.
______________________
*/ Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
<PAGE> 46
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement referred to
on the reverse side hereof 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 Seller has caused this Certificate to be duly
executed.
FORD CREDIT AUTO RECEIVABLES
CORPORATION
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
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<PAGE> 47
FORM OF THE REVERSE OF CERTIFICATE
This certifies that _________________________ (the "Series 1994-1
Certificateholder"), is the registered owner of a fractional undivided interest
in certain assets of the FORD CREDIT AUTO LOAN MASTER TRUST (the "Trust")
created pursuant to a Pooling and Servicing Agreement (the "P&S") dated as of
________ __, 199__, as supplemented by the Series 1994-1 Series Supplement
dated as of September 30, 1992, among Ford Credit Auto Receivables Corporation
("FCAR"), as Seller (the "Seller"), Ford Motor Credit Company ("Ford Credit"),
as servicer (the "Servicer"), and Chemical Bank, as trustee (the "Trustee"),
that are allocated to the Series 1994-1 Certificateholders' 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 Seller's right, title
and interest in, to and under the Receivables in each Account and all
Collateral Security with respect thereto owned by the Seller 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
Seller's rights, remedies, powers and privileges with respect to such
Receivables under the Receivables Purchase Agreement, (c) all of the Seller's
right, title and interest in, to and under the Receivables in each Account and
all Collateral Security with respect thereto owned by the Seller 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 Seller's
Certificate will be issued pursuant to the Pooling and Servicing Agreement
which will represent the Seller's Interest in the Trust. The Seller'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.
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<PAGE> 48
Subject to the terms and conditions of the Pooling and Servicing Agreement,
the Seller 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 1994-1 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 Seller has entered into the Pooling and Servicing Agreement and the
Series 1994-1 Certificates have been (or will be) issued with the intention
that the Series 1994-1 Certificates will qualify under applicable tax law as
indebtedness of FCAR secured by the Receivables. The Seller, each Beneficiary
and each Certificateholder and Certificate Owner, by the acceptance of its
Certificate or Book-Entry Certificate, as applicable, agrees to treat the
Series 1994-1 Certificates as indebtedness of FCAR secured by the Receivables
for Federal income taxes, state and local income, single business and franchise
taxes and any other taxes imposed on or measured by income.
On each Distribution Date, the Trustee shall distribute to each Series
1994-1 Certificateholder of record at the close of business on the the last day
of the month preceding the month in which such Distribution Date occurs (each a
"Record Date") such Certificateholder's pro rata share (based on the aggregate
fractional undivided interest represented by the Series 1994-1 Certificates
held by such Certificateholder, except as otherwise provided in the Pooling and
Servicing Agreement) of such amounts on deposit in the Collection Account or
the Series 1994-1 Accounts as are payable in respect of the Series 1994-1
Certificates pursuant to the Pooling and Servicing Agreement. Distributions
with respect to this Certificate will be made by the Trustee by check mailed to
the address of the Certificateholder of record appearing in the Certificate
Register without
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<PAGE> 49
the presentation or surrender of this Certificate or the making of any notation
thereon (except for the final distribution in respect of this Certificate)
except that with respect to Series 1994-1 Certificates registered in the name
of a Depository, including Cede & Co., the nominee for The Depository Trust
Company, distributions will be made in immediately available funds. Final
payment of this Certificate will be made only upon presentation and surrender
of this Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Certificateholder in accordance
with the Pooling and Servicing Agreement.
On the Distribution Date occurring after the Invested Amount is reduced to
10% of the original principal amount of the Certificates or less, the Seller
has the option, subject to the condition set forth in Section 7.01(c) of the
Series Supplement, to purchase the entire Series 1994-1 Certificateholders'
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 Seller, the Servicer, 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 Servicer, the Seller and the Trustee, without the consent of any of the
Series 1994-1 Certificateholders, so long as any such action shall not, as
evidenced by an Opinion of Counsel, 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 Servicer, the Seller and the Trustee with the consent of the Holders of
Investor Certificates evidencing not less than 66-2/3% of the aggregate unpaid
5
<PAGE> 50
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 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.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register of the Trustee upon surrender of this Certificate
for registration of transfer at the office or agency maintained by the Trustee
in New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or such Holder's
attorney duly authorized, and thereupon one or more new Series 1994-1
Certificates of authorized denominations evidencing the same aggregate
fractional undivided interest will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Series 1994-1 Certificates are exchangeable for
new Series 1994-1 Certificates evidencing like aggregate fractional undivided
interests as requested by the Certificateholder surrendering such Certificates.
No service charge may be imposed for any such exchange but the Trustee may
require payment of a sum sufficient
6
<PAGE> 51
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Servicer, the Trustee, the Transfer Agent and Registrar and any agent of
any of them, may treat the person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Servicer nor the Trustee,
the Transfer Agent and Registrar, nor any agent of any of them, shall be
affected by notice to the contrary except in certain circumstances described in
the Pooling and Servicing Agreement.
7
<PAGE> 52
ASSIGNMENT
Social Security or other identifying number of assignee
________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _____________________________________________________________
____________________________________________________________________________
(name and address of assignee)
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints _________________________, attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated: ____________ _____________________________*
Signature Guaranteed:
______________________________
_______________
(*) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the reverse of the within Certificate in
every particular, without alteration, enlargement or any change whatsoever.
8
<PAGE> 53
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 1994-1 Certificates;
(d) The amount of such distribution allocable to principal on the Series
1994-1 Certificates;
(e) The amount of such distribution allocable to interest on the 1994-1
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 1994-1 Certificates for such distribution
(after giving effect to all distributions which will occur on such Distribution
Date);
(k) The "pool factor" for the Series 1994-1 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);
(1) The Available Subordinated Amount for such Determination Date;
<PAGE> 54
(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".
10
<PAGE> 55
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 1994-1 Certificates;
(d) The amount of such distribution allocable to principal on the Series
1994-1 Certificates;
(e) The amount of such distribution allocable to interest on the 1994-1
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 1994-1 Certificates for such distribution
(after giving effect to all distributions which will occur on such Distribution
Date);
(k) The "pool factor" for the Series 1994-1 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);
(1) 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.
<PAGE> 56
SCHEDULE 1
Name of Series Depository Institution
1994-1 Account and Account No.
- --------------------------- ---------------------------
Interest Funding Account
Principal Funding Account
Excess Funding Account
Reserve Fund
<PAGE> 1
EXHIBIT 8.1
[BROWN & WOOD LETTERHEAD]
July 21, 1994
Ford Credit Auto Receivables
Corporation
The American Road
Dearborn, Michigan 48121
Re: Ford Credit Auto Loan Master Trust
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special tax counsel to Ford Credit Auto Receivables
Corporation, a Delaware corporation ("FCAR"), in connection with the
above-referenced Registration Statement relating to the issuance and sale of
certain of the Series 1994-1, ___% Auto Loan Asset Backed Certificates (the
"Certificates") issued by the Ford Credit Auto Loan Master Trust and evidencing
undivided interests in a pool of receivables generated from time to time
pursuant to certain wholesale automobile loan revolving credit agreements. The
Certificates will be issued pursuant to the Pooling and Servicing Agreement
dated as of December 31, 1991 (the "Pooling and Servicing Agreement"), among
FCAR, as seller (the "Seller"), Ford Motor Credit Company, as servicer (the
"Servicer"), and Manufacturers Hanover Trust Company, as trustee, and the
Series 1994-1 Supplement to the Pooling and Servicing Agreement, entered into
among the Seller, the Servicer and Chemical Bank, as successor by merger to
Manufacturers Hanover Trust Company, as trustee. We have advised the Seller
with respect to certain federal income tax consequences of the proposed
issuance of the Certificates. This advice is summarized under the headings
"Prospectus Summary -- Tax Matters" and "Certain Tax Matters -- United States
Federal Income Tax Consequences" in the prospectus relating to the Certificates
(the "Prospectus"), all a part of the Registration Statement (File No.
33-___________) on Form S-3 (the "Registration Statement"), filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), for the registration of the Certificates under
the Act. Such description does not purport to discuss all possible federal
income tax ramifications of the proposed issuance, but with respect to those
tax consequences which are discussed, in our opinion, the description is
accurate in all material respects.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm (as special tax counsel
to the Seller) under the heading "Certain Tax Matters -- Federal Income Tax
Consequences" in the Prospectus, without implying or admitting that we are
"experts" within the meaning of the Act or the rules and regulations of the
Commission issued thereunder, with respect to any part of the Registration
Statement, including this exhibit.
Very truly yours,
/s/ Brown & Wood
<PAGE> 1
EXHIBIT 25.1
FORD CREDIT AUTO RECEIVABLES CORPORATION
Certificate of Secretary
The undersigned, Hurley D. Smith, Secretary of FORD CREDIT AUTO
RECEIVABLES CORPORATION, a Delaware corporation (the "Company"), DOES HEREBY
CERTIFY that the resolutions attached as Exhibit 1 to this Certificate were
duly adopted by the Board of Directors of the Company on February 14, 1991, at
a meeting duly called and held at which a quorum was present and acted
throughout, and such resolutions have not been amended, modified, rescinded or
revoked and are in full force and effect on the date hereof.
WITNESS my hand and the seal of the Company this 21st day of July,
1994.
/s/ HURLEY D. SMITH, SECRETARY
Hurley D. Smith, Secretary
<PAGE> 2
Exhibit 1
Sale of Receivables Pursuant to Public Offerings of Receivables Securities
RESOLVED, That the Company is hereby authorized to issue and sell,
during any calendar year commencing with calendar year 1991, (i) in one or more
public offerings required to be registered with the Securities and Exchange
Commission (the "Commission") pursuant to applicable provisions of the
Securities Act of 1933, as amended (the "Act"), or (ii) in one or more private
placements exempt from registration under the Act, certificates or securities
("Receivables Securities") relating to or representing an interest in
receivables and assets relating thereto ("Receivables") acquired by the
Company, in an aggregate principal amount not to exceed the aggregate
principal amount authorized for registration under the Act pursuant to the next
succeeding resolution, upon such terms and conditions as may be fixed by any
two of the Chairman of the Board of Directors, the President, the Executive Vice
President-Finance and the Treasurer and that any two of the Chairman of the
Board of Directors, the President, the Executive Vice President-Finance and the
Treasurer be and hereby are authorized to determine the terms and conditions of
the Receivables Securities.
RESOLVED, That the Company is hereby authorized to register with the
Commission pursuant to the provisions of the Act Receivables Securities in
principal amounts not to exceed in the aggregate $8,000,000,000 during any
calendar year.
RESOLVED, That the preparation of one or more Registration Statements
on such form or forms as may be appropriate covering the Receivables
Securities, including prospectuses, exhibits and other documents, to be filed
with the Commission, for the purpose of registering the offer and sale of the
Receivables Securities under the Act, be and it hereby is in all respects
approved; that the directors and appropriate officers of the Company, and each
of them, be and hereby are authorized to sign and execute in their own behalf,
or in the name and on behalf of the Company, or both, as the case may be, any
such Registration Statement, with such changes, if any, therein, including
amendments to the prospectus and the addition or amendment of exhibits and
other documents relating thereto or required by law or regulation in connection
therewith, all in such form as such directors and officers may deem necessary,
appropriate or desirable, as conclusively evidenced by their execution thereof,
and that the appropriate officers of the Company, and each of them, be and
hereby are authorized to cause any such Registration Statement, so executed, to
be filed with the Commission; and, prior to the effective date of any such
Registration Statement, the appropriate officers of the Company are directed to
use their best efforts to furnish each director and each officer signing such
Registration Statement with a copy of such Registration Statement, and if,
prior to the effective date of any such Registration Statement, material
changes therein or material additions thereto are proposed to be made, the
appropriate officers of the Company are directed to use their best efforts to
furnish each director, and each officer signing any such Registration
Statement, with a copy of such Registration Statement and each amendment
thereto as filed with the Commission, or a description of such changes or
<PAGE> 3
-2-
additions, or a combination thereof, in as complete and final form as
practicable and in sufficient time to permit each director and each such
officer so desiring to object to any part of any such Registration Statement
before it becomes effective.
RESOLVED, That the directors and appropriate officers of the Company,
and each of them, be and hereby are authorized to sign and execute in their own
behalf, or in the name and on behalf of the Company, or both, as the case may
be, any and all amendments (including post-effective amendments) to any such
Registration Statement, including amendments to the prospectus and the addition
or amendment of exhibits and other documents relating thereto or required by
law or regulation in connection therewith, all in such form, with such changes,
if any, therein, as such directors and officers may deem necessary, appropriate
or desirable, as conclusively evidenced by their execution thereof, and that
the appropriate officers of the Company, and each of them, be and hereby are
authorized to cause such amendment or amendments, so executed, to be filed with
the Commission; and if, prior to the effective date of each such post-effective
amendment, material changes or material additions are proposed to be made in or
to any such Registration Statement or any amendment thereto in the form in
which it most recently became effective, the appropriate officers of the
Company are directed to use their best efforts to furnish each director, and
each officer signing such post-effective amendment, with a copy of such
post-effective amendment or a description of all material changes or additions
therein, or a combination thereof, in as complete and final form as practicable
and in sufficient time to permit each director and each such officer so
desiring to object to any part of such post-effective amendment before it
becomes effective.
RESOLVED, That each officer and director who may be required to sign
and execute any such Registration Statement or any amendment thereto or
document in connection therewith (whether on behalf of the Company, or as an
officer or director of the Company, or otherwise), be and hereby is authorized
to execute a power of attorney appointing W. E. Odom, K. C. Merrill, K. J.
Coates, J. D. Bringard, H. D. Smith, W. O. Staehlin, R. P. Conrad, and R. A.
Aitken, and each of them, severally, his true and lawful attorney or attorneys
to sign in his name, place and stead in any such capacity any such Registration
Statement and any and all amendments (including post-effective amendments)
thereto and documents in connection therewith, and to file the same with the
Commission, each of said attorneys to have power to act with or without the
other, and to have full power and authority to do and perform, in the name and
on behalf of each of said officers and directors who shall have executed such a
power of attorney, every act whatsoever which such attorneys, or any of them,
may deem necessary, appropriate or desirable to be done in connection therewith
as fully and to all intents and purposes as such officers or directors might or
could do in person.
RESOLVED, That any officer of the Company be and hereby is authorized
in the name and on behalf of the Company to take any and all action which such
persons, or any of them, may deem necessary, appropriate or desirable in order
to obtain a permit, register or qualify the Receivables Securities for issuance
and sale or to request an exemption from registration of such securities or to
register or obtain a license for the Company as a dealer
<PAGE> 4
-3-
or broker under the securities laws of such of the states of the United States
of America as such persons, or any of them, may deem necessary, appropriate or
desirable, and in connection with such registrations, permits, licenses,
qualifications and exemptions to execute, acknowledge, verify, deliver, file
and publish all such applications, reports, resolutions, irrevocable consents
to service of process, powers of attorney and other papers and instruments as
may be required under such laws, and to take any and all further action which
such persons, or any of them, may deem necessary, appropriate or desirable in
order to maintain such registrations in effect for as long as such persons, or
any of them, may deem to be in the best interests of the Company.
RESOLVED, That Ford Credit Auto Receivables Corporation hereby
designates any licensed California broker-dealer designated by any officer of
the Company its attorney-in-fact for the purpose of executing and filing one or
more applications and amendments thereto on behalf of the Company, under
applicable provisions of the California Corporate Securities Law of 1968, for
the registration or qualification of part or all of the Receivables Securities
of the Company for offering and sale in the State of California.
BE IT RESOLVED THAT RICHARD D. LATHAM, Securities Commissioner, State
Securities Board, of the State of Texas, and his successor in office, is made,
constituted and appointed the true and lawful attorney-in-fact for and in the
State of Texas for this corporation, upon whom all process of law against this
corporation in any action at law or legal proceeding growing out of the Texas
Securities Act may be served, subject to and in accordance with all the
provisions of the laws of the State of Texas and all amendments thereto, and
this corporation agrees that any and all lawful process against it may be
served upon its said attorney-in-fact, RICHARD D. LATHAM, or his successor in
office, shall be deemed valid personal service upon this corporation and shall
be of the same force and validity as if served upon this corporation; and that
all process served upon the said Securities Commissioner shall be and have the
same effect as if this corporation were organized and created under the laws of
the State of Texas and had been lawfully served with process therein; and
BE IT FURTHER RESOLVED that the corporation by and through its
President or any Vice President and Secretary or any Assistant Secretary
execute a Power of Attorney to the said RICHARD D. LATHAM, Securities
Commissioner of the State of Texas, and his successor in office, incorporating
the provisions of this resolution therein.
RESOLVED, That any and all haec verba resolutions which may be required
by the Blue Sky or securities laws of any state in which the Company intends to
offer to sell its securities be, and they hereby are, adopted; that the proper
officers of the Company be, and they hereby are, authorized to certify that
such resolutions were duly adopted at this meeting; and that the Secretary of
the Company shall cause a copy of each resolution so certified to be attached
to the minutes of this meeting.
RESOLVED, That the Company is hereby authorized to enter into one or
more Indentures, Pooling and Servicing Agreements or other agreements and
supplements and amendments thereto, each with a bank, trust company or
<PAGE> 5
-4-
other person, or corporation or entity as trustee, providing for the issuance
of the Receivables Securities, and that any officer of the Company be and
hereby is authorized, in the name and on behalf of the Company, (i) to select
such trustee or trustees and (ii) to execute, acknowledge and deliver each
such Indenture, Pooling and Servicing Agreement or other agreement under the
seal of the Company, attested by the Secretary or any Assistant Secretary,
containing such terms and provisions as the officer or officers executing such
agreements may deem necessary, appropriate or desirable, as conclusively
evidenced by his or their execution thereof.
RESOLVED, That any officer of the Company be and hereby is authorized,
in the name and on behalf of the Company and under its corporate seal (which
may be a facsimile of such seal), to execute (by manual or facsimile
signatures) Receivables Securities (and, in addition, Receivables Securities to
replace any of the Receivables Securities which are lost, stolen, mutilated or
destroyed and Receivables Securities required for exchange, substitution or
transfer, all as provided in the respective Indentures, Pooling and Servicing
Agreements or other agreements) in fully registered form in substantially the
forms of Receivables Securities to be set forth in the respective Indentures,
Pooling and Servicing Agreements or other agreements with such changes therein
and additions thereto as the officer or officers executing the Receivables
Securities may deem necessary, appropriate or desirable, as conclusively
evidenced by his or their execution thereof.
RESOLVED, That any officer of the Company be and hereby is authorized
to appoint one or more paying agents, registrars, transfer agents, and other
agents and functionaries, and to execute and deliver, in the name and on behalf
of the Company, any agreement, instrument or document relating to any such
appointment, for the purpose of implementing and giving effect to the
provisions of the Indentures, Pooling and Servicing Agreements or other
agreements and the Receivables Securities, respectively, in the forms in which
they shall be executed and delivered pursuant to the foregoing resolutions;
provided, however, that the Company may at any time elect to act in any such
capacity itself.
RESOLVED, That the Company is hereby authorized to enter into one or
more underwriting agreements, sales agency agreements or like agreements (the
"Underwriting Agreements") with any firm, institution or partnership acting on
behalf of themselves or itself and the several underwriters, providing for the
sale of the Receivables Securities and that, when such Underwriting Agreements,
or any of them, have been completed to set forth the prices at and terms and
conditions upon which the Receivables Securities are to be sold and the
compensation to be received by the underwriters [such matters first having been
presented to and approved by any two of the Chairman of the Board of Directors,
the President, the Executive Vice President-Finance and the Treasurer], any
officer of the Company be and hereby is authorized to execute and deliver, in
the name and on behalf of the Company, the respective Underwriting Agreements,
with the inclusion of such underwriters and containing such other terms and
provisions as the officer or officers executing the same may deem necessary,
appropriate or desirable, as conclusively evidenced by his or their execution
thereof.
<PAGE> 6
-5-
RESOLVED, That the Company is hereby authorized to enter into one or
more Purchase Agreements or other Agreements (the "Purchase Agreements") with
any firm, institution, partnership or other person, including Ford Motor Credit
Company, securities brokers and dealers, relating to the sale and distribution
of Receivables or of Receivables Securities and that, when such Purchase
Agreements, or any of them, have been completed to set forth the terms and
conditions upon which the Receivables or Receivables Securities are to be sold
and the purchase prices to be paid by such purchasers [such matters first
having been presented to and approved by any two of the Chairman of the Board
of Directors, the President, the Executive Vice President-Finance and the
Treasurer], any officer of the Company be and hereby is authorized to execute
and deliver, in the name and on behalf of the Company, the respective Purchase
Agreements, containing such other terms and provisions as the officer or
officers executing the same may deem necessary, appropriate or desirable, as
conclusively evidenced by his or their execution thereof.
RESOLVED, That the appropriate officers of the Company, and each of
them, be and hereby are authorized and empowered, in the name and on behalf of
the Company, to take any action (including, without limitation, the payment of
expenses), and to execute (by manual or facsimile signature) and deliver any
and all letters, documents or other writings, that such officer or officers may
deem necessary, appropriate or desirable in order to enable the Company fully
to issue and sell the Receivables Securities and exercise its rights and to
perform its obligations under the Indentures, Pooling and Servicing Agreements
or other agreements, the Underwriting Agreements, and the Purchase Agreements,
or otherwise carry out the purposes and intents of each and all of the
foregoing resolutions.
<PAGE> 7
POWER OF ATTORNEY WITH RESPECT TO REGISTRATION STATEMENTS OF
FORD CREDIT AUTO RECEIVABLES CORPORATION
COVERING SECURITIES BACKED BY COMPANY RECEIVABLES
KNOW ALL MEN BY THESE PRESENTS that the undersigned, an officer or
director of FORD CREDIT AUTO RECEIVABLES CORPORATION does hereby constitute and
appoint W. E. Odom, Edsel B. Ford II, K. J. Coates, J. D. Bringard, M. D.
Smith, W. O. Staehlin, R. P. Conrad and S. P. Thomas, and each of them,
severally, his true and lawful attorney and agent at any time and from time to
time to do any and all acts and things and execute in his name (whether on
behalf of FORD CREDIT AUTO RECEIVABLES CORPORATION, or as an officer or
director of FORD CREDIT AUTO RECEIVABLES CORPORATION, or by attesting the seal
of FORD CREDIT AUTO RECEIVABLES CORPORATION or otherwise) any and all
instruments which said attorney and agent may deem necessary or advisable in
order to enable FORD CREDIT AUTO RECEIVABLES CORPORATION to comply with the
Securities Act of 1933, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with a Registration
Statement or Registration Statements and any and all amendments (including
post-effective amendments) to the Registration Statement or Registration
Statements relating to the issuance and sale of any of the above-captioned
securities of FORD CREDIT AUTO RECEIVABLES CORPORATION authorized at a meeting
of the Board of Directors of FORD CREDIT AUTO RECEIVABLES CORPORATION held on
February 14, 1991, including specifically, but without limitation thereto,
power and authority to sign his name (whether on behalf of FORD CREDIT AUTO
RECEIVABLES CORPORATION or as an officer or director of FORD CREDIT AUTO
RECEIVABLES CORPORATION, or by attesting the seal of FORD CREDIT AUTO
RECEIVABLES CORPORATION or otherwise) to such Registration Statement or
Registration Statements and to such amendments (incuding post-effective
amendments) to the Registration Statement or Registration Statements to be
filed with the Securities and Exchange Commission, or any of the exhibits,
financial statements or schedules or the Prospectuses, filed therewith, and to
file the same with the Securities and Exchange Commission; and each of the
Undersigned does hereby ratify and confirm all that said attorneys and agents,
and each of them shall do or cause to be done by virtue hereof. Any one of
said attorneys and agents shall have, and may exercise, all the powers hereby
conferred.
IN WITNESS WHEREOF, the undersigned has signed his name hereto as of
the 21st day of July, 1994.
/s/ Kenneth J. Coates /s/ W. E. Odom
_______________________ _________________________
(Kenneth J. Coates) (W. E. Odom)
/s/ Edsel B. Ford II /s/ Paul W. Lewis
_______________________ _________________________
(Edsel B. Ford II) (Paul W. Lewis)
