<PAGE> 1
REGISTRATION NO. 33-54125
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FORD CREDIT 1994-B GRANTOR TRUST
(In which the Certificates represent undivided interests)
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FORD CREDIT AUTO RECEIVABLES CORPORATION
(Originator of the Trust described herein)
A DELAWARE CORPORATION
IRS EMPLOYER NO. 38-2973806
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THE AMERICAN ROAD
DEARBORN, MICHIGAN 48121
(313) 322-3000
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J.D. BRINGARD, ESQ.
FORD MOTOR CREDIT COMPANY
THE AMERICAN ROAD
DEARBORN, MICHIGAN 48121
(313-594-7742)
(Name and Address of Agent for Service)
COPY TO:
SUSAN M. CURTIS, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212-735-3000)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be 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, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED
MAXIMUM PROPOSED
AMOUNT OFFERING MAXIMUM AMOUNT OF
TITLE OF SECURITIES BEING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
% Asset Backed
Certificates, Class A.... $1,098,627,554.60 100%(1) $1,098,627,554.60(1) $378,837.09(2)
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) $344.83 of which was previously paid.
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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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<PAGE> 2
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.
PROSPECTUS Subject to Completion
Dated November 8, 1994
$1,098,627,554.60
Ford Credit 1994-B Grantor Trust
% Asset Backed Certificates, Class A
Ford Credit Auto Receivables Corporation
Seller
Ford Motor Credit Company
Servicer
The % Asset Backed Certificates (the "Certificates") will consist of two
Classes of Certificates, the Class A Certificates and the Class B Certificates.
Only the Class A Certificates are being offered hereby. The Class A Certificates
will evidence in the aggregate an undivided ownership interest of 93.5% in a
trust (the "Trust") to be formed pursuant to a Pooling and Servicing Agreement
to be entered into among Ford Credit Auto Receivables Corporation, as Seller
(the "Seller"), Ford Motor Credit Company, as Servicer (the "Servicer"), and
Chemical Bank, as Trustee. The Class B Certificates, which initially will be
retained by the Seller, will evidence in the aggregate an undivided ownership
interest of 6.5% in the Trust. The rights of the Class B Certificateholders to
receive distributions with respect to the Receivables are subordinated to the
rights of the Class A Certificateholders, to the extent described herein.
Principal, and interest to the extent of the Pass-Through Rate of % per
annum, will be distributed on the 15th day of each month (or the next following
business day) beginning December 15, 1994 (the "Distribution Date"). The Final
Scheduled Distribution Date on the Certificates will be October 15, 1999. The
Trust property will include a pool of retail installment sale contracts
originated on or after November 1, 1993 secured by new and used automobiles and
light trucks (the "Receivables"), certain monies due thereunder on or after
November 1, 1994, security interests in the vehicles financed thereby and
certain other property.
There currently is no secondary market for the Class A Certificates and there is
no assurance that one will develop. The Underwriters expect, but are not
obligated, to make a market in the Class A Certificates. There is no assurance
that any such market will continue.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST AND DO NOT REPRESENT INTERESTS
IN OR OBLIGATIONS OF THE SELLER, THE SERVICER OR ANY OF THEIR RESPECTIVE
AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
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PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT SELLER(1)( 2)
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<S> <C> <C> <C>
Per Certificate % % %
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Total $ $ $
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</TABLE>
(1) Plus accrued interest at the Pass-Through Rate calculated from November 15,
1994.
(2) Before deducting expenses payable by the Seller estimated at $670,000.
The Class A Certificates are offered by the Underwriters when, as, and if issued
and accepted by the Underwriters and subject to their right to reject orders in
whole or in part. It is expected that the Class A Certificates will be delivered
in book-entry form on or about November , 1994.
J.P. MORGAN SECURITIES INC.
CS FIRST BOSTON
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
November , 1994
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SELLER, THE SERVICER OR THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE HEREUNDER, SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
UNTIL FEBRUARY , 1995 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE CLASS A 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.
TABLE OF CONTENTS
<TABLE>
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PAGE
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Available Information........................................................................... 2
Reports to Class A Certificateholders by the Trustee............................................ 2
Summary......................................................................................... 3
Formation of the Trust.......................................................................... 7
Property of the Trust........................................................................... 7
The Receivables................................................................................. 7
Class A Certificate Factors and Trading Information............................................. 11
Use of Proceeds................................................................................. 12
The Seller...................................................................................... 12
The Servicer.................................................................................... 13
The Certificates................................................................................ 13
Rating of the Class A Certificates.............................................................. 26
Certain Legal Aspects of the Receivables........................................................ 26
Certain Federal Income Tax Consequences......................................................... 30
ERISA Considerations............................................................................ 33
Underwriting.................................................................................... 35
Legal Opinions.................................................................................. 36
Index of Terms.................................................................................. 37
</TABLE>
AVAILABLE INFORMATION
Ford Credit Auto Receivables Corporation, as originator of the Trust, has
filed a Registration Statement under the Securities Act of 1933, as amended,
with the Securities and Exchange Commission (the "Commission") on behalf of the
Trust with respect to the Class A Certificates offered pursuant to this
Prospectus. For further information, reference is made to the Registration
Statement and amendments thereof and to the exhibits thereto, which are
available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, 13th Floor, New York, New York 10048; and Northwest Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of the
Registration Statement and amendments thereof and exhibits thereto may be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates.
REPORTS TO CLASS A CERTIFICATEHOLDERS BY THE TRUSTEE
Chemical Bank (the "Trustee"), as Trustee for the Class A
Certificateholders and Class B Certificateholders (collectively, the
"Certificateholders") under the Pooling and Servicing Agreement, to be dated as
of November 1, 1994, by and among the Seller, the Servicer and the Trustee, will
provide to Class A Certificateholders (which shall be Cede & Co. as the nominee
of The Depository Trust Company ("DTC") unless Definitive Certificates are
issued under the limited circumstances described herein) monthly and annual
reports concerning the Receivables. See "The Certificates -- Statements to Class
A Certificateholders; -- General; -- Book-Entry Registration."
2
<PAGE> 4
SUMMARY
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus. Certain capitalized terms
used in the Summary are defined elsewhere in this Prospectus. A listing of the
pages on which some of such terms are defined is found in the "Index of Terms."
ISSUER........................ Ford Credit 1994-B Grantor Trust (the "Trust"),
to be formed by the Seller pursuant to a
Pooling and Servicing Agreement to be dated
as of November 1, 1994 (the "Agreement"),
among the Seller, the Servicer and Chemical
Bank, as trustee (the "Trustee").
SELLER........................ Ford Credit Auto Receivables Corporation, a
wholly owned subsidiary of Ford Motor Credit
Company ("Ford Credit").
SERVICER...................... Ford Credit, a wholly owned subsidiary of Ford
Motor Company.
SECURITIES OFFERED............ The Certificates consist of two classes,
entitled % Asset Backed Certificates,
Class A (the "Class A Certificates") and
% Asset Backed Certificates, Class B
(the "Class B Certificates"). Only the Class
A Certificates are being offered hereby. Each
Certificate will represent a fractional
undivided interest in the Trust. The Trust
property will include retail installment sale
contracts originated on or after November 1,
1993 secured by new and used automobiles and
light trucks (the "Receivables"), certain
monies due thereunder on or after November 1,
1994 (the "Cutoff Date"), security interests
in the vehicles securing the Receivables
("Financed Vehicles"), certain bank accounts
and the proceeds thereof, any proceeds from
claims on certain insurance policies, and
certain rights under the Agreement. The Class
A Certificates shall be issued in fully
registered form in denominations of $1,000
and integral multiples thereof. The
Receivables will be purchased by the Seller
from Ford Credit pursuant to a Purchase
Agreement (the "Purchase Agreement") between
the Seller and Ford Credit providing for such
purchase on or before the date of issuance of
the Certificates.
The Class A Certificates will evidence in the
aggregate an undivided ownership interest
(the "Class A Percentage") of 93.5% of the
Trust (initially representing
$1,098,627,554.60) and the Class B
Certificates will evidence in the aggregate
an undivided ownership interest (the "Class B
Percentage") of 6.5% of the Trust (initially
representing $76,375,177.59). The Class B
Certificates are subordinated to the Class A
Certificates, to the extent described herein.
The Class B Certificates are not being
offered hereby and initially will be retained
by the Seller.
REGISTRATION OF THE CLASS A
CERTIFICATES.................. The Class A Certificates initially will be
represented by one or more Class A
Certificates registered in the name of Cede &
Co. ("Cede"), as the nominee of DTC. No
person acquiring an interest in the Class A
Certificates (a "Class A Certificate Owner"
or "Certificate Owner") will be entitled to
receive a definitive certificate representing
such person's interest, except in the event
that Definitive Certificates (as defined
herein) are issued under the limited
circumstances described herein. All
references herein to Class A
Certificateholders shall reflect the rights
of Class A Certificate Owners, as such rights
may be exercised through DTC and its
Participants, except as otherwise
3
<PAGE> 5
specified herein. See "The Certificates --
Definitive Certificates."
PASS-THROUGH RATE............. % per annum.
INTEREST...................... On each Distribution Date, the Trustee shall
pass through and distribute pro rata to the
holders of record of Class A Certificates
(the "Class A Certificateholders") as of the
fourteenth day of the current calendar month
(or, if Definitive Certificates are issued,
the last day of the preceding calendar month)
(the "Record Date") interest at one-twelfth
of the Pass-Through Rate, calculated on the
basis of a 360-day year consisting of twelve
30-day months, on the Class A Certificate
Balance as of the last day of the preceding
calendar month to the extent of funds
available from (i) the Class A Percentage of
the Available Interest, (ii) the
Subordination Spread Account, and (iii) the
Class B Percentage of the Total Available
Amount. The "Class A Certificate Balance"
shall equal, initially, the Class A
Percentage of the Pool Balance as of the
Cutoff Date and thereafter shall equal the
initial Class A Certificate Balance reduced
by all principal distributions on the Class A
Certificates.
PRINCIPAL..................... On each Distribution Date, the Trustee shall
pass through and distribute pro rata to
Certificateholders as of the Record Date all
scheduled payments of principal and the
principal portion of all prepayments in full
(and certain partial prepayments) collected
during the preceding calendar month. Such
principal, to the extent of funds available
from (i) the Class A Percentage of the
Available Principal, (ii) the Subordination
Spread Account, and (iii) the Class B
Percentage of the Total Available Amount will
be passed through on each Distribution Date
to the Class A Certificateholders in an
amount equal to the Class A Percentage of:
(a) the principal portion of all scheduled
payments due during the preceding Collection
Period; (b) the principal portion of all
prepayments in full received during the
preceding Collection Period (and certain
partial prepayments); (c) the principal
balance of each Receivable that was purchased
by the Servicer or repurchased by the Seller,
in each case, under an obligation that arose
during the preceding Collection Period; and
(d) the principal balance of each Receivable
liquidated by the Servicer, during the
preceding Collection Period. A "Collection
Period" with respect to a Distribution Date
will be the calendar month preceding the
month in which such Distribution Date occurs,
or, in the case of the initial Distribution
Date, the period from the Cutoff Date through
the last day of the calendar month preceding
the month in which the initial Distribution
Date occurs.
SUBORDINATION................. The rights of the holders of the Class B
Certificates (the "Class B
Certificateholders") to receive distributions
to which they would otherwise be entitled
with respect to the Receivables are
subordinated to the rights of the Class A
Certificateholders, as described more fully
herein.
SUBORDINATION SPREAD
ACCOUNT....................... The Subordination Spread Account will be
created with an initial deposit by the Seller
of cash or Eligible Investments maturing on
or prior to the initial Distribution Date and
having a value of $1,762,504 (the
"Subordination Initial Deposit"). The
Subordination Initial Deposit will be
augmented by the deposit in the Subordination
Spread Account of amounts otherwise
distributable to Class B Certificateholders
until the amount in
4
<PAGE> 6
the Subordination Spread Account reaches an
amount equal to the Specified Subordination
Spread Account Balance. Thereafter, amounts
otherwise distributable to the Class B
Certificateholders will be deposited in the
Subordination Spread Account to the extent
necessary to maintain the amount in the
Subordination Spread Account at an amount
equal to the Specified Subordination Spread
Account Balance. Amounts in the Subordination
Spread Account on any Distribution Date
(after giving effect to all distributions
made on such Distribution Date) in excess of
the Specified Subordination Spread Account
Balance for such Distribution Date generally
will be released to the Class B
Certificateholders. The "Specified
Subordination Spread Account Balance" with
respect to any Distribution Date will be
equal to $8,812,520, except that in the event
that on any Distribution Date (i) the
annualized average for the preceding three
Collection Periods of the ratios of net
losses (i.e., the balances of all Receivables
which are determined to be uncollectible in
the Collection Period, less any Liquidation
Proceeds) to the Pool Balance as of the first
day of each such Collection Period exceeds
2.25% or (ii) the average for the preceding
three Collection Periods of the ratios of the
number of Receivables that have been
repossessed but not yet sold or are
delinquent 60 days or more to the outstanding
number of Receivables exceeds 1.50%, then the
Specified Subordination Spread Account
Balance for such Distribution Date shall be
an amount equal to the percentage of the Pool
Balance as of the first day of such
Collection Period determined by deducting
from eleven percent the following fraction,
expressed as a percentage: (x) 1 minus (y) a
fraction, the numerator of which is the Class
A Certificate Balance and the denominator of
which is the Pool Balance both as of the
first day of such Collection Period, but in
no event shall the Specified Subordination
Spread Account Balance be more than
$52,875,123, or less than $8,812,520. On any
Distribution Date on which the aggregate
balance of the Class A Certificates is
$117,500,000 or less after giving effect to
distributions on such Distribution Date, the
Specified Subordination Spread Account
Balance shall be the greater of the balance
described above or $20,562,548. The
Subordination Spread Account will be
maintained with Chemical Bank, as agent for
the Class A Certificateholders as a
segregated trust account, and will not be
part of the Trust.
DISTRIBUTION DATE............. The 15th day of each month (or if such 15th day
is not a business day, the next following
business day).
ADVANCES...................... The Servicer each month will advance to the
Trust, in respect of each Receivable, that
portion of scheduled payments that was not
timely made (an "Advance"). The Servicer
shall be entitled to reimbursement of
Advances from subsequent payments on or with
respect to the Receivables. The Servicer will
not be required to make any Advance to the
extent that it does not expect to recoup the
Advance from subsequent collections or
recoveries. See "The Certificates --
Advances."
REPURCHASES AND PURCHASES
OF CERTAIN RECEIVABLES........ The Seller will be obligated to repurchase any
Receivable if the interest of the Trust
therein is materially adversely affected by a
breach of any representation or warranty made
by the Seller with respect to the Receivable
and if the breach has not been cured
5
<PAGE> 7
by the last day of the second month following
the discovery by or notice to the Seller of
the breach. Ford Credit will be obligated to
repurchase the Receivable from the Seller
pursuant to the Purchase Agreement
contemporaneously with the Seller's
repurchase from the Trust.
The Servicer will be obligated to purchase any
Receivable if, among other things, it changes
the APR or the amount or the number of the
scheduled payments of such Receivable or
fails to maintain a perfected security
interest in the Financed Vehicle. See "The
Certificates -- Servicing Procedures."
SERVICER FEE.................. The Servicer will receive each month a fee for
servicing the Receivables equal to (a) the
product of one-twelfth of 1.00% (the
"Servicing Fee Rate") and the Pool Balance
outstanding at the beginning of the previous
month, plus (b) any late, prepayment, and
other administrative fees and expenses
collected during such month plus reinvestment
proceeds on any payments received in respect
of the Receivables. See "The Certificates --
Servicing Compensation."
OPTIONAL PURCHASE............. The Servicer may purchase all of the
Receivables as of the last day of any month
on or after which the aggregate principal
balance of the Receivables (after giving
effect to the current calendar month's
collections and Advances) declines below 10%
of the original Pool Balance. The purchase
price will be equal to the aggregate Purchase
Amounts, and will be distributed to
Certificateholders on the next following
Distribution Date. See "The
Certificates -- Termination."
TRUSTEE....................... Chemical Bank.
TAX STATUS.................... In the opinion of special tax counsel to the
Seller, the Trust will be treated as a
grantor trust for federal income tax
purposes, and will not be subject to federal
income tax. Certificate Owners will report
their pro rata shares of all income earned on
the Receivables (other than amounts, if any,
treated as "stripped coupons") and, subject
to certain limitations in the case of
Certificate Owners who are individuals,
trusts, or estates, may deduct their pro rata
shares of reasonable servicing and other
fees. See "Certain Federal Income Tax
Consequences."
ERISA CONSIDERATIONS.......... As described herein, the Class A Certificates
may be purchased by employee benefit plans
that are subject to the Employee Retirement
Income Security Act of 1974, as amended
("ERISA"). See "ERISA Considerations."
RATING........................ As a condition of issuance, the Class A
Certificates will be rated in the highest
rating category by at least one nationally
recognized rating agency. There is no
assurance that a rating will not be lowered
or withdrawn by a rating agency based on a
change in circumstances deemed by such rating
agency to adversely affect the Class A
Certificates. See "Rating of the Class A
Certificates."
6
<PAGE> 8
FORMATION OF THE TRUST
The Seller will establish the Trust by selling and assigning the Trust
property, as described below, to the Trustee in exchange for the Certificates.
The Servicer will service the Receivables pursuant to the Agreement, and will be
compensated for acting as the Servicer. See "The Certificates -- Servicing
Compensation." To facilitate servicing and to minimize administrative burden and
expense the Servicer will retain physical possession of the Receivables and
documents relating thereto as custodian for the Trustee. Due to the
administrative burden and expense, the certificates of title to the Financed
Vehicles will not be amended to reflect the assignment of the security interest
in the Financed Vehicles to the Trustee. In the absence of such amendment, the
Trustee may not have a perfected security interest in the Financed Vehicles in
all states. See "Certain Legal Aspects of the Receivables -- Security Interests
in Vehicles." The Trustee will not be responsible for the legality, validity, or
enforceability of any security interest in any Financed Vehicle.
If the protection provided to the Class A Certificateholders by the
subordination of the Class B Certificates and by the Subordination Spread
Account is insufficient, the Class A Certificateholders would have to look to
the Obligors on the Receivables, the proceeds from the repossession and sale of
Financed Vehicles which secure defaulted Receivables and the proceeds from
Dealer Recourse. In such event, certain factors, such as the Trustee's not
having perfected security interests in the Financed Vehicles in all states, may
affect the Trust's ability to repossess and sell the collateral securing the
Receivables, and thus may reduce the proceeds to be distributed to
Certificateholders. See "The Certificates -- Subordination of the Class B
Certificates; Subordination Spread Account" and "Certain Legal Aspects of the
Receivables."
PROPERTY OF THE TRUST
Each Certificate represents a fractional undivided interest in the Trust.
The property of the Trust will include retail installment sale contracts
originated on or after November 1, 1993 between dealers (the "Dealers") and
retail purchasers (the "Obligors") secured by new and used automobiles and light
trucks and all payments due thereunder on or after the Cutoff Date. The
Receivables were originated by Dealers in accordance with Ford Credit's
requirements under agreements with Dealers, for assignment to Ford Credit, have
been so assigned, will, on or prior to the issuance of the Certificates, be sold
to the Seller by Ford Credit, are serviced by Ford Credit, and evidence the
indirect financing made available by Ford Credit to the Obligors. The property
of the Trust also will include (i) such amounts as from time to time may be held
in separate trust accounts (the "Collection Account," the "Certificate Account,"
and the "Payahead Account") established and maintained pursuant to the
Agreement, and the proceeds of such accounts; (ii) security interests in the
Financed Vehicles and any accessions thereto; (iii) any Dealer Recourse; (iv)
the right to proceeds of credit life, credit disability, and physical damage
insurance policies covering the Financed Vehicles; (vi) the rights of the Seller
under the Purchase Agreement; (vii) certain rebates of premiums and other
amounts relating to certain insurance policies and other items financed under
the Receivables in effect as of the Cutoff Date and (viii) any and all proceeds
of the foregoing. The property of the Trust does not include the Subordination
Spread Account.
Additionally, pursuant to agreements between Ford Credit and the Dealers,
the Dealers are obligated to repurchase from Ford Credit Receivables which do
not meet certain representations made by the Dealers, as well as those covered
by recourse plans ("Dealer Recourse"). See "The Receivables."
THE RECEIVABLES
The Receivables were purchased by Ford Credit in the ordinary course of
business in accordance with Ford Credit's underwriting standards, which
emphasize the Obligor's ability to pay and creditworthiness, as well as the
asset value of the Financed Vehicle. The Receivables were selected from Ford
Credit's portfolio by several criteria, including the following: each Receivable
(i) was originated in the United States, (ii) has a contractual Annual
Percentage Rate ("APR") that equals or exceeds 8.80%, (iii) provides for level
monthly payments which provide interest at the APR and fully amortize the amount
financed over an original term no greater than 60 months, (iv) is not more than
30 days past due as of the Cutoff Date and has never been extended and (v) was
originated on or after November 1, 1993. The Receivables were selected at random
7
<PAGE> 9
from Ford Credit's portfolio of retail installment sale contracts for new
vehicles and Ford Credit's portfolio of retail installment sale contracts for
used vehicles, in each case, meeting the criteria described above. Contracts for
financing of new vehicles comprise a greater proportion of the Receivables than
of Ford Credit's total portfolio of retail contracts. No selection procedures
believed to be adverse to the Certificateholders were utilized in selecting the
Receivables from qualifying retail installment sale contracts.
Approximately 97.9% of the aggregate principal balance of the Receivables,
constituting 97.1% of the number of Receivables, as of the Cutoff Date,
represent vehicles financed at new vehicle rates, and the remainder of the
Receivables represent vehicles financed at used vehicle rates.
Based on principal balance, less than 1.0% of the Receivables provide
recourse to the Dealer which originated the Receivable. Dealers are generally
obligated under these recourse plans for payment of the unpaid principal balance
of a defaulted contract, unless Ford Credit fails to repossess the vehicle and
deliver it to the Dealer within 90 days after default. The Dealer's obligation
generally terminates after the first 24 monthly payments are made under the
related contract.
The geographical distribution, composition, and distribution by annual
percentage rate of the Receivables are as set forth in the following tables.
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
<TABLE>
<CAPTION>
<S> <C>
PERCENTAGE
OF
AGGREGATE
PRINCIPAL
STATE(1) BALANCE(2)
- ----------------------------------- ----------
Alabama............................ 1.7%
Alaska............................. 0.3
Arizona............................ 0.0
Arkansas........................... 1.2
California......................... 14.7
Colorado........................... 1.5
Connecticut........................ 3.4
Delaware........................... 0.1
District of Columbia............... 0.1
Florida............................ 4.1
Georgia............................ 5.1
Hawaii............................. 0.0
Idaho.............................. 0.0
Illinois........................... 7.4
Indiana............................ 0.4
Iowa............................... 0.3
Kansas............................. 0.1
Kentucky........................... 0.5
Louisiana.......................... 1.2
Maine.............................. 0.0
Maryland........................... 6.9
Massachusetts...................... 4.3
Michigan........................... 0.6
Minnesota.......................... 0.0
Mississippi........................ 1.6
Missouri........................... 5.0
Montana............................ 0.3%
Nebraska........................... 0.2
Nevada............................. 0.1
New Hampshire...................... 0.1
New Jersey......................... 5.5
New Mexico......................... 0.7
New York........................... 5.8
North Carolina..................... 2.8
North Dakota....................... 0.0
Ohio............................... 0.0
Oklahoma........................... 1.4
Oregon............................. 0.0
Pennsylvania(3).................... 0.0
Rhode Island....................... 0.4
South Carolina..................... 1.1
South Dakota....................... 0.0
Tennessee.......................... 1.8
Texas.............................. 12.2
Utah............................... 0.0
Vermont............................ 0.0
Virginia........................... 4.2
Washington......................... 1.2
West Virginia...................... 1.2
Wisconsin.......................... 0.0
Wyoming............................ 0.2
</TABLE>
- ---------------
(1) Based on the current billing addresses of the Obligors on the Receivables.
(2) Percentages do not add to 100.00% due to rounding. States showing 0.0% each
represent less than 0.05%.
(3) Pennsylvania was excluded for administrative reasons.
8
<PAGE> 10
COMPOSITION OF THE RECEIVABLES
<TABLE>
<S> <C>
Aggregate Principal Balance............................................ $1,175,002,732.19
Number of Receivables.................................................. 83,300
Average Principal Balance.............................................. $14,106
Average Original Amount Financed....................................... $14,971
(Range)........................................................... $538.89 to $52,900
Weighted Average APR................................................... 11.73%
(Range)........................................................... 8.8% to 20.00%
Weighted Average Original Term......................................... 57.1 months
(Range)........................................................... 6 to 60 months
Weighted Average Remaining Term........................................ 52.9 months
(Range)........................................................... 1 to 59 months
Scheduled Weighted Average Life(1)..................................... 29.2 months
</TABLE>
- ---------------
(1) Based on Scheduled Payments as of the Cutoff Date, assuming no prepayments
on the Receivables are made after the Cutoff Date.
DISTRIBUTION BY APR OF THE RECEIVABLES
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE RECEIVABLES BALANCE BALANCE(1)
- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
8.80% to 9.00% 11,427 $ 164,786,810.23 14.02%
9.01 to 9.50 7,364 107,121,299.09 9.11
9.51 to 10.00 13,440 193,039,475.20 16.42
10.01 to 10.50 5,072 74,019,745.11 6.29
10.51 to 11.00 7,962 114,615,421.46 9.75
11.01 to 11.50 3,227 46,267,441.24 3.93
11.51 to 12.00 5,399 76,315,580.15 6.49
12.01 to 12.50 2,786 37,788,701.14 3.21
12.51 to 13.00 4,767 65,876,169.85 5.60
13.01 to 13.50 1,943 26,815,188.59 2.28
13.51 to 14.00 3,522 49,038,367.27 4.17
14.01 to 14.50 1,983 27,228,673.20 2.31
14.51 to 15.00 3,051 41,495,168.18 3.53
15.01 to 15.50 1,182 15,919,082.13 1.35
15.51 to 16.00 2,047 27,661,158.92 2.35
16.01 to 16.50 969 12,942,636.24 1.10
16.51 to 17.00 1,851 25,105,683.97 2.13
17.01 to 17.50 1,059 14,456,611.61 1.23
17.51 to 18.00 2,388 31,009,654.22 2.63
18.01 to 18.50 262 3,431,151.24 0.29
18.51 to 19.00 717 9,254,197.53 0.78
19.01 to 19.50 185 2,268,225.40 0.19
19.51 to 20.00 697 8,546,290.22 0.72
------- ----------------- -------
Totals 83,300 $1,175,002,732.19 100.00%
====== =============== ======
</TABLE>
- ---------------
(1) Percentages do not add to 100.00% because of rounding.
9
<PAGE> 11
MATURITY AND PREPAYMENT ASSUMPTIONS
All the Receivables are prepayable at any time. If prepayments are received
on the Receivables, the actual weighted average life of the Receivables will be
shorter than the scheduled weighted average life, which is based on the
assumptions that payments will be made as scheduled, and that no prepayments
will be made. (For this purpose the term "prepayments" includes liquidations due
to default, as well as receipt of proceeds from credit life, credit disability,
and casualty insurance policies.) Weighted average life means the average amount
of time during which each dollar of principal on a receivable is outstanding.
The rate of prepayments on the Receivables may be influenced by a variety
of economic, social, and other factors, including the fact that an Obligor may
not sell or transfer a Financed Vehicle without the consent of the Servicer.
Ford Credit believes that the actual rate of prepayments will result in a
substantially shorter weighted average life than the scheduled weighted average
life shown above. Ford Credit estimates that the actual weighted average life of
its portfolio of U.S. retail installment contracts for new and used automobiles
and light trucks in recent history is between 60% and 70% of their scheduled
weighted average life. Substantially all reinvestment risks resulting from a
faster or slower incidence of prepayment of Receivables will be borne by the
Certificateholders. See also "The Certificates -- Termination" regarding the
Servicer's option to purchase the Receivables when the aggregate principal
balance of the Receivables (the "Pool Balance") is less than 10% of the Pool
Balance as of the Cutoff Date.
DELINQUENCIES, REPOSSESSIONS, AND NET LOSSES
Set forth below is certain information concerning Ford Credit's experience
with respect to its portfolio of U.S. retail installment sale contracts for new
and used automobiles and light trucks (including previously sold contracts which
Ford Credit continues to service, but not including retail installment sale
contracts purchased by Ford Credit under certain special financing programs).
There is no assurance that the behavior of the Receivables will be comparable to
Ford Credit's experience shown in the following tables.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Number of
Contracts Outstanding
During the Period............. 3,433,517 3,386,405 3,398,797 3,388,214 3,398,048 3,616,862 3,909,811
Average Daily Delinquencies
as a Percent of Average
Contracts Outstanding
31-60 Days(2)............... 2.01% 2.04% 2.02% 2.35% 2.72% 2.71% 3.23%
61-90 Days(2)............... 0.15% 0.15% 0.15% 0.20% 0.29% 0.31% 0.43%
Over 90 Days(3)............. 0.03% 0.03% 0.03% 0.04% 0.07% 0.08% 0.12%
</TABLE>
- ---------------
(1) The information in the table includes U.S. retail installment sale contracts
for new and used automobiles and light trucks and includes previously sold
contracts which Ford Credit continues to service; it does not include retail
installment sale contracts purchased by Ford Credit under certain special
financing programs.
(2) Delinquencies represent the daily average number of contracts
delinquent.
(3) Delinquencies represent the average monthly end-of-period number of
contracts delinquent.
10
<PAGE> 12
CREDIT LOSS AND REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- ---------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Portfolio Outstanding
During the Period
(Millions)................... $33,457.2 $30,738.5 $31,204.9 $29,505.1 $28,977.1 $30,789.7 $32,065.8
Percent of Average Receivables
Outstanding During the Period
without Recourse to Dealer... 98.5% 97.5% 97.7% 96.4% 94.4% 92.2% 89.9%
Repossessions as a Percent of
Average Number of Contracts
Outstanding.................. 2.11%(2) 2.27%(2) 2.27% 2.74% 3.27% 3.17% 3.57%
Net Losses as a Percent of
Gross Liquidations(3)........ 0.95% 1.11% 1.16% 1.52% 2.29% 2.40% 2.84%
Net Losses as a Percent of
Average Portfolio
Outstanding(3)............... 0.55%(2) 0.66%(2) 0.69% 0.90% 1.29% 1.31% 1.57%
</TABLE>
- ---------------
(1) Except as indicated, all amounts and percentages are based on the gross
amount scheduled to be paid on each contract, including unearned finance and
other charges. The information in the table includes U.S. retail installment
sale contracts for new and used automobiles and light trucks and includes
previously sold contracts which Ford Credit continues to service; it does
not include retail installment sale contracts purchased by Ford Credit under
certain special financing programs.
(2) Annualized rate.
(3) "Net Losses" are equal to the aggregate balance of all contracts which are
determined to be uncollectible in the period less any recoveries on
contracts charged-off in the period or any prior periods. Effective January
1, 1993 net losses include expenses associated with outside collection
agencies. Other expenses associated with collection, repossession, and
disposition of the vehicle continue to be excluded.
The reduction in credit losses since 1989 primarily has been due to actions
taken by Ford Credit to improve purchase and collection practices, as well as
higher vehicle resale values. The actions taken by Ford Credit include
establishment of a risk-based pricing policy, improved training, retention of
experienced collection personnel, faster direct customer contact on problem
accounts, and implementation of new risk-rating guides. Ford Credit's retail
loss experience also depends upon the availability of recourse from dealers, the
number of repossessions, the amount outstanding at the time of repossession, and
the resale value of repossessed vehicles.
CLASS A CERTIFICATE FACTORS AND TRADING INFORMATION
The "Class A Certificate Factor" is a seven-digit decimal which the
Servicer will compute each month indicating the Class A Certificate Balance as
of the close of business on the Distribution Date in that month as a fraction of
the original Class A Certificate Balance. The Class A Certificate Factor will be
1.0000000 as of the Cutoff Date; thereafter, the Class A Certificate Factor will
decline to reflect reductions in the Class A Certificate Balance. The amount of
a Class A Certificateholder's pro rata share of the Class A Certificate Balance
can be determined by multiplying the original denomination of the holder's
Certificate by the Class A Certificate Factor as of the close of business on the
most recent Distribution Date. The Class A Certificate Factor will be made
available through the Underwriters.
Pursuant to the Agreement, the Certificateholders will receive monthly
reports concerning the payments received on the Receivables, the Class A
Certificate Balance, the Class A Certificate Factor, and various other items of
information. Class A Certificateholders of record during any calendar year will
be furnished information for tax reporting purposes not later than the latest
date permitted by law. See "The Certificates -- Statements to Class A
Certificateholders."
11
<PAGE> 13
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the Class A
Certificates will be applied to the purchase of the Receivables from Ford
Credit.
THE SELLER
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, 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." However,
there can be no assurance that the activities of the Seller would not result in
a court concluding that the assets and liabilities of the Seller should be
consolidated with those of Ford Credit in a proceeding under any Insolvency Law.
The Seller has received the advice of counsel to the effect that, subject
to certain facts, assumptions and qualifications, it would not be a proper
exercise by a court of its equitable discretion to disregard the separate
corporate existence of the Seller and to require the consolidation of the assets
and liabilities of the Seller with the assets and liabilities of Ford Credit in
the event of the application of the federal bankruptcy laws to Ford Credit.
Among other things, it is assumed by counsel that the Seller will follow certain
procedures in the conduct of its affairs, including maintaining records and
books of account separate from those of Ford Credit, refraining from commingling
its assets with those of Ford Credit, doing business from an office separate
from that of Ford Credit and refraining from holding itself out as having agreed
to pay, or being liable for, the debts of Ford Credit. The Seller intends to
follow and has represented to such counsel that it will follow these and other
procedures related to maintaining its separate corporate identity. However, in
the event that the Seller did not follow these procedures, there can be no
assurance that a court would not conclude that the assets and liabilities of the
Seller should be consolidated with those of Ford Credit. If a court were to
reach such a conclusion, or a filing were made under any Insolvency Law by or
against the Seller, or if an attempt were made to litigate any of the foregoing
issues, delays in distributions on the Certificates (and possible reductions in
the amount of such distributions) could occur.
It is intended by Ford Credit and the Seller that the transfer of the
Receivables by Ford Credit to the Seller under the Purchase Agreement constitute
a "true sale" of the Receivables to the Seller. If the transfer constitutes such
a "true sale," the Receivables and the proceeds thereof would not be part of
Ford Credit's bankruptcy estate under Section 541 of the Bankruptcy Code should
Ford Credit become the subject of a bankruptcy case subsequent to the transfer
of the Receivables to the Seller. The Seller has received the advice of counsel
to the effect that, subject to certain facts, assumptions and qualifications, in
the event Ford Credit were to become the subject of a voluntary or involuntary
case under the Bankruptcy Code subsequent to the transfer of the Receivables to
the Seller, the transfer of the Receivables by Ford Credit to the Seller
pursuant to the Purchase Agreement would be characterized as a "true sale" of
the Receivables from Ford Credit to the Seller and the Receivables and the
proceeds thereof would not form part of Ford Credit's bankruptcy estate pursuant
to Section 541 of the Bankruptcy Code.
12
<PAGE> 14
In a 1993 decision, Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th
Cir. 1993), cert. denied 114 S.Ct 554 (1993), the United States Court of Appeals
for the 10th Circuit suggested that even where a transfer of accounts from a
seller to a buyer constitutes a "true sale," the accounts would nevertheless
constitute property of the seller's bankruptcy estate in a bankruptcy of the
seller. If Ford Credit or the Seller were to become subject to a bankruptcy
proceeding and a court were to follow the Octagon court's reasoning,
Certificateholders might experience delays in payment or possibly losses on
their investment in the Certificates. As part of the advice of counsel described
above, counsel has advised the Seller that the reasoning of the Octagon case
appears to be inconsistent with precedent and the Uniform Commercial Code.
THE SERVICER
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. In addition, a wholly-owned subsidiary
of Ford Credit provides these financing services in the U.S. to other vehicle
dealers. More than 85% of all new vehicles financed by Ford Credit are
manufactured by Ford or its affiliates. Ford Credit also provides retail
financing for used vehicles built by Ford and other manufacturers. In addition
to vehicle financing, Ford Credit makes loans to affiliates of Ford, finances
certain receivables of Ford and its subsidiaries, and offers diversified
financing services which are managed by USL Capital Corporation, a wholly owned
subsidiary of Ford Holdings, Inc. ("Ford Holdings"). Ford Credit also manages
the insurance businesses of The American Road Insurance Company, a wholly owned
subsidiary of Ford Holdings. Ford Credit also is a significant equity
participant in Ford Holdings whose primary activities are consumer and
commercial financing operations, insurance underwriting and equipment leasing.
The mailing address of Ford Credit's executive offices is The American
Road, Dearborn, Michigan 48121. The telephone number of such offices is (313)
322-3000.
THE CERTIFICATES
The Class A Certificates offered hereby will be issued pursuant to the
Agreement. Copies of the Agreement (without exhibits) may be obtained by the
Class A Certificateholders upon request in writing to Servicer, at its address
set forth above. Citations to the relevant sections of the Agreement appear
below in parentheses. The following summary does not purport to be complete and
is subject to and qualified in its entirety by reference to the Agreement.
GENERAL
The Class A Certificates will be offered for purchase in denominations of
$1,000 and integral multiples thereof, and will be represented initially by
physical certificates registered in the name of Cede as the nominee of DTC
except that one Class A Certificate may be issued in a denomination that
includes any residual portion of the Class A Percentage of the original Pool
Balance. No Certificate Owner will be entitled to receive a certificate
representing such person's interest in the Class A Certificates, except as set
forth below under "Definitive Certificates." Unless and until Definitive
Certificates are issued under the limited circumstances described herein, all
references to actions by Class A 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 Class A
Certificateholders shall refer to distributions, notices, reports and statements
to DTC or Cede, as the registered holder of the Class A Certificates, as the
case may be, for distribution to Certificate Owners in accordance with DTC
procedures. See "The Certificates -- Book-Entry Registration."
In general, it is intended that Class A Certificateholders receive, on each
Distribution Date, the Class A Percentage of the scheduled payments of principal
due and the aggregate full prepayments and certain partial
13
<PAGE> 15
prepayments on the Receivables made during or with respect to the preceding
calendar month (the "Collection Period"), plus interest at the Pass-Through Rate
on the Class A Certificate Balance. (Section 14.06.) See "The
Certificates -- Distributions on Certificates." A scheduled payment on a
Receivable may be made by or on behalf of the respective Obligor, or advanced by
the Servicer. See "The Certificates -- Advances." A prepayment of a Receivable
may be made by or on behalf of the respective Obligor, by application of certain
insurance proceeds, as a result of a repurchase made by the Seller or the
Servicer, or upon the repossession and liquidation of the respective Financed
Vehicle or other enforcement measure taken with respect to a defaulted
Receivable. See "The Certificates -- Sale and Assignment of Receivables," and
" -- Servicing Procedures."
The Certificates will evidence interests in the Trust created pursuant to
the Agreement. The Class A Certificates will evidence in the aggregate an
undivided ownership interest (the "Class A Percentage") of 93.5% of the Trust
and the Class B Certificates will evidence in the aggregate an undivided
ownership interest (the "Class B Percentage") of 6.5% of the Trust. The Class B
Certificates, which are not being offered hereby, will be held initially by the
Seller. (Sections 16.01, 16.02 and 16.04.)
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 New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. DTC was created to hold securities for its participating organizations
("Participants") and to facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entries, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing
corporations. 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").
Certificate Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, Class A Certificates may do so only through Participants and Indirect
Participants. In addition, Certificate Owners will receive all distributions of
principal and interest from the Trustee through DTC Participants. Under a
book-entry format, Certificate Owners may experience some delay in their receipt
of payments, since such payments will be forwarded by the Trustee to Cede, as
nominee for DTC. DTC will forward such payments to its Participants, which
thereafter will forward them to Indirect Participants or Certificate Owners. It
is anticipated that the only "Class A Certificateholder" will be Cede, as
nominee of DTC. Certificate Owners will not be recognized by the Trustee as
Class A Certificateholders, as such term is used in the Agreement, and
Certificate Owners will be permitted to exercise the rights of Class A
Certificateholders only indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Class A Certificates among Participants on whose behalf it acts with respect to
the Class A Certificates and to receive and transmit distributions of principal
of, and interest on, the Class A Certificates. Participants and Indirect
Participants with which Certificate Owners have accounts with respect to the
Class A Certificates similarly are required to make book-entry transfers and
receive and transmit such payments on behalf of their respective Certificate
Owners. Accordingly, although Class A Certificate Owners will not possess Class
A Certificates, the Rules provide a mechanism by which Participants will receive
payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Class A
Certificate Owner to pledge Class A Certificates to persons or entities that do
not participate in the DTC system, or to otherwise act with respect to such
Certificates, may be limited due to the unavailability of physical certificates
evidencing interests in the Class A Certificates.
DTC has advised the Seller that it will take any action permitted to be
taken by a Class A Certificateholder under the Agreement only at the direction
of one or more Participants to whose accounts with DTC the Class A Certificates
are credited. Additionally, DTC has advised the Seller that it will take
14
<PAGE> 16
such actions with respect to specified percentages of the Class A Certificates
only at the direction of and on behalf of Participants whose holdings include
undivided interests that satisfy such specified percentages. DTC may take
conflicting actions with respect to other undivided interests to the extent that
such actions are taken on behalf of Participants whose holdings include such
undivided interests.
Neither the Seller nor the Trustee will have any liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Class A Certificates held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DEFINITIVE CERTIFICATES
The Class A Certificates will be issued in fully registered, certificated
form ("Definitive Certificates") to Certificate Owners or their nominees, 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 discharge properly its
responsibilities as depository with respect to the Class A Certificates and the
Trustee or 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 an Event of Default, Class A Certificate Owners
representing not less than 51% of the Class A Certificate Balance advise the
Trustee through DTC in writing that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in the Certificate Owners'
best interest. (Section 16.10.)
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee will be required to notify all Certificate Owners through
Participants of the availability of Definitive Certificates and that the Record
Date will thereafter be the last day of each calendar month. Upon surrender by
DTC of the definitive certificates representing the Class A Certificates and
receipt of instructions for re-registration, the Trustee will reissue the Class
A Certificates as Definitive Certificates to Certificate Owners.
Distributions of principal of, and interest on, the Class A Certificates
will thereafter be made by the Trustee directly to holders of Definitive
Certificates in accordance with the procedures set forth in the Agreement, to
holders in whose names the Definitive Certificates were registered at the close
of business on the last day of the preceding calendar month. Such 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 payment on any Class A
Certificate, however, will be made only upon presentation and surrender of such
Class A Certificate at the office or agency specified in the notice of final
distribution to Certificateholders.
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee or of a certificate registrar named in a notice delivered
to holders of Definitive Certificates. 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.
SALE AND ASSIGNMENT OF RECEIVABLES
Prior to the time of issuance of the Class A Certificates, pursuant to a
Purchase Agreement (the "Purchase Agreement"), Ford Credit will sell and assign
to the Seller, without recourse, its entire interest in the Receivables
(exclusive of any amount allocable to the premium for physical damage insurance
force-placed by Ford Credit), including its security interests in the Financed
Vehicles. At the time of issuance of the Class A Certificates the Seller will
sell and assign to the Trustee, without recourse, the Seller's entire interest
in the Receivables, including its security interests in the Financed Vehicles.
Each Receivable will be identified in a schedule to the Agreement. The Trustee
will, concurrently with such sale and assignment, execute, authenticate, and
deliver the Certificates to the Seller in exchange for the Receivables. (Section
16.02.) The Seller will sell the Class A Certificates to the Underwriters. See
"Underwriting."
In the Purchase Agreement, Ford Credit will represent and warrant to the
Seller, and in the Agreement the Seller will represent and warrant to the
Trustee, among other things, that (i) the information provided with respect to
the Receivables is correct in all material respects; (ii) the Obligor on each
Receivable has obtained or agreed to obtain physical damage insurance in
accordance with Ford Credit's normal
15
<PAGE> 17
requirements; (iii) at the date of issuance of the Certificates, the Receivables
are free and clear of all security interests, liens, charges, and encumbrances
(such representation and warranty will be made to the best of its knowledge with
respect to mechanic's liens and the like relating to a Financed Vehicle) and no
setoffs, defenses, or counterclaims against it have been asserted or threatened;
(iv) at the date of issuance of the Certificates, each of the Receivables is or
will be secured by a first perfected security interest in the Financed Vehicle
in favor of Ford Credit; and (v) each Receivable, at the time it was originated,
complied, and at the date of issuance of the Certificates, complies in all
material respects with applicable federal and state laws, including consumer
credit, truth in lending, equal credit opportunity, and disclosure laws. As of
the last day of the second (or, if the Seller elects, the first) month following
the discovery by or notice to the Seller of a breach of any representation or
warranty of the Seller which materially and adversely affects the interests of
the Certificateholders in a Receivable, the Seller, unless it cures the breach,
will purchase the Receivable from the Trustee, and Ford Credit will purchase the
Receivable from the Seller, at a price equal to the amount required to be paid
by the related Obligor to prepay the Receivable (including one month's interest
thereon, in the month of payment, at the APR), after giving effect to the
receipt of any moneys collected (from whatever source) on such Receivable, if
any (such price, the "Purchase Amount"). The purchase obligation will constitute
the sole remedy available to the Certificateholders or the Trustee for any such
uncured breach. (Sections 12.01 and 12.02.)
Pursuant to the Agreement, the Servicer will service and administer the
Receivables. The Agreement will also designate the Servicer as custodian to
maintain possession as the Trustee's agent of the retail installment sale
contracts and any other documents relating to the Receivables. (Section 12.03.)
To assure uniform quality in servicing both the Receivables and the Servicer's
own portfolio of receivables, as well as to facilitate servicing and save
administrative costs, the documents will not be physically segregated from other
similar documents that are in the Servicer's possession or otherwise stamped or
marked to reflect the transfer to the Trust so long as Ford Credit is servicing
the Receivables. However, Uniform Commercial Code financing statements
reflecting the sale and assignment of the Receivables by Ford Credit to the
Seller and by the Seller to the Trustee will be filed, and the Servicer's
accounting records and computer systems will be marked to reflect such sale and
assignment. Because the Receivables will remain in the Servicer's possession and
will not be stamped or otherwise marked to reflect the assignment to the
Trustee, if a subsequent purchaser were able to take physical possession of the
Receivables without knowledge of the assignment, the Trustee's interest in the
Receivables could be defeated. See "Certain Legal Aspects of the
Receivables -- Security Interests in Vehicles."
ACCOUNTS
The Servicer will establish two accounts in the name of the Trustee on
behalf of the Certificateholders, the first into which certain payments made on
or with respect to the Receivables will be deposited (the "Collection Account"),
and the second from which all distributions with respect to the Receivables and
the Certificates will be made (the "Certificate Account"). The Collection
Account shall be maintained with the Trustee so long as (i) the Trustee's
short-term unsecured debt obligations have a rating of P-1 by Moody's Investors
Service, Inc. and a rating of A-1+ by Standard & Poor's Corporation (the
"Required Deposit Rating") or (ii) such Account is maintained in the trust
department of the Trustee. If the short-term unsecured debt obligations of the
Trustee do not have the Required Deposit Rating, the Servicer shall, with the
Trustee's assistance as necessary, cause the Collection Account to be moved to a
bank whose short-term unsecured debt obligations have such a rating or moved to
the trust department of the Trustee. The Collection Account and the Certificate
Account shall initially be maintained in the trust department of the Trustee.
(Section 14.01.)
The Servicer will also establish an additional account (the "Payahead
Account") in the name of the Trustee, into which early payments by or on behalf
of the Obligors which constitute neither scheduled payments, full prepayments,
nor certain partial prepayments that result in a reduction of the Obligor's
periodic payment below the scheduled payment as of the Cutoff Date ("Payaheads")
will be deposited until such time as the payment falls due. The Payahead Account
will be established initially and maintained with the Trustee for so long as (i)
the short-term unsecured debt obligations of the Trustee have the Required
Deposit Rating or (ii) such Account is maintained in the trust department of the
Trustee. (Section 14.01.)
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Notwithstanding the foregoing, so long as Ford Credit is the servicer and
provided that (i) there exists no Event of Default and (ii) each other condition
to holding Payaheads as may be required by the Agreement is satisfied, Payaheads
may be retained by the Servicer until the related Distribution Date. (Section
14.01.)
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables and will continue such collection procedures as it
follows with respect to its own automotive retail installment sale contracts, in
a manner consistent with the Agreement. (Section 13.01.) Consistent with its
normal procedures, the Servicer may, in its discretion, arrange with the Obligor
on a Receivable to defer or modify the payment schedule. (Section 13.02.) Some
of such arrangements may cause the Servicer to purchase the Receivable while
others may result in the Servicer making Advances with respect to the
Receivable. (Sections 13.07 and 14.04.) If the Servicer determines that eventual
payment in full of a Receivable is unlikely, the Servicer will follow its normal
practices and procedures to realize upon the Receivable, including the
repossession and disposition of the Financed Vehicle securing the Receivable at
a public or private sale, or the taking of any other action permitted by
applicable law. (Section 13.03.)
COLLECTIONS
The Servicer will deposit all payments on Receivables received from
Obligors and all proceeds of Receivables collected during each Collection Period
into the Collection Account not later than the business day after receipt.
However, so long as Ford Credit is the servicer and provided that (i) there
exists no Event of Default and (ii) each other condition to making monthly
deposits as may be required by the Agreement is satisfied, the Servicer may
retain such amounts until the related Distribution Date. The Servicer or the
Seller, as the case may be, will remit the aggregate Purchase Amount of
Receivables to be purchased from the Trust to the Collection Account on the
Distribution Date. Pending deposit into the Collection Account, collections may
be employed by the Servicer at its own risk and for its own benefit and will not
be segregated from its own funds. (Section 14.02.)
For purposes of the Agreement, collections on a Receivable made during a
Collection Period which are not late fees, prepayment charges, or certain other
similar fees or charges shall be applied first to any outstanding Advances made
by the Servicer with respect to such Receivable and then to the scheduled
payment. To the extent that such collections on a Receivable during a Collection
Period exceed the outstanding Advances and the scheduled payment on such
Receivable, the collections shall be applied to prepay the Receivable in full.
If the collections are insufficient to prepay the Receivable in full, they
generally shall be treated as Payaheads until such later Collection Period as
such Payaheads may be transferred to the Collection Account and applied either
to the scheduled payment or to prepay the Receivable in full. (Sections 14.03,
14.04, and 14.06.)
ADVANCES
To the extent the collections on a Receivable for a Collection Period are
less than the scheduled payment, the amount of Payaheads made on such Receivable
not previously applied (the "Payahead Balance"), if any, with respect to such
Receivable shall be applied by the Servicer to the extent of the shortfall. To
the extent of any remaining shortfall, the Servicer will make an Advance of the
deficiency. The Servicer will be obligated to make an Advance in respect of a
Receivable only to the extent that the Servicer, in its sole discretion, expects
to recoup the Advance from the Obligor, the Purchase Amount, Liquidation
Proceeds or collections from other Receivables. (Section 14.04.) The Servicer
will deposit Advances in the Collection Account on the following Distribution
Date. The Servicer will be entitled to recoup its Advances from subsequent
payments by or on behalf of the Obligor, collections of Liquidation Proceeds and
payment of the Purchase Amount; or, upon the determination that reimbursement
from the preceding sources is unlikely, will be entitled to recoup its Advances
from collections from other Receivables. (Section 14.04.)
In the event that an Obligor shall prepay a Receivable in full, if the
related contract did not require such Obligor to pay a full month's interest for
the month of prepayment, at the APR, the Servicer shall advance the amount of
such interest. The Servicer will not be entitled to recoup any such advance.
(Section 14.04.)
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SERVICING COMPENSATION
The Servicer is entitled under the Agreement to receive a servicing fee
(the "Servicing Fee") for each Collection Period equal to one-twelfth of 1.00%
(the "Servicing Fee Rate") multiplied by the Pool Balance as of the first day of
such Collection Period. The Servicer is also entitled to receive a supplemental
servicing fee (the "Supplemental Servicing Fee") for each Collection Period
equal to any late, prepayment, and other administrative fees and expenses
collected during the Collection Period, plus any interest earned during the
Collection Period on deposits made with respect to the Receivables. The Servicer
will be paid the Servicing Fee and the Supplemental Servicing Fee for each
Collection Period on the following Distribution Date.
The Servicing Fee and the Supplemental Servicing Fee (collectively, the
"Servicer Fee") are intended to compensate the Servicer for performing the
functions of a third party servicer of the Receivables as an agent for the
Certificateholders, including collecting and posting all payments, responding to
inquiries of Obligors on the Receivables, investigating delinquencies, sending
payment coupons to Obligors, reporting tax information to Obligors, paying costs
of collections, and policing the collateral. The Servicer Fee will also
compensate the Servicer for administering the Receivables, including making
Advances, accounting for collections, furnishing monthly and annual statements
to the Trustee with respect to distributions, and generating federal income tax
information for the Trust. The Servicer Fee also will reimburse the Servicer for
certain taxes, the Trustee's fees, accounting fees, outside auditor fees, data
processing costs, and other costs incurred in connection with administering the
Receivables. (Sections 13.13 and 20.07.)
DISTRIBUTIONS ON CERTIFICATES
On or about the tenth calendar day of each month, the Servicer will inform
the Trustee of the amount of aggregate collections on the Receivables; the
aggregate Advances to be made by the Servicer, the aggregate Purchase Amount of
Receivables to be purchased by the Seller or the Servicer, all with respect to
the preceding Collection Period. (Section 13.09.)
On each Distribution Date, the Servicer, or the Trustee, as the case may
be, shall transfer the portion of Payaheads constituting all or a portion of
scheduled payments for that Collection Period or, which together with that
month's payment by an Obligor constitute prepayments in full on the Receivables
to the Certificate Account. On the Distribution Date, the Trustee shall cause
collections made during the Collection Period which constitute Payaheads to be
transferred from the Certificate Account to the Servicer, or to the Payahead
Account if required. (Sections 14.01 and 14.06.)
The Servicer shall determine prior to each Distribution Date the Total
Available Amount, the Available Interest, the Available Principal, the Class A
Distributable Amount and the Class B Distributable Amount and, based on the
Total Available Amount and the other distributions to be made on such
Distribution Date, as described below, determine the amount to be distributed to
Certificateholders of each Class. (Sections 13.09 and 14.06(b).)
Determination of Available Amounts. The "Total Available Amount" for a
Distribution Date (being the funds available for distribution to
Certificateholders of each Class with respect to such Distribution Date in
accordance with the priorities described below) shall be the sum of the
Available Interest and the Available Principal.
The "Available Interest" for a Distribution Date shall be the sum of the
following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on the Receivables allocable to interest (including
amounts withdrawn from the Payahead Account but excluding amounts deposited into
the Payahead Account); (ii) all proceeds of the liquidation of defaulted
Receivables ("Liquidated Receivables"), net of expenses incurred by the
Servicer, received in connection with such liquidation and any amounts required
by law to be remitted to the Obligor on such Liquidated Receivable ("Liquidation
Proceeds") to the extent attributable to interest due thereon in accordance with
the Servicer's customary servicing procedures; (iii) all Advances made by the
Servicer, of interest due on Receivables; (iv) all advances, if any, of interest
made by the Servicer in respect of Receivables which were prepaid in full; and
(v) the Purchase Amount of each Receivable that was purchased by the Seller or
Servicer under an obligation which arose during the related Collection Period,
to the extent attributable to accrued interest thereon.
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The "Available Principal" for a Distribution Date shall be the sum of the
following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on the Receivables allocable to principal (including
amounts withdrawn from the Payahead Account but excluding amounts deposited into
the Payahead Account); (ii) all Liquidation Proceeds attributable to principal
in accordance with the Servicer's customary servicing procedures; (iii) all
Advances made by the Servicer, of principal due on the Receivables; (iv) to the
extent attributable to principal, the Purchase Amount received with respect to
each Receivable purchased by the Seller or the Servicer under an obligation
which arose during such Collection Period; and (v) partial prepayments of any
refunded item included in the principal balance of a Receivable, such as
extended warranty protection plan costs, or physical damage, credit life,
disability insurance premiums, or any partial prepayment which causes a
reduction in the Obligor's periodic payment to an amount below the scheduled
payment as of the Cutoff Date.
The Available Interest and the Available Principal on any Distribution Date
shall exclude the following:
(i) amounts received on Receivables to the extent that the Servicer
has previously made an unreimbursed Advance; and
(ii) Liquidation Proceeds with respect to a particular Receivable to
the extent of any unreimbursed Advances, and amounts representing
reimbursement for certain costs and expenses incurred by the Servicer as
provided in the Agreement.
Calculation of Distributable Amounts. The "Class A Distributable Amount"
with respect to a Distribution Date shall be an amount equal to the sum of:
(i) the "Class A Principal Distributable Amount," consisting of the
Class A Percentage of:
(a) the principal portion of all scheduled payments due during the
preceding Collection Period;
(b) the principal portion of all prepayments in full received
during the preceding Collection Period (and certain partial prepayments)
(except to the extent included in (a) above);
(c) the principal balance of each Receivable that was purchased by
the Seller or the Servicer under an obligation that arose during the
preceding Collection Period (except to the extent included in (a) or (b)
above); and
(d) the principal balance of each Receivable liquidated by the
Servicer during the preceding Collection Period; plus
(ii) the "Class A Interest Distributable Amount," consisting of thirty
(30) days' interest at the Pass-Through Rate on the Class A Certificate
Balance as of the last day of the preceding Collection Period.
The "Class A Certificate Balance" shall equal, initially, the Class A
Percentage of the Pool Balance as of the Cutoff Date and, thereafter shall equal
the initial Class A Certificate Balance, reduced by all amounts previously
distributed to Class A Certificateholders and allocable to principal.
The "Class B Distributable Amount" with respect to a Distribution Date
shall be an amount equal to the sum of:
(i) the "Class B Principal Distributable Amount," consisting of the
Class B Percentage of the amounts set forth under (i)(a) through (i)(d)
above with respect to the Class A Principal Distributable Amount; plus
(ii) the "Class B Interest Distributable Amount," consisting of thirty
(30) days' interest at the Pass-Through Rate on the Class B Certificate
Balance as of the last day of the preceding Collection Period plus the
excess, for each Receivable having an APR greater than the sum of the
Pass-Through Rate and the Servicing Fee Rate, of the interest portion of
the scheduled payment over the portion of such interest equal to interest
at the sum of the Pass-Through Rate and the Servicing Fee Rate.
The "Class B Certificate Balance" shall equal, initially, the Class B
Percentage of the Pool Balance as of the Cutoff Date and, thereafter shall equal
the initial Class B Certificate Balance, reduced by all amounts previously
distributed to Class B Certificateholders (or deposited in the Subordination
Spread Account not including the Subordination Initial Deposit) and allocable to
principal and by the Class A Principal Carryover Shortfall and the Class B
Principal Carryover Shortfall.
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Calculation of Amounts to be Distributed. Prior to each Distribution Date,
the Servicer will calculate the amount to be distributed to the
Certificateholders.
The holders of the Class A Certificates will receive on any Distribution
Date, to the extent of available funds, an amount equal to the sum of the Class
A Distributable Amount and any outstanding Class A Interest Carryover Shortfall
and Class A Principal Carryover Shortfall (as defined below). (Section
14.06(c).) On each Distribution Date on which the sum of the Class A Interest
Distributable Amount and any outstanding Class A Interest Carryover Shortfall
(plus interest on such Class A Interest Carryover Shortfall at the Pass-Through
Rate from such preceding Distribution Date to the current Distribution Date, to
the extent permitted by law) exceeds the Class A Percentage of the Available
Interest (after payment of the Servicer Fee including any unpaid Servicer Fees
with respect to prior Collection Periods) on such Distribution Date, the Class A
Certificateholders shall be entitled to receive such shortfall first, from the
Class B Percentage of the Available Interest; second, if such amounts are
insufficient, from amounts available in the Subordination Spread Account; and
third, if such amounts are insufficient, from the Class B Percentage of the
Available Principal; provided, however, that if the Servicer shall fail to make
an advance of interest in respect of a Receivable prepaid in full, the portion
of such shortfall attributable thereto shall be paid only from amounts available
in the Subordination Spread Account. (Section 14.06(d).) The "Class A Interest
Carryover Shortfall" as of the close of any Distribution Date means the excess
of the Class A Interest Distributable Amount for such Distribution Date plus any
outstanding Class A Interest Carryover Shortfall from the preceding Distribution
Date, plus interest on such outstanding Class A Interest Carryover Shortfall, to
the extent permitted by law, at the Pass-Through Rate from such preceding
Distribution Date through the current Distribution Date, over the amount of
interest that the holders of the Class A Certificates actually received on such
current Distribution Date.
On each Distribution Date on which the sum of the Class A Principal
Distributable Amount and any outstanding Class A Principal Carryover Shortfall
from the preceding Distribution Date exceeds the Class A Percentage of the
Available Principal on such Distribution Date, the Class A Certificateholders
shall be entitled to receive such shortfall first, from the Class B Percentage
of the Available Principal; second, if such amounts are insufficient, from
amounts available in the Subordination Spread Account and third, if such amounts
are insufficient, from the Class B Percentage of the Available Interest.
(Section 14.06(d).) The "Class A Principal Carryover Shortfall" as of the close
of any Distribution Date means the excess of the Class A Principal Distributable
Amount plus any outstanding Class A Principal Carryover Shortfall from the
preceding Distribution Date over the amount of principal that the holders of the
Class A Certificates actually received on such current Distribution Date.
The holders of the Class B Certificates are entitled to receive on any
Distribution Date an amount equal to the sum of the Class B Interest
Distributable Amount, the Class B Principal Distributable Amount (and any
shortfalls from prior Distribution Dates in payments to the Class B
Certificateholders), after giving effect to (A) any amounts required to be
distributed to the holders of Class A Certificates pursuant to the subordination
of the rights of the holders of Class B Certificates, and (B) amounts required
to pay the Servicer Fee (including any unpaid Servicer Fees with respect to
prior Collection Periods) payable to the Servicer on such Distribution Date.
(Section 14.06(c).)
SUBORDINATION OF THE CLASS B CERTIFICATES; SUBORDINATION SPREAD ACCOUNT
The rights of the Class B Certificateholders to receive distributions with
respect to the Receivables will be subordinated to the rights of the Class A
Certificateholders in the event of defaults and delinquencies on the Receivables
as provided in the Agreement. The protection afforded to the Class A
Certificateholders will be effected both by the preferential right of the Class
A Certificateholders to receive current distributions with respect to the
Receivables and by the establishment of the Subordination Spread Account. The
Subordination Spread Account will be created with an initial deposit by the
Seller of the Subordination Initial Deposit and will be augmented by deposit
therein of amounts otherwise distributable to Class B Certificateholders until
the amount in the Subordination Spread Account reaches an amount equal to the
Specified Subordination Spread Account Balance. Thereafter, amounts otherwise
distributable to the Class B Certificateholders will be deposited in the
Subordination Spread Account to the extent necessary to maintain the amount in
the Subordination Spread Account at the Specified Subordination Spread Account
Balance.
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The Subordination Spread Account will not be a part of or otherwise
includible in the Trust and will be a segregated trust account held by Chemical
Bank as agent for the Class A Certificateholders (the "Class A Agent"). On each
Distribution Date, (i) if the amounts on deposit in the Subordination Spread
Account are less than the Specified Subordination Spread Account Balance, the
Trustee will, after payment of any amounts required to be distributed to holders
of the Class A Certificates and the payment of the Servicer Fee due with respect
to the related Collection Period (including any unpaid Servicer Fees with
respect to prior Collection Periods), withdraw from the Collection Account and
deposit in the Subordination Spread Account the amount remaining in the
Collection Account that would otherwise be distributed to the holders of the
Class B Certificates, or such lesser portion thereof as is sufficient to restore
the amount in the Subordination Spread Account to such Specified Subordination
Spread Account Balance and (ii) if the amount on deposit in the Subordination
Spread Account on such Distribution Date (after giving effect to all deposits or
withdrawals therefrom on such Distribution Date) is greater than the Specified
Subordination Spread Account Balance for such Distribution Date, the Class A
Agent will release and distribute any such excess to the holders of the Class B
Certificates. Upon any such distribution, the Class A Certificateholders will
have no rights in, or claims to, such amounts. (Section 14.07.)
Amounts held from time to time in the Subordination Spread Account will
continue to be held for the benefit of holders of the Class A Certificates and
holders of the Class B Certificates in order to effectuate the subordination of
the rights of the holders of the Class B Certificates to the rights of the
holders of the Class A Certificates. Funds in the Subordination Spread Account
shall be invested as provided in the Agreement in Eligible Investments. The
holders of the Class B Certificates shall be entitled to receive all investment
earnings on amounts in the Subordination Spread Account. Investment income on
amounts in the Subordination Spread Account will not be available for
distribution to the holders of the Class A Certificates or otherwise subject to
any claims or rights of the holders of the Class A Certificates. (Section
14.07(c).)
"Eligible Investments" for monies deposited in the Subordination Spread
Account are limited to investments acceptable to the rating agency or agencies
then rating the Class A Certificates as being consistent with the then-current
rating of the Class A Certificates. Eligible Investments are limited to
obligations or securities that mature not later than the Distribution Date next
succeeding the day of investment. (Section 14.01.)
The time necessary for the Subordination Spread Account to reach and
maintain the Specified Subordination Spread Account Balance at any time after
the date of issuance of the Certificates will be affected by the delinquency,
credit loss and repossession and prepayment experience of the Receivables and,
therefore, cannot be accurately predicted.
If on any Distribution Date the holders of the Class A Certificates do not
receive the sum of the Class A Distributable Amount, the Class A Interest
Carryover Shortfall and the Class A Principal Carryover Shortfall for such
Distribution Date (after giving effect to any amounts withdrawn from the
Subordination Spread Account and the Class B Distributable Amount and applied to
such deficiency, as described above), the holders of the Class B Certificates
will not receive any portion of the Total Available Amount.
The subordination of the Class B Certificates and the Subordination Spread
Account described above are intended to enhance the likelihood of receipt by
Class A Certificateholders of the full amount of principal and interest on the
Receivables due them and to decrease the likelihood that the Class A
Certificateholders will experience losses. However, in certain circumstances,
the Subordination Spread Account could be depleted and shortfalls could result.
NET DEPOSITS
As an administrative convenience and for so long as certain conditions are
satisfied, the Servicer will be permitted to make the deposit of collections and
aggregate Advances and Purchase Amounts for or with respect to the Collection
Period, net of distributions to the Servicer as reimbursement of Advances or
payment of the Servicer Fee with respect to the Collection Period. Similarly,
the Servicer may cause to be made a single, net transfer from the Certificate
Account to the Payahead Account, or vice versa. The Servicer, however, will
account to the Trustee and to the Certificateholders as if all deposits,
distributions, and transfers were made individually. (Section 14.08.)
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The following chart sets forth an example of the application of the
foregoing provisions to a monthly distribution:
<TABLE>
<S> <C>
November 1............. Cutoff Date. The Original Pool Balance equals the aggregate
principal balance of the Receivables.
November 1 --
November 30.......... Collection Period. The Servicer receives monthly payments,
prepayments, and other proceeds in respect of the
Receivables.
December 10............ The tenth calendar day of the month. On or about this date
the Servicer notifies the Trustee of, among other things,
the amounts to be distributed on the Distribution Date.
December 14............ Record Date. Distributions on the Distribution Date are
made to Certificateholders of record at the close of
business on this date (or, if Definitive Certificates are
issued, the Record Date will be November 30, ).
December 15............ Distribution Date. On or before this date, the Seller and
the Servicer (or the Trustee), make the required
remittances and transfers to the Collection Account and the
Certificate Account in immediately available funds, and the
Trustee distributes to holders of the Class A Certificates
and of the Class B Certificates amounts payable in respect
of the Certificates and pays the Servicer Fee and remits
amounts to the Subordination Spread Account (if required).
</TABLE>
STATEMENTS TO CLASS A CERTIFICATEHOLDERS
On each Distribution Date, the Trustee will include with each distribution
to each Class A Certificateholder (which shall be Cede as the nominee for DTC
unless Definitive Certificates are issued under the limited circumstances
described herein) as of the close of business on the last day of the preceding
Collection Period a statement, setting forth the following information with
respect to the preceding Collection Period:
(i) the amount of the distribution allocable to principal;
(ii) the amount of the distribution allocable to interest;
(iii) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(iv) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period and the Certificateholder's Class
A Percentage of the Servicing Fee and the amount of any unpaid Servicing
Fees and the change in such amount from that of the prior Distribution
Date;
(v) the amount of the Class A Interest Carryover Shortfall and Class
A Principal Carryover Shortfall, if any, on such Distribution Date and the
change in such amounts from those of the prior Distribution Date;
(vi) the Class A Certificate Factor and Class B Certificate Balance
as of such Distribution Date;
(vii) the amount otherwise distributable to the Class B
Certificateholders that is distributed to Class A Certificateholders on
such Distribution Date;
(viii) the balance of the Subordination Spread Account on such
Distribution Date, after giving effect to distributions made on such
Distribution Date and the change in such balance from that of the prior
Distribution Date;
(ix) the aggregate amount in the Payahead Account and the change in
such amount from that of the prior Distribution Date; and
(x) the amount of Advances on such Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii), (iv) and (v) above
shall be expressed in the aggregate and as a dollar amount per $1,000 of
original principal balance of a Class A Certificate.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the Agreement, the Trustee shall
mail to each person who at any time during such calendar year shall have been a
Class A Certificateholder and received any payment thereon, a statement
containing the sum
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of the amounts described in (i), (ii), (iv), and (v) above for the purposes of
such Class A Certificateholder's preparation of federal income tax returns.
(Section 14.09.) See "Certain Federal Income Tax Consequences."
EVIDENCE AS TO COMPLIANCE
The Agreement will provide that a firm of independent public accountants
will furnish to the Trustee on or before April 30 of each year, beginning April
30, 1995, a statement as to compliance by the Servicer during the preceding
calendar year, or part thereof in the case of calendar year 1994, ended December
31 with certain standards relating to the servicing of the Receivables, the
Servicer's accounting and computer systems with respect thereto, and certain
other matters. (Section 13.11.)
The Agreement will also provide for delivery to the Trustee, on or before
April 30 of each year, commencing April 30, 1995, of a certificate signed by an
officer of the Servicer stating that the Servicer has fulfilled its obligations
under the Agreement throughout the preceding calendar year, or part thereof in
the case of calendar year 1994, ended December 31 or, if there has been a
default in the fulfillment of any such obligation, describing each such default.
(Section 13.10.)
Copies of such statements and certificates may be obtained by Class A
Certificateholders by a request in writing addressed to the Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
The Agreement will provide that Ford Credit may not resign from its
obligations and duties as servicer thereunder, except upon determination that
Ford Credit's performance of such duties is no longer permissible under
applicable law. No such resignation will become effective until the Trustee or a
successor servicer has assumed Ford Credit's servicing obligations and duties
under the Agreement. (Section 8.01.)
The Agreement will further provide that neither the Servicer, nor any of
its directors, officers, employees, and agents will be under any liability to
the Trust or the Certificateholders for taking any action or for refraining from
taking any action pursuant to the Agreement, or for errors in judgment;
provided, however, that neither the Servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith, or negligence (except for errors in judgment) in
the performance of duties, or by reason of reckless disregard of obligations and
duties thereunder. In addition, the Agreement will provide that the Servicer is
under no obligation to appear in, prosecute, or defend any legal action that is
not incidental to the Servicer's servicing responsibilities under the Agreement
and that, in its opinion, may cause it to incur any expense or liability. The
Servicer may, however, undertake any reasonable action that it may deem
necessary or desirable in respect of the Agreement, the rights and duties of the
parties thereto, and the interests of the Certificateholders thereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom will be expenses, costs, and liabilities of the Servicer, and the
Servicer will not be entitled to be reimbursed therefor out of the Certificate
Account. (Section 18.04.)
Any entity into which the Servicer or the Seller, as the case may be, may
be merged or consolidated, or any entity resulting from any merger, conversion,
or consolidation to which the Servicer or the Seller, as the case may be, is a
party, or any entity succeeding to the business of the Servicer or the Seller,
as the case may be, or any corporation, more than 50% of the voting stock of
which is owned, directly or indirectly, by Ford Motor Company, which assumes the
obligations of the Servicer or the Seller, as the case may be, will be the
successor of the Servicer or the Seller, as the case may be, under the
Agreement. (Sections 17.03 and 18.03.) For as long as Ford Credit is the
Servicer, it may at any time subcontract substantially all of its duties as
servicer under the Agreement to any corporation more than 50% of the voting
stock of which is owned, directly or indirectly, by Ford Motor Company and the
Servicer may at any time perform certain specific duties as servicer through
other subcontractors. (Section 18.05.)
EVENTS OF DEFAULT
"Events of Default" under the Agreement will consist of (i) any failure by
the Servicer to deliver to the Trustee for distribution to the
Certificateholders or deposit in the Subordination Spread Account any required
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payment, which failure continues unremedied for three Business Days after
written notice from the Trustee is received by the Servicer or after discovery
by an officer of the Servicer; (ii) any failure by the Seller or the Servicer
duly to observe or perform in any material respect any other covenant or
agreement in the Agreement which failure materially and adversely affects the
rights of Certificateholders and which continues unremedied for 90 days after
the giving of written notice of such failure (1) to the Seller or the Servicer,
as applicable, by the Trustee or (2) to the Seller or the Servicer, as
applicable, and to the Trustee by holders of Class A Certificates evidencing not
less than 25% of the Class A Certificate Balance; and (iii) certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities, or
similar proceedings with respect to the Servicer indicating its insolvency,
reorganization pursuant to bankruptcy proceedings, or inability to pay its
obligations. (Section 19.01.)
RIGHTS UPON EVENT OF DEFAULT
As long as an Event of Default under the Agreement remains unremedied, the
Trustee or holders of Class A Certificates evidencing not less than 51% of the
Class A Certificate Balance may terminate all the rights and obligations of the
Servicer under the Agreement, whereupon the Trustee will succeed to all the
responsibilities, duties, and liabilities of the Servicer under such Agreement
and will be entitled to similar compensation arrangements. If, however, a
bankruptcy trustee or similar official has been appointed for the Servicer, and
no Event of Default other than such appointment has occurred, such trustee or
official may have the power to prevent the Trustee or the Class A
Certificateholders from effecting a transfer of servicing. In the event that the
Trustee is unwilling or unable to so act, it may appoint, or petition a court of
competent jurisdiction for the appointment of, a successor with a net worth of
at least $100,000,000 and whose regular business includes the servicing of
automotive receivables. The Trustee, or any person appointed as successor
Servicer, shall be the successor in all respects to the predecessor Servicer
under the Agreement and all references therein to the Servicer shall apply to
such successor Servicer. The Trustee may make such arrangements for compensation
to be paid, which in no event may be greater than the servicing compensation to
Ford Credit, as Servicer, under the Agreement. (Sections 19.01 and 19.02.)
WAIVER OF PAST DEFAULTS
The holders of Class A Certificates evidencing not less than 51% of the
Class A Certificate Balance may waive any default by the Servicer in the
performance of its obligations under the Agreement and its consequences, except
a default in making any required deposits to or payments from the Collection
Account or the Certificate Account in accordance with the Agreement. No such
waiver shall impair the Certificateholders' rights with respect to subsequent
defaults. (Section 19.05.)
AMENDMENT
The Agreement may be amended by the Seller, the Servicer, and the Trustee,
without the consent of the Certificateholders, (i) to cure any ambiguity,
correct or supplement any provision therein which may be inconsistent with any
other provision therein, or make any other provisions with respect to matters or
questions arising under such Agreement which are not inconsistent with the
provisions of the Agreement; provided that such action will not, in the opinion
of counsel satisfactory to the Trustee, materially and adversely affect the
interest of any Certificateholder, and (ii) to provide for the transfer of the
Class B Certificates; provided that certain conditions specified in the
Agreement are satisfied prior to such transfer, including written confirmation
from any rating agency rating the Class A Certificates that such transfer will
not result in the qualification, downgrading or withdrawal of the then current
rating assigned to the Class A Certificates by such rating agency, and that such
amendment will not change the timing of, or the amount of, any distributions
that the holders of the Class A Certificates are entitled to receive under the
Agreement. The Agreement may also be amended by the Seller, the Servicer, and
the Trustee with the consent of the holders of Class A Certificates and Class B
Certificates, each voting as a Class, evidencing not less than 51% of the Class
A Certificate Balance and Class B Certificate Balance, respectively, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Agreement or of modifying in any manner the rights of
Certificateholders; provided, however, that no such amendment may (i) increase
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or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that are required to be
made on any Certificate or change the Pass-Through Rate or the Specified
Subordinated Spread Account Balance or (ii) reduce the aforesaid percentage of
the Class A Certificate Balance or Class B Certificate Balance, which is
required to consent to any such amendment, without the consent of the holders of
all Certificates of such Class. (Section 22.01.)
LIST OF CERTIFICATEHOLDERS
Upon written request of the Servicer, the Trustee will provide to the
Servicer within 15 days after receipt of such request a list of the names and
addresses of all Certificateholders of record as of the most recent Record Date.
Upon written request by three or more Certificateholders or by one or more
holders of Class A Certificates evidencing not less than 25% of the Class A
Certificate Balance, and upon compliance by such Certificateholders with certain
other provisions of the Agreement, 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 Agreement. (Section 16.06.)
The Agreement will not provide for the holding of any annual or other
meetings of Certificateholders.
TERMINATION
The respective obligations of the Seller, the Servicer and the Trustee
pursuant to the Agreement will terminate upon (i) the maturity or other
liquidation of the last Receivable and the disposition of any amounts received
upon liquidation of any remaining Receivables and (ii) the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement. In order to avoid excessive administrative expense, the Servicer, or
its successor, is permitted at its option to purchase from the Trust, as of the
last day of any month as of which the then outstanding Pool Balance is less than
10% of the original Pool Balance, all remaining Receivables at a price equal to
the aggregate of the Purchase Amounts thereof as of such last day. Exercise of
such right will effect early retirement of the Certificates. The Trustee will
give written notice of termination to each Certificateholder of record. The
final distribution to any Certificateholder will be made only upon surrender and
cancellation of such holder's Certificate at any office or agency of the Trustee
specified in the notice of termination. Any funds remaining in the Trust, after
the Trustee has taken certain measures to locate a Certificateholder and such
measures have failed, will be distributed to the Edison Institute, Dearborn,
Michigan. (Sections 21.01 and 21.02.)
DUTIES OF THE TRUSTEE
The Trustee makes no representations as to the validity or sufficiency of
the Agreement, the Certificates (other than the authentication of the
Certificates), or any Receivables or related documents, and is not accountable
for the use or application by the Servicer of any funds paid to the Seller or
the Servicer in respect of the Certificates or the Receivables, or the
investment of any monies by the Servicer before such monies are deposited into
the Certificate Account. The Trustee has not independently verified the
Receivables. If no Event of Default has occurred, the Trustee is required to
perform only those duties specifically required of it under the Agreement.
Generally, those duties are limited to the receipt of the various certificates,
reports, or other instruments required to be furnished to the Trustee under the
Agreement, in which case it is only required to examine them to determine
whether they conform to the requirements of the Agreement. The Trustee shall not
be charged with knowledge of a failure by the Servicer to perform its duties
under the Agreement which failure constitutes an Event of Default unless the
Trustee obtains actual knowledge of such failure as specified in the Agreement.
(Sections 20.01 and 20.05.)
The Trustee is under no obligation to exercise any of the rights or powers
vested in it by the Agreement or to make any investigation of matters arising
thereunder or to institute, conduct, or defend any litigation thereunder or in
relation thereto at the request, order, or direction of any of the
Certificateholders, unless such Certificateholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses, and liabilities
that may be incurred therein or thereby. (Section 20.04.) No Class A
Certificateholder will have any right under the Agreement to institute any
proceeding with respect to the Agreement, unless such holder
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previously has given to the Trustee written notice of default and unless (i) the
default arises from the Seller's or the Servicer's failure to remit payments
when due under the Agreement or (ii) the holders of Class A Certificates
evidencing not less than 25% of the Class A Certificate Balance have made
written request upon the Trustee to institute such proceeding in its own name as
Trustee thereunder and have offered to the Trustee reasonable indemnity and the
Trustee for 30 days has neglected or refused to institute any such proceeding.
(Section 22.03.)
THE TRUSTEE
Chemical Bank is the Trustee under the Agreement. The Trustee, in its
individual capacity or otherwise, may hold Certificates in its own name or as
pledgee. (Section 20.06.) For the purpose of meeting the legal requirements of
certain jurisdictions, the Servicer and the Trustee acting jointly (or in some
instances, the Trustee acting alone) shall have the power to appoint co-trustees
or separate trustees of all or any part of the Trust. In the event of such
appointment, all rights, powers, duties, and obligations conferred or imposed
upon the Trustee by the Agreement 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. (Section 20.13.)
The Trustee may resign at any time, in which event the Servicer 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
Agreement, becomes legally unable to act, or becomes insolvent. In such
circumstances, the Servicer will be obligated to appoint a successor trustee.
Any resignation or removal of the Trustee and appointment of a successor trustee
does not become effective until acceptance of the appointment by the successor
trustee. (Section 20.10.)
The Agreement will provide that the Servicer will pay the Trustee's fees.
(Section 20.07.) The Agreement will further provide that the Trustee will be
entitled to indemnification by the Seller and the Servicer for, and will be held
harmless against, any loss, liability, fee, disbursement, or expense incurred by
the Trustee not resulting from the Trustee's own willful misfeasance, bad faith,
or negligence (other than by reason of a breach of any of its representations or
warranties set forth in the Agreement). The Agreement will further provide that
the Seller and the Servicer will indemnify the Trustee for certain taxes that
may be asserted in connection with the transaction.
RATING OF THE CLASS A CERTIFICATES
It is a condition to issuance of the Class A Certificates that they be
rated in the highest rating category by at least one nationally recognized
rating agency. The rating is not a recommendation to purchase, hold or sell
Class A Certificates, inasmuch as such rating does not comment as to market
price or suitability for a particular investor. There is no assurance that the
rating will remain for any given period of time or that the rating will not be
lowered or withdrawn entirely by such rating agency if in its judgment
circumstances in the future so warrant.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTERESTS IN VEHICLES
In all states in which the Receivables have been originated, retail
installment sale contracts such as the Receivables evidence the credit sale of
automobiles and light trucks by dealers to obligors; the contracts also
constitute personal property security agreements and include grants of security
interests in the vehicles under the Uniform Commercial Code (the "UCC").
Perfection of security interests in the vehicles is generally governed by the
motor vehicle registration laws of the state in which the vehicle is located. In
most states in which the Receivables have been originated, a security interest
in a vehicle is perfected by notation of the
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secured party's lien on the vehicle's certificate of title. Each Receivable
prohibits the sale or transfer of the Financed Vehicle without Ford Credit's
consent.
Pursuant to the Purchase Agreement, Ford Credit will assign its security
interests in the Financed Vehicles securing the Receivables to the Seller and,
pursuant to the Agreement, the Seller will assign its security interests in the
Financed Vehicles securing the Receivables to the Trustee. However, because of
the administrative burden and expense, the Servicer, the Seller and the Trustee
will not amend any certificate of title to identify the Trust as the new secured
party on the certificates of title relating to the Financed Vehicles. Also, the
Servicer will continue to hold any certificates of title relating to the
Financed Vehicles in its possession as custodian for the Trustee pursuant to the
Agreement. See "The Certificates -- Sale and Assignment of Receivables."
In most states, assignments such as those under the Purchase Agreement and
the Agreement are an effective conveyance of a security interest without
amendment of any lien noted on a vehicle's certificate of title, and the
assignee succeeds thereby to the assignor's rights as secured party. In the
absence of fraud or forgery by the vehicle owner or the Servicer or
administrative error by state or local agencies, the notation of Ford Credit's
lien on the certificates of title will be sufficient to protect the Trust
against the rights of subsequent purchasers of a Financed Vehicle or subsequent
lenders who take a security interest in a Financed Vehicle. If there are any
Financed Vehicles as to which Ford Credit failed to obtain a perfected security
interest, its security interest would be subordinate to, among others,
subsequent purchasers of the Financed Vehicles and holders of perfected security
interests. Such a failure, however, would constitute a breach of Ford Credit's
warranties under the Purchase Agreement and of the Seller's warranties under the
Agreement and would create an obligation of Ford Credit under the Purchase
Agreement and of the Seller under the Agreement to purchase the related
Receivable unless the breach is cured. See "The Certificates -- Sale and
Assignment of Receivables." By not identifying the Trust as the secured party on
the certificate of title, the security interest of the Trust in the Financed
Vehicle could be defeated through fraud or negligence. The Seller will assign
its rights under the Purchase Agreement to the Trust.
Under the laws of most states, the perfected security interest in a vehicle
would continue for four months after a vehicle is moved to a state other than
the state in which it is initially registered and thereafter until the vehicle
owner re-registers the vehicle in the new state. A majority of states generally
require surrender of a certificate of title to re-register a vehicle;
accordingly, a secured party must surrender possession if it holds the
certificate of title to the vehicle, or, in the case of vehicles registered in
states providing for the notation of a lien on the certificate of title but not
possession by the secured party, the secured party would receive notice of
surrender if the security interest is noted on the certificate of title. Thus,
the secured party would have the opportunity to re-perfect its security interest
in the vehicle in the state of relocation. In states that do not require a
certificate of title for registration of a motor vehicle, re-registration could
defeat perfection. In the ordinary course of servicing receivables, Ford Credit
takes steps to effect re-perfection upon receipt of notice of re-registration or
information from the obligor as to relocation. Similarly, when an obligor sells
a vehicle, Ford Credit must surrender possession of the certificate of title or
will receive notice as a result of its lien noted thereon and accordingly will
have an opportunity to require satisfaction of the related Receivable before
release of the lien. Under the Agreement, the Servicer is obligated to take
appropriate steps, at the Servicer's expense, to maintain perfection of security
interests in the Financed Vehicles.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for certain unpaid taxes take priority over even a perfected
security interest in a Financed Vehicle. The Internal Revenue Code of 1986 also
grants priority to certain federal tax liens over the lien of a secured party.
The laws of certain states and federal law permit the confiscation of motor
vehicles under certain circumstances if used in unlawful activities, which may
result in the loss of a secured party's perfected security interest in the
confiscated motor vehicle. Ford Credit will represent to the Seller and the
Seller will represent to the Trust that each security interest in a Financed
Vehicle is or will be prior to all other present liens (other than tax liens and
liens that arise by operation of law) upon and security interests in such
Financed Vehicle. However, liens for repairs or taxes, or the confiscation of a
Financed Vehicle, could arise or occur at any time during the term of a
Receivable. No notice will be given to the Trustee or Certificateholders in the
event such a lien arises or confiscation occurs.
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REPOSSESSION
In the event of default by vehicle purchasers, the holder of the retail
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. The UCC remedies of a
secured party include the right to repossession by self-help means, unless such
means would constitute a breach of the peace. Unless a vehicle is voluntarily
surrendered, self-help repossession is the method employed by Ford Credit in the
majority of instances in which a default occurs and is accomplished simply by
retaking possession of the financed vehicle. In cases where the obligor objects
or raises a defense to repossession, or if otherwise required by applicable
state law, a court order must be obtained from the appropriate state court, and
the vehicle must then be repossessed in accordance with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of default by the obligor, some jurisdictions require that the
obligor be notified of the default and be given a time period within which the
obligor may cure the default prior to repossession. Generally, this right of
reinstatement may be exercised on a limited number of occasions in any one-year
period.
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time, and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal balance of the obligation plus reasonable
expenses for repossessing, holding, and preparing the collateral for disposition
and arranging for this sale, plus, in some jurisdictions, reasonable attorneys'
fees, or, in some states, by payment of delinquent installments or the unpaid
balance. Repossessed vehicles are generally resold by Ford Credit through
automobile auctions which are attended principally by dealers.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the repossessed vehicles generally will be
applied to the expenses of resale and repossession and then to the satisfaction
of the indebtedness of the obligor on the receivable. While some states impose
prohibitions or limitations on deficiency judgments if the net proceeds from
resale do not cover the full amount of the indebtedness, a deficiency judgment
can be sought in those states that do not prohibit or limit such judgments.
However, the deficiency judgment would be a personal judgment against the
obligor for the shortfall, and a defaulting obligor can be expected to have very
little capital or sources of income available following repossession. Therefore,
in many cases, it may not be useful to seek a deficiency judgment or, if one is
obtained, it may be settled at a significant discount.
Occasionally, after resale of a vehicle and payment of all expenses and
indebtedness, there is a surplus of funds. In that case, the UCC requires the
lender to remit the surplus to any holder of any lien with respect to the
vehicle or if no such lienholder exists or there are remaining funds, the UCC
requires the lender to remit the surplus to the former obligor.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Reporting
Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board's Regulations B and Z, state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code, and state motor vehicle
retail installment sales acts, retail installment sales acts, and other similar
laws. Also, state laws impose finance charge ceilings and other restrictions on
consumer transactions and require contract disclosures in addition to those
required under federal law. These requirements impose specific statutory
liabilities upon creditors who fail to comply with their provisions. In some
cases, this liability could affect an assignee's ability to enforce consumer
finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
(the "FTC Rule"), the provisions of which are generally duplicated by the
Uniform Consumer Credit Code, other state statutes, or
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the common law in certain states, has the effect of subjecting a seller (and
certain related lenders and their assignees) in a consumer credit transaction
and any assignee of the seller to all claims and defenses which the obligor in
the transaction could assert against the seller of the goods. Liability under
the FTC Rule is limited to the amounts paid by the obligor under the contract,
and the holder of the contract may also be unable to collect any balance
remaining due thereunder from the obligor.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, the Trustee, as holder of the Receivables, will be subject to
any claims or defenses that the purchaser of the Financed Vehicle may assert
against the seller of the Financed Vehicle. Such claims are limited to a maximum
liability equal to the amounts paid by the obligor on the Receivable. Under most
state motor vehicle dealer licensing laws, sellers of motor vehicles are
required to be licensed to sell motor vehicles at retail sale. Furthermore,
Federal Odometer Regulations promulgated under the Motor Vehicle Information and
Cost Savings Act require that all sellers of new and used vehicles furnish a
written statement signed by the seller certifying the accuracy of the odometer
reading. If a seller is not properly licensed or if an Odometer Disclosure
Statement was not provided to the purchaser of the related financed vehicle, the
obligor may be able to assert a defense against the seller of the vehicle. If an
obligor were successful in asserting any such claim or defense, such claim or
defense would constitute a breach of Ford Credit's and the Seller's
representations and warranties under the Purchase Agreement and the Agreement,
respectively, and would create an obligation of Ford Credit and the Seller to
repurchase the Receivable unless the breach is cured. See "The
Certificates -- Sale and Assignment of the Receivables."
Courts have imposed general equitable principles on secured parties
pursuing repossession of collateral or litigation involving deficiency balances.
These equitable principles may have the effect of relieving an obligor from some
or all of the legal consequences of a default.
In several cases, obligors have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to consumers.
Ford Credit and the Seller will warrant under the Purchase Agreement and
the Agreement, respectively, that each Receivable complies with all requirements
of law in all material respects. Accordingly, if an obligor has a claim against
the Trust for violation of any law and such claim materially and adversely
affects the Trust's interest in a Receivable, such violation would constitute a
breach of warranty under the Purchase Agreement and the Agreement and would
create an obligation of Ford Credit and the Seller to repurchase the Receivable
unless the breach is cured. See "The Certificates -- Sale and Assignment of the
Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
lender from repossessing a motor vehicle, and, as part of the rehabilitation
plan, reduce the amount of the secured indebtedness to the market value of the
motor vehicle at the time of bankruptcy (as determined by the court), leaving
the party providing financing as a general unsecured creditor for the remainder
of the indebtedness. A bankruptcy court may also reduce the monthly payments due
under a contract or change the rate of interest and time of repayment of the
indebtedness.
TRANSFERS OF VEHICLES
The Receivables prohibit the sale or transfer of the vehicle securing a
Receivable without Ford Credit's consent and, except those originated in Ohio
and Wisconsin, permit Ford Credit to accelerate the maturity of the Receivable
upon a sale or transfer without its consent. The Servicer will not consent to a
sale or transfer and will require prepayment of the Receivable. The Servicer may
enter into a transfer of equity agreement with the secondary purchaser for the
purpose of effecting the transfer of the Financed Vehicle.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain federal income tax
consequences of the purchase, ownership, and disposition of Class A
Certificates. This summary is based upon laws, regulations, rulings, and
decisions currently in effect, all of which are subject to change. The
discussion does not deal with all federal tax consequences applicable to all
categories of investors, some of which may be subject to special rules. In
addition, this summary is generally limited to investors who will hold the Class
A Certificates as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code"). Investors should consult their own tax advisors to
determine the federal, state, local, and other tax consequences of the purchase,
ownership, and disposition of the Class A Certificates. Prospective investors
should note that no rulings have been or will be sought from the Internal
Revenue Service (the "Service") with respect to any of the federal income tax
consequences discussed below, and no assurance can be given that the Service
will not take contrary positions.
TAX STATUS OF THE TRUST
In the opinion of Skadden, Arps, Slate, Meagher & Flom, special tax counsel
to the Seller, the Trust will be classified as a grantor trust and not as an
association taxable as a corporation for federal income tax purposes. Subject to
the discussion of stripped coupons below under "Characterization of Fees," each
Class A Certificate Owner will be treated as the owner of a pro rata undivided
interest in the Class A Percentage of the ordinary income and corpus portions of
the Trust.
Income on the Receivables. If the Receivables are not characterized as
"stripped bonds" or otherwise recharacterized, each Class A Certificate Owner
will be required to report on its federal income tax return its pro rata share
of the Class A Percentage of the entire income of the Trust for the period
during which it owns a Class A Certificate, including interest or finance
charges earned on the Receivables, and any gain or loss upon collection or
disposition of the Receivables. Because the Receivables, when originally issued
by the Obligors to the Dealers from whom Ford Credit acquired the Receivables,
are believed to have had adequate stated interest, the original issue discount
rules and imputed interest rules should not apply to the Receivables except to
the extent that a Receivable is treated as a "stripped bond," as discussed
below. The portion of each monthly payment to a Class A Certificate Owner that
is allocable to principal on the Receivables will represent a recovery of
capital, which will reduce the tax basis of such Class A Certificate Owner's
undivided interest in the Receivables. In computing its federal income tax
liability, a Class A Certificate Owner will be entitled to deduct, consistent
with its method of accounting, its pro rata share of reasonable servicing fees,
and other fees paid or incurred by the Trust as provided in Section 162 or 212
of the Code. If a Class A Certificate Owner is an individual, estate or trust
the deduction for his pro rata share of such fees will be allowed only to the
extent that all of his miscellaneous itemized deductions, including his share of
such fees, exceed 2% of his adjusted gross income. In addition, in the case of
Certificate Owners who are individuals, otherwise allowable itemized deductions
will be reduced, but not by more than 80%, by an amount equal to 3% of the
Certificate Owner's adjusted gross income in excess of a statutorily defined
threshold ($111,800 in the case of a married couple filing jointly for taxable
years beginning in 1994, which amount will be adjusted for inflation). Because
the Servicer will not report to Class A Certificate Owners the amount of income
or deductions attributable to the Supplemental Servicing Fee, such a Class A
Certificate Owner may effectively underreport his net taxable income. To the
extent that the Receivables are characterized as "stripped bonds," as discussed
below, the portion of the interest treated as retained by the Class B
Certificateholder, the Seller, or the Servicer would not be included in the
income of Class A Certificateholders. See "Characterization of Fees" below.
To the extent that the purchase price of a Class A Certificate allocated to
a Class A Certificate Owner's undivided interest in a Receivable is greater than
or less than the portion of the principal balance of the Receivable allocable to
the Class A Certificate, such interest in the Receivable will have been acquired
at a premium or discount, as the case may be. In determining whether a Class A
Certificate Owner has purchased its interest in the Receivables (or any
Receivable) at a discount, a portion of the purchase price for a Class A
Certificate may be allocated to accrued interest on each Receivable and to
amounts held in the Collection Account pending distribution to
Certificateholders at the time of purchase as though such accrued interest and
collections on the Receivables were separate assets purchased by the Class A
Certificate Owner, thus reducing
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the portion of the purchase price allocable to a Class A Certificate Owner's
undivided interest in each Receivable (the "Purchase Price") and increasing the
potential discount on the Receivables.
Characterization of Fees. The Servicer intends to report income to
Certificate Owners on the assumption that the Certificate Owners own a 93.5%
interest in all of the principal and interest derived from the Receivables.
However, to the extent that the amounts paid to the Servicer, the Seller, or the
Class B Certificateholder exceed reasonable fees for services rendered, by
reason of the extent to which either the weighted average APR of the
Receivables, or the individual stated APRs of some of the Receivables, exceed
the Pass-Through Rate, such amounts will be treated as an interest in the
Receivables retained by the Seller, the Servicer, or the Class B
Certificateholder. There are no authoritative pronouncements for federal income
tax purposes as to either the maximum amount of compensation that may be
considered reasonable for servicing Receivables, providing the Subordination
Spread Account, or performing other services in the context of transactions
involving receivables such as the Receivables, although the Service has issued
such guidelines in the context of mortgage loans. To the extent that amounts
paid to the Servicer, the Seller, or the Class B Certificateholder exceed
reasonable compensation for services provided, they would be viewed as having
retained for federal income tax purposes an ownership interest in a portion of
each interest payment with respect to the certain Receivables (each such
payment, a "stripped coupon"). As a result, such Receivables would be treated as
"stripped bonds" within the meaning of the Code.
To the extent that the Receivables are characterized as "stripped bonds,"
the income and deductions of the Trust allocable to Class A Certificate Owners
will not include the portion of the interest on the Receivables treated as
having been retained by the Seller or the Class B Certificateholder, as the case
may be, and the Trust's deductions will be limited to reasonable servicing and
other fees. In addition, a Class A Certificate Owner will not be subject to the
market discount rules discussed below with respect to the stripped Receivables,
but instead will be subject to the original issue discount rules contained in
the Code. However, if the price at which a Certificate Owner were deemed to have
acquired a stripped Receivable is less than the remaining principal balance of
such Receivable by an amount which is less than a statutorily defined de minimis
amount, such Receivable would not be treated as having OID. In general, the
amount of OID on a Receivable treated as a "stripped bond" will be de minimis if
it is less than 1/4 of one percent for each remaining full year of weighted
average life of the Receivable (probably based on a prepayment assumption)
remaining after the purchase date until the final maturity of the Receivable. If
the amount of OID is de minimis under this rule, the actual amount of discount
on such a Receivable would be includible in income proportionately as principal
payments are received on the Receivable in the proportion that the amount of the
principal payment made bears to the total principal amount of the Receivable.
If the OID on a Receivable, which may differ for each Receivable, based on
the Class A Certificateholder's Purchase Price, is not treated as being de
minimis, a Certificate Owner will be required to include any original issue
discount on a Receivable in income as it accrues, regardless of when cash
payments are received, using a method reflecting a constant yield to maturity on
the Receivable. It is possible that the Service could require use of a
prepayment assumption in computing the yield of a stripped Receivable. If a
stripped Receivable is deemed to be acquired by a Class A Certificateholder at a
greater than de minimis discount, such treatment would accelerate the accrual of
income by a Class A Certificate Owner. Prospective investors are advised to
consult their own tax advisors regarding the extent to which a portion of the
amounts paid to the Servicer or the Class B Certificateholder could be
characterized other than as compensation for services rendered for federal
income tax purposes and the calculation of OID on the Receivables.
It is also possible that any fees deemed to be excessive could be
recharacterized as deferred purchase price payable to the Seller by Class A
Certificate Owners in exchange for the Receivables. The likely effect of such
recharacterization would be to accelerate realization of taxable income by a
Class A Certificate Owner.
Rule of 78s Receivables. The annual statement regularly furnished to
Certificateholders for federal income tax purposes will include information
based on the actuarial method of accounting for interest and principal on the
Receivables, and the amount of the fees paid to the Servicer and others. Class A
Certificate Owners should generally be permitted to account for interest on the
Receivables using the actuarial method (the method used to compute the Class A
Certificate Factor and the Pass-Through Rate). However, some of
31
<PAGE> 33
the Receivables provide that, upon a prepayment in full, the amount payable by
the Obligor will be determined under the Rule of 78s (the "Rule of 78s
Receivables"). Prospective investors should consult their tax advisors as to
whether they may be required or permitted to use the Rule of 78s method to
account for interest on the Rule of 78s Receivables. A Class A Certificateholder
will be furnished information for federal income tax purposes enabling him to
report interest on the Receivables under the Rule of 78s method of accounting
only upon written request to the Trustee, and payment of the actual costs of
producing the same.
If a Rule of 78s Receivable is prepaid, any amount received by the Trust
upon prepayment in excess of the account balance using the actuarial method
would constitute income to a Class A Certificate Owner who had reported income
with respect to such Rule of 78s Receivable on the actuarial method, and an
amount equal to such excess will be paid to the Servicer as part of its
Supplemental Servicing Fee and be deductible to the extent described above.
MARKET DISCOUNT
If the Receivables are not treated as "stripped bonds," a Class A
Certificate Owner's interest in each Receivable the Purchase Price of which is
less than the original issue price (plus original issue discount, if any,
previously includible in the income of any holder) of the Receivable will be
treated as having been purchased at a "market discount". The market discount on
a Receivable will be considered to be zero if it is less than a statutorily
defined de minimis amount.
In general, under the market discount provisions of the Code, principal
payments received by the Trust, and all or a portion of the gain recognized upon
a sale or other disposition of a Receivable or upon the sale or other
disposition of a Class A Certificate by a Class A Certificate Owner, will be
taxable as ordinary income to the extent of accrued market discount, and a
portion of the interest deductions attributable to indebtedness treated as
incurred or continued to purchase or carry a Receivable or a Class A Certificate
must be deferred. The ordinary income treatment on dispositions and deferral of
interest deductions described in the preceding sentence will not apply if a
Class A Certificate Owner elects to include market discount in income currently
as it accrues for each taxable year during which it holds the Class A
Certificate. Market discount will accrue in the manner to be provided in
Treasury regulations, but the Conference Report accompanying the Tax Reform Act
of 1986 states that, until such regulations are issued, it is intended that
taxpayers may elect to accrue market discount either (i) under a constant yield
(economic accrual) method or (ii) at the election of the taxpayer, in the
proportion that the stated interest paid on the obligation for the current
period bears to total remaining interest on the obligation. As described above,
if the Class A Certificates are characterized as "stripped bonds", any discount
would be treated as original issue discount, the amount and timing of which
should be comparable to the amount and timing of market discount if an election
is made to include market discount in income currently on the constant yield
method. See "Characterization of Fees" above. Due to the complexity of the
market discount rules, the Class A Certificate Owners are urged to consult their
own tax advisors as to whether market discount will result from the acquisition
of Class A Certificates, and as to the tax treatment of any such discount.
PREMIUM
In the event that a Receivable is treated as purchased at a premium (i.e.,
the Purchase Price exceeds the sum of principal payments to be made thereon),
such premium will be amortizable by a Class A Certificate Owner as an offset to
interest income (with a corresponding reduction in the Class A
Certificateholder's basis) under a constant yield method over the term of the
Receivable if an election under Section 171 of the Code is made (or previously
in effect in accordance with the provisions of the Tax Reform Act of 1986) with
respect to the Class A Certificates. Any such election will also apply to debt
instruments held by the taxpayer during the year in the election is made and all
debt instruments acquired thereafter.
SALE OF A CLASS A CERTIFICATE OR A RECEIVABLE
If a Class A Certificate is sold, gain or loss will be recognized equal to
the difference between the amount realized on the sale and the Class A
Certificate Owner's adjusted basis in the Receivables and any other assets
32
<PAGE> 34
held by the Trust. A Class A Certificate Owner's adjusted basis will equal the
Class A Certificate Owner's cost for the Class A Certificate, increased by any
discount previously included in income, and decreased by any deduction
previously allowed for accrued premium and by the amount of principal payments
previously received on the Receivables. Any gain or loss will be capital gain or
loss if the Class A Certificate was held as a capital asset, except that gain
will be treated in whole or in part as ordinary interest income to the extent of
the seller's interest in accrued market discount not previously taken into
income on Receivables having a fixed maturity date of more than one year from
the date of origination.
Under proposed Treasury regulations, the grant of an extension of the
maturity of a Receivable to the Obligor thereon could be treated as an exchange
if it changes the yield on the Receivable by more than a de minimis amount,
potentially resulting in taxable gain or loss to Certificate Owners. Reports to
Certificate Owners will not include information sufficient to calculate any such
gain or loss and accordingly, in the event that an extension were to result in a
deemed exchange, a Certificate Owner could underreport its taxable income. No
assurance can be given as to whether the proposed regulations will be adopted as
final regulations in their present form or whether, if adopted, they will apply
to the Receivables.
FOREIGN CLASS A CERTIFICATE OWNERS
Interest attributable to Receivables which is received by a foreign Class A
Certificate Owner will generally not be subject to the 30% withholding tax
imposed with respect to payments of interest, provided that such Class A
Certificate Owner is not engaged in a trade or business in the United States and
that such Class A Certificate Owner fulfills certain certification requirements.
Under such requirements, the holder must certify, under penalties of perjury,
that it is not a "United States person" and provide its name and address. For
this purpose, "United States person" means a citizen or resident of the U.S., a
corporation, partnership, or other entity created or organized in or under the
laws of the U.S. or any political subdivision thereof, or an estate or trust the
income of which is includible in gross income for U.S. federal income tax
purposes, regardless of its source.
BACKUP WITHHOLDING
Payments made on the Class A Certificates and proceeds from the sale of the
Class A Certificates will not be subject to a "backup" withholding tax of 31%
unless, in general, the Class A Certificate Owner fails to comply with certain
reporting procedures and is not an exempt recipient under applicable provisions
of the Code.
ERISA CONSIDERATIONS
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.
ERISA also imposes certain duties on persons who are fiduciaries of plans
subject to ERISA and prohibits certain transactions between a plan and parties
in interest with respect to such plans. Under ERISA, any person who exercises
any authority or control respecting the management or disposition of the assets
of a plan is considered to be a fiduciary of such plan (subject to certain
exceptions not here relevant). A violation of these "prohibited transaction"
rules may generate excise tax and other liabilities under ERISA and the Code for
such persons.
Pursuant to a final regulation (the "Final Regulation") issued by the
Department of Labor ("DOL") 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 (an "IRA") (collectively referred to as "Benefit
Plans"), the assets and properties of certain entities in which a Benefit Plan
makes an equity investment could be deemed to be assets of the Benefit Plan in
certain circumstances. Accordingly, if Benefit Plans purchase Class A
Certificates, the Trust could be deemed to hold plan assets unless one of the
exceptions under the Final Regulation is applicable to the Trust.
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<PAGE> 35
The Final Regulation only applies to the purchase by a Benefit Plan of an
"equity interest" in an entity. Assuming that interests in Class A Certificates
are equity interests, the Final Regulation contains an 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 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. The Final
Regulation provides that if at all times more than 75% of the value of all
classes of equity interests in certificates are held by investors other than
benefit plan investors (which is defined as including plans subject to ERISA,
government plans, and IRAs), the investing plan's assets will not include any of
the underlying assets of the trust.
It is anticipated that interests in the Class A Certificates will meet the
criteria of publicly-offered securities as set forth above. The Underwriters
expect (although no assurances can be given) that interests in the Class A
Certificates will be held by at least 100 independent investors at the
conclusion of the offering; there are no restrictions imposed on the transfer of
interests in the Class A Certificates; and interests in the Class A Certificates
will be sold as part of an offering pursuant to an effective registration
statement under the Act and then will be timely registered under the Exchange
Act.
There can be no assurance that any of the exceptions set forth in the Final
Regulation will apply to the purchase of Certificates offered hereby. Under the
terms of the Final Regulation, if the Trust were deemed to hold "plan assets" by
reason of a Benefit Plan's investment in a Certificate, such "plan assets" would
include an undivided interest in the assets of the Trust. In addition, the
persons providing services with respect to the assets of the Trust, including
the Servicer and the Trustee, may be subject to the fiduciary responsibility
provisions of Title I of ERISA and be subject to the prohibited transaction
provisions of ERISA and Section 4975 of the Code with respect to transactions
involving such assets. Certain exemptions from the prohibited transaction rules
may be applicable, however.
In this regard, the DOL granted to each of J.P. Morgan Securities Inc., CS
First Boston Corporation, Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Salomon Brothers Inc an administrative exemption
(Prohibited Transaction Exemption 90-23, 89-90, 89-88, 90-29 and 89-89,
respectively) (such exemptions collectively, the "Exemption") from certain of
the prohibited transaction rules of ERISA with respect to the initial purchase,
the holding, and the subsequent resale by Benefit Plans of certificates in asset
backed pass-through trusts that consist of certain receivables, loans, and other
obligations that meet the conditions and requirements of the Exemption. The
receivables covered by the Exemption include motor vehicle installment
obligations such as the Receivables. The Exemption will apply to the
acquisition, holding, and resale of the Class A Certificates by a Benefit Plan,
provided that specified conditions (certain of which are described below) are
met. The Seller believes that the Exemption will apply to the acquisition and
holding of Class A Certificates by Benefit Plans and that all conditions of the
Exemption other than those within the control of the investors have been or will
be met.
Among the conditions which must be satisfied for the Exemption to apply to
the acquisition by a Benefit Plan of the Class A Certificates are the following
(each of which the Seller believes has been or will be met in connection with
the Class A Certificates):
(1) The acquisition of the Class A Certificates by a Benefit Plan is on
terms (including the price for the Class A Certificates) that are at least as
favorable to the Benefit Plan as they would be in an arm's-length transaction
with an unrelated party;
(2) The rights and interests evidenced by the Class A Certificates acquired
by the Benefit Plan are not subordinated to the rights and interests evidenced
by other certificates of the Trust;
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<PAGE> 36
(3) The Class A Certificates acquired by the Benefit Plan have received a
rating at the time of such acquisition that is in one of the three highest
generic rating categories from either Standard & Poor's Corporation, Moody's
Investors Service, Inc., Duff & Phelps Inc. or Fitch Investors Service, Inc.;
and
(4) The sum of all payments made to the Underwriters in connection with the
distribution of the Class A Certificates represents not more than reasonable
compensation for underwriting the Class A Certificates. The sum of all payments
made to and retained by the Seller pursuant to the sale of the Receivables to
the Trust represents not more than the fair market value of such Receivables.
The sum of all payments made to and retained by the Servicer represents not more
than reasonable compensation for the Servicer's services under the Agreement and
reimbursement of the Servicer's reasonable expenses in connection therewith.
In addition, it is a condition that the Benefit Plan investing in the Class
A Certificates be an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D of the Commission under the Securities Act.
The Exemption does not apply to the acquisition and holding of Class A
Certificates by Benefit Plans sponsored by the Seller, the Underwriters, the
Trustee, the Servicer, any obligor with respect to Receivables included in the
Trust constituting more than 5% of the aggregate unamortized principal balance
of the assets in the Trust, or any affiliate of such parties (the "Restricted
Group"). As of the date hereof, no obligor with respect to Receivables included
in the Trust constitutes more than 5% of the aggregate unamortized principal
balance of the Trust. Moreover, the Exemption provides relief from certain
self-dealing/conflict of interest prohibited transactions, only if, among other
requirements (i) a Benefit Plan's investment in Class A Certificates does not
exceed 25% of all of the Class A Certificates outstanding at the time of the
acquisition and (ii) immediately after the acquisition, no more than 25% of the
assets of a Benefit Plan are invested in certificates representing an interest
in one or more trusts containing assets sold or serviced by the same entity.
Any Benefit Plan fiduciary that proposes to cause a Benefit Plan to
purchase Certificates should consult with its counsel with respect to the
potential applicability of ERISA and the Code to such investments and whether
the Final Regulation or the Exemption or any statutory or administrative
exemption would be applicable and determine on its own whether all conditions
have been satisfied.
Moreover, each Benefit Plan fiduciary should determine whether, under the
general fiduciary standards of investment prudence and diversification, an
investment in the Certificates is appropriate for the Benefit Plan, taking into
account the overall investment policy of the Benefit Plan and the composition of
the Benefit Plan's investment portfolio.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement"), the Seller has agreed to sell to each of the
underwriters named below (the "Underwriters") and each of the Underwriters has
severally agreed to purchase the principal amount of Class A Certificates set
forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
CLASS A
UNDERWRITERS CERTIFICATES
------------------------------------------------------------------ -----------------
<S> <C>
J.P. Morgan Securities Inc. ...................................... $
CS First Boston Corporation.......................................
Goldman, Sachs & Co. .............................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................................
Salomon Brothers Inc..............................................
-----------------
Total............................................................. $1,098,627,554.60
===============
</TABLE>
The Seller has been advised by the Underwriters that they propose initially
to offer the Class A Certificates to the public at the price set forth on the
cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of % of the principal amount of the Class A
Certificates. The
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<PAGE> 37
Underwriters may allow and such dealers may reallow to other dealers a discount
not in excess of % of such principal amount. After the initial public
offering, such public offering price, concession and reallowance may be changed.
The Seller has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act of 1933, or to
contribute to payments which the Underwriters may be required to make in respect
thereof.
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon for
the Seller and the Servicer by J. D. Bringard, Esq., Vice President -- General
Counsel of the Servicer, and for the Underwriters by Skadden, Arps, Slate,
Meagher & Flom, New York, New York. Certain federal income tax and other matters
will be passed upon for the Seller by Skadden, Arps, Slate, Meagher & Flom. Mr.
Bringard is a full-time employee of Ford Credit and owns and holds options to
purchase shares of Common Stock of Ford. Skadden, Arps, Slate, Meagher & Flom
have from time to time represented Ford and Ford Credit in connection with
certain transactions.
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<PAGE> 38
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus and
the pages on which the definitions of such terms may be found herein.
<TABLE>
<S> <C>
Advance.......................................................................... 5
Agreement........................................................................ 3
APR.............................................................................. 7
Available Interest............................................................... 18
Available Principal.............................................................. 19
Benefit Plans.................................................................... 33
Cede............................................................................. 3
Certificate Account.............................................................. 7, 16
Certificate Owner................................................................ 3
Certificateholders............................................................... 2
Certificates..................................................................... 1
Class A Agent.................................................................... 21
Class A Certificate Balance...................................................... 4, 19
Class A Certificateholders....................................................... 4
Class A Certificate Factor....................................................... 11
Class A Certificate Owner........................................................ 3
Class A Certificates............................................................. 3
Class A Distributable Amount..................................................... 19
Class A Interest Carryover Shortfall............................................. 20
Class A Interest Distributable Amount............................................ 19
Class A Percentage............................................................... 3, 13
Class A Principal Carryover Shortfall............................................ 20
Class A Principal Distributable Amount........................................... 19
Class B Certificate Balance...................................................... 19
Class B Certificateholders....................................................... 4
Class B Certificates............................................................. 3
Class B Distributable Amount..................................................... 19
Class B Interest Distributable Amount............................................ 19
Class B Principal Distributable Amount........................................... 19
Class B Percentage............................................................... 3, 14
Code............................................................................. 30
Collection Account............................................................... 7, 16
Collection Period................................................................ 14
Commission....................................................................... 2
Cutoff Date...................................................................... 3
Dealer Recourse.................................................................. 7
Dealers.......................................................................... 7
Definitive Certificates.......................................................... 15
Distribution Date................................................................ 1
DOL.............................................................................. 33
DTC.............................................................................. 3
Eligible Investments............................................................. 21
ERISA............................................................................ 6
Events of Default................................................................ 23
Exemption........................................................................ 34
Final Regulation................................................................. 33
Final Scheduled Distribution Date................................................ 1
Financed Vehicles................................................................ 3
Ford............................................................................. 13
</TABLE>
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<PAGE> 39
<TABLE>
<S> <C>
Ford Credit...................................................................... 3
Ford Holdings.................................................................... 13
FTC Rule......................................................................... 28
Indirect Participants............................................................ 14
Insolvency Laws.................................................................. 12
IRA.............................................................................. 33
Liquidated Receivables........................................................... 18
Liquidation Proceeds............................................................. 18
Obligors......................................................................... 7
Participants..................................................................... 14
Pass-Through Rate................................................................ 1
Payahead Account................................................................. 7, 16
Payahead Balance................................................................. 17
Payaheads........................................................................ 16
Pool Balance..................................................................... 10
Purchase Agreement............................................................... 3, 15
Purchase Amount.................................................................. 16
Purchase Price................................................................... 31
Receivables...................................................................... 1, 3
Record Date...................................................................... 4
Required Deposit Rating.......................................................... 16
Restricted Group................................................................. 35
Rule of 78s Receivables.......................................................... 32
Rules............................................................................ 14
Seller........................................................................... 1
Service.......................................................................... 30
Servicer......................................................................... 1
Servicer Fee..................................................................... 18
Servicing Fee.................................................................... 18
Servicing Fee Rate............................................................... 6, 18
Specified Subordination Spread Account Balance................................... 5
Subordination Initial Deposit.................................................... 4
Subordination Spread Account..................................................... 4
Supplemental Servicing Fee....................................................... 18
Total Available Amount........................................................... 18
Trust............................................................................ 1, 3
Trustee.......................................................................... 2, 3
UCC.............................................................................. 26
Underwriters..................................................................... 35
Underwriting Agreement........................................................... 35
</TABLE>
38
<PAGE> 40
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the offering described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission........................................ $378,837
Rating agency fees........................................................ 150,000
Printing.................................................................. 50,000
Accountants' fees......................................................... 40,000
Fees and expenses of Trustee.............................................. 17,000
Miscellaneous expenses.................................................... 34,163
--------
Total................................................................ $670,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware provides as follows:
145. Indemnification of officers, directors, employees and agents;
insurance --
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expense which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
II-1
<PAGE> 41
(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.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
II-2
<PAGE> 42
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 action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
(b) Any repeal or modification of paragraph (a) of this Article FIFTH by
the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
(c)(i) Each person who was or is made a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative, investigative or otherwise (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director, officer or employee of
the corporation or is or was serving at the request of the corporation as a
director, officer or employee of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer or employee or in any other capacity
while serving as a director, officer or employee, shall be indemnified and held
harmless by the corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the corporation to provide broader indemnification rights than said law
permitted the corporation to provide prior to such amendment), against all
expense, liability and loss (including penalties, fines, judgments, attorneys'
fees, amounts paid or to 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
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
II-3
<PAGE> 43
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 covered 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 are not recoverable under the indemnification provisions of
the Seller's Certificate of Incorporation. The premium for both insurance
coverages is paid by Ford Motor Company.
II-4
<PAGE> 44
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(A) EXHIBITS:
<TABLE>
<S> <C>
1.1 -- Form of Underwriting Agreement.
3.1 -- Restated Certificate of Incorporation of the Seller, filed as Exhibit 3.1 to
Registration Statement No. 33-39027 and incorporated herein by reference.
3.2 -- By-Laws of the Seller, filed as Exhibit 3.2 to Registration Statement No.
33-39027 and incorporated herein by reference.
4.1 -- Form of Pooling and Servicing Agreement among the Seller, the Servicer, and
the Trustee.
4.2 -- Form of Standard Terms and Conditions of Agreement among the Seller, the
Servicer, and the Trustee.
5.1 -- Opinion of H.D. Smith Esq., Secretary and Corporate Counsel of Ford Credit
Auto Receivables Corporation with respect to legality.
8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to tax matters.
10.1 -- Form of Purchase Agreement between Ford Motor Credit Company and the Seller.
23.1 -- Consent of H. D. Smith Esq., Secretary and Corporate Counsel of Ford Credit
Auto Receivables Corporation (included as part of Exhibit 5.1).
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included as part of Exhibit
8.1).
24 -- Powers of Attorney.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933 each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-5
<PAGE> 45
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3, AND HAS DULY CAUSED THIS AMENDMENT NO. 1 TO
THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF DETROIT AND STATE OF MICHIGAN, ON THE
8TH DAY OF NOVEMBER, 1994.
FORD CREDIT AUTO RECEIVABLES CORPORATION
By WILLIAM E. ODOM*
-------------------------------------------
(WILLIAM E. ODOM, CHAIRMAN
OF THE BOARD OF DIRECTORS)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------
<C> <S> <C>
WILLIAM E. ODOM* Chairman of the Board of November 8, 1994
- ---------------------------------------- Directors and Director
(WILLIAM E. ODOM) (principal executive officer)
KENNETH J. COATES* Director and Executive November 8, 1994
- ---------------------------------------- Vice President -- Finance
(KENNETH J. COATES) (principal financial officer)
TERRENCE F. MARRS* Controller (principal November 8, 1994
- ---------------------------------------- accounting officer)
(TERRENCE F. MARRS)
EDSEL B. FORD II* Director November 8, 1994
- ----------------------------------------
(EDSEL B. FORD II)
*By /s/ RICHARD P. CONRAD
- ----------------------------------------
(RICHARD P. CONRAD, ATTORNEY IN FACT)
</TABLE>
II-6
<PAGE> 46
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------------
<S> <C>
1.1 -- Form of Underwriting Agreement.
3.1 -- Restated Certificate of Incorporation of the Seller, filed as Exhibit 3.1 to
Registration Statement No. 33-39027 and incorporated herein by reference.
3.2 -- By-Laws of the Seller, filed as Exhibit 3.2 to Registration Statement No. 33-39027
and incorporated herein by reference.
4.1 -- Form of Pooling and Servicing Agreement among the Seller, the Servicer, and the
Trustee.
4.2 -- Form of Standard Terms and Conditions of Agreement among the Seller, the Servicer,
and the Trustee.
5.1 -- Opinion of H.D. Smith Esq., Secretary and Corporate Counsel of Ford Credit Auto
Receivables Corporation with respect to legality.
8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to tax matters.
10.1 -- Form of Purchase Agreement between Ford Motor Credit Company and the Seller.
23.1 -- Consent of H. D. Smith Esq., Secretary and Corporate Counsel of Ford Credit Auto
Receivables Corporation (included as part of Exhibit 5.1).
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included as part of Exhibit 8.1).
24 -- Powers of Attorney.
</TABLE>
<PAGE> 1
EXHIBIT 1.1
FORD CREDIT 1994-B GRANTOR TRUST
____% ASSET BACKED CERTIFICATES
FORD CREDIT AUTO RECEIVABLES CORPORATION
(SELLER)
November __, 1994
UNDERWRITING AGREEMENT
J.P. Morgan Securities Inc.
As Representative of the
Several Underwriters,
60 Wall Street
New York, New York 10260-0060
Ladies and Gentlemen:
1. Introductory. Ford Credit Auto Receivables Corporation, a Delaware
corporation (the "Seller"), proposes to sell $__________ principal amount of
its ____% Asset Backed Certificates, Class A (the "Class A Certificates") of
the Ford Credit 1994-B Grantor Trust (the "Trust"). Each Class A Certificate
will represent a fractional undivided interest in the Trust. The assets of the
Trust will include, among other things, a pool of retail installment sale
contracts for new and used automobiles and light trucks (the "Receivables") and
certain monies due thereunder on or after November __, 1994 (the "Cutoff
Date"), such Receivables to be sold to the Trust and to be serviced for the
Trust by Ford Motor Credit Company, a Delaware corporation (the "Servicer" or
"Ford Credit"). The Class A Certificates will be issued in an aggregate
principal amount of $____________, which is equal to [93]% of the aggregate
principal balance of the Receivables, as of the Cutoff Date. Simultaneously
with the issuance and sale of the Class A Certificates as contemplated herein,
the Trust will also issue certificates entitled "___% Asset Backed
Certificates, Class B" (the "Class B Certificates," and together with the Class
A Certificates, the "Certificates") evidencing an undivided ownership interest
of [7]% in the Trust, payments
<PAGE> 2
in respect of which are, to the extent specified
in the Pooling and Servicing Agreement (defined below), subordinated to the
rights of the holders of the Class A Certificates. The Certificates will be
issued pursuant to a pooling and servicing agreement (the "Pooling and
Servicing Agreement") to be dated as of November __, 1994, among the Seller,
the Servicer and Chemical Bank, as trustee (the "Trustee") and as Class A
Agent.
Capitalized terms used herein and not otherwise defined shall have the
meanings given them in the Pooling and Servicing Agreement.
2. Representations and Warranties of the Seller. The Seller
represents and warrants to and agrees with the several underwriters named in
Schedule I hereto (the "Underwriters") that:
(a) A registration statement (No. 33-______), including a
prospectus, on Form S-3, in respect of the Class A Certificates has been filed
with the Securities and Exchange Commission (the "Commission") in the form
heretofore delivered to the Underwriters. Such registration statement in
such form, including the exhibits thereto and any material incorporated by
reference therein, is hereinafter referred to as the "Registration Statement,"
and such prospectus, as first filed, or mailed for filing, with the Commission
pursuant to Rule 424(b) ("Rule 424(b)") under the Securities Act of 1933, as
amended (the "Act") is hereinafter referred to as the "Prospectus." For
purposes of this Agreement, "Effective Time" means the date and time as of
which such Registration Statement is declared effective by the Commission, and
"Effective Date" means the date of the Effective Time.
(b) On the Effective Date, the Registration Statement will
conform, in all material respects to the requirements of the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), where
applicable, and the rules and regulations of the Commission under the Act
or the Exchange Act, as applicable, and will not, as of the 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
2
<PAGE> 3
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 Class A Certificates.
On the date of this Agreement, the Registration Statement conforms, and at the
time of filing of the Prospectus pursuant to Rule 424(b), the Registration
Statement and the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder (the "Rules and Regulations"), and, except as aforesaid, neither of
such documents includes, or will include, any untrue statement of a material
fact or omits, or will omit, to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(c) The consummation by the Seller of the transactions
contemplated by this 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.
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 Class A
Certificates set forth opposite the names of the Underwriters in Schedule I
hereto. The Class A Certificates are to be purchased at the purchase price of
_______% of the aggregate principal amount thereof plus accrued interest at the
applicable Pass-Through Rate (as defined in the Registration Statement)
calculated from (and including) November __, 1994 to (but excluding) the
Closing Date.
Against payment of the purchase price in immediately available funds
drawn to the order of the Seller, the Seller will deliver the Class A
Certificates to the Representative, for the account of the Underwriters, at
3
<PAGE> 4
the office of Skadden, Arps, Slate, Meagher & Flom on November __, 1994, at
10:00 a.m., New York time, or at such other time not later than seven full
business days thereafter as the Representative and the Seller determine, such
time being herein referred to as the "Closing Date." The Class A Certificates
to be so delivered will be initially represented by one or more Class A
Certificates registered in the name of Cede & Co., the nominee of The
Depository Trust Company ("DTC"). The interests of beneficial owners of the
Class A Certificates will be represented by book entries on the records of DTC
and participating members thereof. Definitive Class A Certificates will be
available only under limited circumstances.
4. Offering by Underwriters. It is understood that, after the
Registration Statement becomes effective, the Underwriters propose to offer the
Class A Certificates for sale to the public (which may include selected
dealers), as set forth in the Prospectus.
5. Covenants of the Seller. The Seller covenants and agrees with the
Underwriters:
(a) If required, 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 Representative with a copy of the proposed form
thereof and providing the Representative with a reasonable opportunity to
review the same; and during such same period to advise the Representative,
promptly after it receives notice thereof, of the time when any amendment to
the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus as amended or supplemented or any amended
Prospectus has been filed or mailed for filing, of the issuance of any stop
order by the Commission, of the suspension of the qualification of the Class A
Certificates for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the
4
<PAGE> 5
amending or supplementing of the Registration Statement or the Prospectus as
amended or supplemented or for additional information; and, in the event of the
issuance of any such stop order or of any order preventing or suspending the
use of any prospectus relating to the Class A Certificates or suspending any
such qualification, to use promptly its best efforts to obtain its withdrawal.
(c) Promptly from time to time to take such action as the
Representative may reasonably request in order to qualify the Class A
Certificates for offering and sale under the securities laws of such states as
the Representative may request and to continue such qualifications in effect so
long as necessary under such laws for the distribution of such Class A
Certificates, provided that in connection therewith the Seller shall not be
required to qualify as a foreign 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 Class A Certificates shall be at the
Representative's expense.
(d) To furnish the Underwriters with copies of the Registration
Statement (including exhibits) and copies of the Prospectus as amended or
supplemented in such quantities as the Representative may from time to time
reasonably request; and if, before a period of six months shall have elapsed
after the Effective Date and the delivery of a prospectus shall be at the time
required by law in connection with sales of any such Class A Certificates,
either (i) any event shall have occurred as a result of which the Prospectus
would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or (ii) for
any other reason it shall be necessary during such same period to amend or
supplement the Prospectus as amended or supplemented, to notify the
Representative and to prepare and furnish to the Representative as the
Representative may from time to time reasonably request an amendment or a
supplement to the Prospectus which will correct such statement or omission or
effect such compliance; and in case any Underwriter is required by law to
deliver a
5
<PAGE> 6
prospectus in connection with sales of any of such Class A Certificates at any
time six months or more after the Closing Date, upon the Representative's
request, but at the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as the Representative may request of an amended or
supplemented prospectus complying with Section 10(a)(3) of the Act.
(e) To make generally available to Class A Certificateholders of
the Trust as soon as practicable after the Effective Date of the Registration
Statement (as such date is defined in Rule 158(c) under the Act), an earning
statement of the Seller complying with Rule 158 under the Act and covering a
period of at least twelve consecutive months beginning after such Effective
Date.
(f) To furnish to the Representative copies of the Registration
Statement (one of which will be signed and will include all exhibits), each
related preliminary prospectus, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available and in such
quantities as the Representative reasonably requests.
(g) So long as any of the Class A Certificates are outstanding, to
furnish the Representative copies of all reports or other communications
(financial or other) furnished to Class A Certificateholders of the Trust, and
to deliver to the Representative during such same period, (i) as soon as they
are available, copies of any reports and financial statements furnished to or
filed with the Commission and (ii) such additional information concerning the
business and financial condition of the Seller as the Representative may from
time to time reasonably request.
(h) To pay or cause to be paid all costs and expenses incident to
the performance of its obligations hereunder, including any fees charged by the
rating agency or rating agencies that initially rate the Class A Certificates,
and the reasonable expenses incurred in distributing preliminary prospectuses
and the Prospectus (including any amendments and supplements thereto required
within six months from the Effective Date pursuant to Section 5(d) hereof) it
being understood that, except as provided in this subsection (h) and Section 9
hereof,
6
<PAGE> 7
the Underwriters will pay all their own costs and expenses, including, without
limitation, the cost of printing any agreement among underwriters, the fees of
the Underwriters' counsel, transfer taxes on resale of the Class A Certificates
by the Underwriters, and any advertising expenses connected with any offers
that the Underwriters may make.
(i) For a period from the date of this Agreement until the
retirement of the Class A Certificates, or until such time as the Underwriters
shall cease to maintain a secondary market in the Class A Certificates,
whichever occurs first, to deliver to the Representative the annual
statements of compliance and the annual independent certified public
accountants' reports furnished to the Trustee pursuant to Article XIII of the
Pooling and Servicing Agreement, as soon as such statements and reports are
furnished to the Trustee.
(j) On or before the Closing Date, the Seller shall cause Ford
Credit's computer records relating to the Receivables to be marked to show the
Trust's absolute ownership of the Receivables, and from and after the Closing
Date neither the Seller nor the Servicer shall take any action inconsistent
with the Trust's ownership of such Receivables, other than as permitted by the
Pooling and Servicing Agreement.
(k) To the extent, if any, that the rating provided with respect
to the Class A Certificates by the rating agency or agencies that initially
rate the Class A Certificates is conditional upon the furnishing of
documents or the taking of any other actions by the Seller, 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 Class A 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:
7
<PAGE> 8
(a) On or prior to the Closing Date, Coopers & Lybrand shall have
furnished to the Representative a letter dated as of the Closing Date
substantially in the form and substance of the draft to which the
Representative previously agreed.
(b) The Registration Statement shall have become effective not
later than 5:30 p.m., New York time, on November __, 1994, or such later date
as shall have been consented to by the Representative; and prior to the Closing
Date no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Seller, shall be contemplated by the
Commission.
(c) The Representative shall have received as of the Closing Date
an officer's certificate signed by the Chairman of the Board, the President,
the Executive Vice President - Finance or the Treasurer of the 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
Seller, or any material adverse change in the financial position or results or
operations of the Seller, otherwise than as set forth or contemplated in the
Prospectus, which in any such case makes it impracticable or inadvisable in the
Representative's reasonable judgment to proceed with the public offering or the
delivery of the Class A Certificates on the terms and in the manner
contemplated in the Prospectus as amended or supplemented.
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<PAGE> 9
(e) Subsequent to the execution and delivery of this Agreement,
the United States shall not have become engaged in hostilities which have
resulted in the declaration of a national emergency or a declaration of war,
which makes it impracticable or inadvisable in the Representative's
reasonable judgment to proceed with the public offering of the 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 Representative in
its reasonable judgment, shall have furnished to the Representative, his
written opinion, dated the Closing Date, in form reasonably satisfactory to the
Representative in its reasonable judgment, to the effect that:
(i) The Seller has been duly 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 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 and the Purchase 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
9
<PAGE> 10
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 Class A Certificates have been duly authorized; when
executed and authenticated by the Trustee in accordance with the Pooling and
Servicing Agreement and delivered and paid for pursuant to the
Underwriting Agreement, the Class A 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 Statement or the
Prospectus as amended or supplemented or any further amendments or supplements
thereto, or omitted therefrom, as to which such counsel need express no
opinion) comply as to form in all material respects with the requirements of
the Act and the rules and regulations thereunder.
(vii) Such counsel believes that neither the Registration
Statement (other than the financial statements and other accounting
information contained therein or omitted therefrom, as to which such counsel
need express no opinion) nor any amendment hereto, at the time
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<PAGE> 11
the same became effective, contained any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(viii) Such counsel believes that at the Closing Date the
Prospectus as amended or supplemented (other than the financial statements and
the other accounting information contained therein or omitted therefrom,
as to which such counsel need express no opinion) does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(ix) Such counsel does not know of any contract or other
document of a character required to be filed as an exhibit to the Registration
Statement or required to be incorporated by reference into the Prospectus as
amended or supplemented or required to be described in the Registration
Statement or the Prospectus as amended or supplemented which is not filed or
incorporated by reference or described as required.
(x) Such counsel does not know of any legal or governmental
proceedings pending to which the Seller is a party or of which any property
of the Seller is the subject, and no such proceedings are known by such
counsel to be threatened or contemplated by governmental authorities or
threatened by others, other than as set forth or contemplated in the
Prospectus as amended or supplemented and other than such proceedings which,
in his opinion, will not have a material adverse effect upon the general
affairs, financial position, net worth or results of operations (on an annual
basis) of the Seller and will not materially and adversely affect the
performance by the Seller of its obligations under, or the validity and
enforceability of, the Pooling and Ser-
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<PAGE> 12
vicing Agreement, the Purchase Agreement or the Class A Certificates.
(xi) The Class A Certificates, the Pooling and Servicing
Agreement, the Purchase Agreement and this Agreement each conform in
all material respects with the descriptions thereof contained in the
Registration Statement and the Prospectus.
Such opinion may be made subject to the qualifications that the
enforceability of the terms of the Pooling and Servicing Agreement, the
Purchase Agreement and the Class A Certificates may be limited by bankruptcy,
insolvency, reorganizations or other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general equitable
principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(g) J.D. Bringard, Esq., Vice President-General Counsel of Ford Credit
and the Seller, or other counsel satisfactory to the Representative in its
reasonable judgment, shall have furnished to the Representative his written
opinion, dated as of the Closing Date, in form satisfactory to the
Representative in its reasonable judgment, to the effect that:
(i) Ford Credit has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, and is duly qualified to transact business and is in good standing
in each jurisdiction in the United States of America in which the conduct of
its business or the ownership of its property requires such qualification.
(ii) The indemnification agreement (the "Indemnification
Agreement") dated as of November __, 1994, between Ford Credit and the
Underwriters, has been duly authorized, executed and delivered by Ford Credit.
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<PAGE> 13
(iii) The Pooling and Servicing Agreement and the Purchase
Agreement have been duly authorized, executed and delivered by, and each
constitutes a valid and binding obligation of, Ford Credit.
(iv) The consummation of the transactions contemplated by the
Pooling and Servicing Agreement, the Purchase Agreement and the
Indemnification Agreement, 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 Ser-
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<PAGE> 14
vicing Agreement, the Purchase Agreement or the Indemnification Agreement.
(vi) Ford Credit has full power and authority to sell and
assign the property to be sold and assigned to the Seller pursuant to the
Purchase Agreement and has duly authorized such sale and assignment to the
Seller by all necessary corporate action.
(vii) The Seller has full power and authority to sell and
assign the property to be sold and assigned to and deposited with the Trustee
as part of the Trust and has duly authorized such sale and assignment to the
Trustee by all necessary corporate action.
(viii) The statement in the Prospectus under the caption
"Certain Legal Aspects of the Receivables," to the extent they constitute
matters of law or legal conclusions, are correct in all material respects.
(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, and immediately prior to the assignment of the Receivables
to the Trustee, the Seller 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 and to the Trustee as Trustee of the Trust by the Seller.
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<PAGE> 15
(x) All filings necessary under applicable law to perfect
both the sale of the Receivables by Ford Credit to the Seller pursuant to the
Purchase Agreement and the sale of the Receivables by the Seller to the
Trustee as Trustee of the Trust pursuant to the Pooling and Servicing
Agreement have been made and, provided that neither Ford Credit nor the Seller
relocates its principal place of business in a state other than Michigan and
that the Trustee maintains the list of Receivables for inspection by
interested parties as described above, no other filings (other than the filing
of continuation statements) need be made to maintain the perfection of the
sale of the Receivables either to the Seller pursuant to the Purchase
Agreement or to the Trustee as Trustee of the Trust pursuant to the Pooling
and Servicing Agreement.
(xi) The Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended, and the Trust
is not 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 Purchase 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 Class A Certificates, filings with
respect to the transfer of the Receivables to the Seller pursuant to the
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
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<PAGE> 16
either Ford Credit or the Seller is the subject, and no such proceedings are
known by such counsel to be threatened or contemplated by governmental
authorities or threatened by others (1) seeking to prevent the issuance of
the Class A Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Pooling and Servicing Agreement, the
Purchase Agreement or the Indemnification Agreement, or (2) seeking adversely
to affect the federal income tax attributes of the Class A Certificates as
described in the Prospectus under the heading "Certain Federal Income Tax
Consequences."
(xiv) Neither the issuance or sale of the Class A
Certificates, nor the execution and delivery of the Class A Certificates, the
Pooling and Servicing Agreement, the Purchase 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 Purchase Agreement or Indemnification Agreement by
Ford Credit or the Seller, as the case may be, will contravene the terms of
any material provision of any statute, order, or regulation applicable to Ford
Credit or the Seller, as the case may be, the failure with which to comply
could have a material adverse effect on Ford Credit and its subsidiaries
considered as a whole or the Seller, as the case may be.
(h) Skadden, Arps, Slate, Meagher & Flom (or such other counsel
satisfactory to the Representative) shall have furnished their written opinion,
dated the Closing Date, with respect to the characterization of the transfer of
the Receivables by Ford Credit to the Seller as a sale, and with respect to the
characterization of the transfer of the Receivables from the Seller to the
Trust, and as to certain matters described in Section 6(g)(iv) above (which
opinion shall state that it may be relied upon by the Trustee) to the
Representative and to Ford Credit, and such opinion shall be in substantially
the form previously discussed with the Representative and its counsel and in any
event satisfactory in
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<PAGE> 17
form and in substance to the Representative and its counsel and to Ford Credit.
(i) Skadden, Arps, Slate, Meagher & Flom, special tax counsel to
the Seller, shall have furnished to the Representative their written opinion,
dated as of the Closing Date, in form and in substance satisfactory to the
Representative in its reasonable judgment, to the effect that:
(i) For New York franchise tax purposes, the trust fund
created by the Pooling and Servicing Agreement will not be classified as a
corporation and, accordingly, will not be subject to New York franchise taxes,
and Class A Certificateholders who are not residents or otherwise subject to
tax in New York will not be subject to New York income or franchise taxes with
respect to interest from the Class A Certificates or with respect to any of
the Receivables.
(ii) The Trust created by the Pooling and Servicing Agreement
will not be classified as an association taxable as a corporation for federal
income tax purposes and, instead, under subpart E, part I of subchapter J of
the Internal Revenue code of 1986, as amended, the Trust will be treated as a
grantor trust and, subject to recharacterization of certain fees paid by the
Trust, each Class A Certificateholder will be treated as the owner of an
undivided interest in the income and corpus attributable to the trust fund.
(iii) The statements in the Registration Statement and
Prospectus under the headings "Certain Federal Income Tax Consequences" and
"ERISA Considerations," to the extent that they constitute matters of law or
legal conclusions with respect thereto, have been prepared or reviewed by such
counsel and are correct in all material respects.
(j) The Representative shall have received an opinion addressed
to the Representative of Skadden, Arps, Slate, Meagher & Flom, dated the Closing
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Date, with respect to the validity of the Class A Certificates and such other
related matters as the Representative shall require and the Seller shall have
furnished or caused to be furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(k) The Representative shall have received an opinion addressed
to the Representative, the Seller and the Servicer of Kelley, Drye & Warren,
counsel to the Trustee, dated the Closing Date and satisfactory in form and
substance to the Representative and to counsel to the Underwriters, to the
effect that:
(i) The Trustee has been duly incorporated and is validly
existing as a banking corporation in good standing under the laws of the State
of New York with full corporate trust power and authority to enter into and
perform its obligations under the Pooling and Servicing Agreement.
(ii) The Pooling and Servicing Agreement has been duly
executed and delivered by the Trustee, and, insofar as the laws governing the
trust powers of the Trustee are concerned and assuming due authorization,
execution and delivery thereof by the Seller and the Servicer, the Pooling and
Servicing Agreement constitutes a legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms,
except (1) the enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights, and (2) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(iii) The Class A Certificates have been duly executed,
authenticated and delivered by the Trustee.
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(iv) Neither the execution nor delivery by the Trustee of
the Pooling and Servicing Agreement nor the consummation of any of the
transactions by the Trustee contemplated thereby required the consent or
approval of, the giving of notice to, the registration with, or the taking of
any other action with respect to, any governmental authority or agency under
any existing federal or New York State law governing the trust powers of the
Trustee, except such as have been obtained, made or taken.
(l) The Representative shall have received an officer's
certificate dated the Closing Date of the Chairman of the Board, the President,
the Executive Vice President-Finance or the Treasurer of each of Ford Credit,
the 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 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 Class A Certificates shall have been rated in the highest
rating category by each of Moody's Investors Service, Inc. and Standard & Poor's
Corporation.
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
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<PAGE> 20
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
Representative 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 Class A Certificates to a person to whom there
was not sent or given, at or prior to the written confirmation of such sale, a
copy of the Prospectus or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference), whichever is most recent, if
the Seller has previously furnished copies thereof to such Underwriter.
The indemnity agreement in this subsection (a) shall be in addition to
any liability which the Seller may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act.
(b) Each Underwriter will indemnify and hold harmless the Seller
against any losses, claims, damages or liabilities to which the Seller may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omissions to state therein a material
fact required to be stated therein or necessary to make the statements therein
not
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misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Seller by such Underwriter through the Representative specifically for
use therein, and will reimburse any legal or other expenses reasonably incurred
by the Seller in connection with investigating or defending any such action or
claim.
The indemnity agreement in this subsection (b) shall be in addition to
any liability which each Underwriter may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls the Seller
within the meaning of the Act.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) of written notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the indemnifying
party of the commencement thereof, and in the event that such indemnified party
shall not so notify the indemnifying party within 30 days following receipt of
any such notice by such indemnified party, the indemnifying party shall have no
further liability under such subsection to such indemnified party unless the
indemnifying party shall have received other notice addressed and delivered in
the manner provided in Section 10 hereof of the commencement of such action; but
the omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under such
subsection. In case any such action is brought against any indemnified party
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party in its reasonable judgment, and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under such
subsection for any legal or other expenses subsequently incurred by such
indemnified party in connection with the
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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 Class A Certificates. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Seller 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 Class A Certificates. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Seller or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission, including, with respect to
any Underwriter, the extent to which such losses, claims, damages or liabilities
(or actions in respect thereof) result from the fact that such Underwriter sold
such Class A Certificates to a person to whom there was not sent or given, at or
prior to the written
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<PAGE> 23
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 above in this subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages, or liabilities
(or actions in respect thereof) referred to above in this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim. Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Class A Certificates underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, 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 Class A Certificates.
9. Failure to Purchase the Class A Certificates. If the purchase of
the Class A Certificates shall not be consummated by the Underwriters because
the condition set forth in Section 6(e) has not
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<PAGE> 24
been met, then the Seller shall be under no liability to the Underwriters with
respect to the Class A Certificates except as provided in Section 5(h) and
Section 7 hereof; but if for any other reason any Class A Certificates are not
delivered by the Seller as provided herein, the Seller will be liable to
reimburse the Underwriters, through the Representative, for all out-of-pocket
expenses, including counsel fees and disbursements reasonably incurred by the
Underwriters in making preparations for the offering of the Class A
Certificates, but the Seller shall then have no further liability to any
Underwriter with respect to such Class A Certificates except as provided in
Section 5(h) and Section 7 hereof. If any Underwriter or Underwriters default
on their obligations to purchase Class A Certificates hereunder and the
aggregate principal amount of Class A Certificates that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the total principal amount of Class A Certificates, the Representative may
make arrangements satisfactory to the Seller for the purchase of such Class A
Certificates by other persons, including the non-defaulting Underwriter or
Underwriters, but if no such arrangements are made by the Closing Date, the
non-defaulting Underwriter or Underwriters shall be obligated, in proportion to
their commitments hereunder, to purchase the Class A Certificates that such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters so default and the aggregate principal amount of
Class A Certificates with respect to which such default or defaults occur
exceeds 10% of the total principal amount of Class A Certificates and
arrangements satisfactory to the non-defaulting Underwriter or Underwriters and
the Seller for the purchase of such Class A 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 Representative or the Underwriters, will be mailed, delivered or
sent by facsimile transmission and confirmed to J.P. Morgan
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<PAGE> 25
Securities Inc. at 60 Wall Street, New York, New York 10260-0060, Attention:
Theodore F. Breck - facsimile number (212) 648-5251; 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 (313) 337-1160.
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. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
13. Counterparts. This Agreement may be executed by each of the
parties hereto in any number of counterparts, and by each of the parties hereto
on separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
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<PAGE> 26
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:
J.P. Morgan Securities, Inc.
______________________________
Acting on behalf of itself and
as the Representative of the
several Underwriters.
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<PAGE> 27
ADDENDUM TO UNDERWRITING AGREEMENT
DATED November __, 1994 RELATING TO
FORD CREDIT 1994-B GRANTOR TRUST
In order to clarify the provisions of Section 5(h) of the Underwriting
Agreement, dated November __, 1994, among Ford Credit Auto Receivables
Corporation and J.P. Morgan Securities Inc., as Representative of the Several
Underwriters, the parties hereto agree as follows:
1. The Underwriters shall pay directly (i) all Blue Sky fees and
expenses as well as reasonable fees and expenses of counsel in connection with
state securities law qualifications and any legal investment surveys; and (ii)
the reasonable fees and expenses of Skadden, Arps, Slate, Meagher & Flom.
2. Ford Credit Auto Receivables Corporation shall pay (i) the
Securities and Exchange Commission the filing fee with respect to the Class A
Certificates; (ii) all fees of any rating agencies rating the Class A
Certificates; (iii) all fees and expenses of the Trustee; (iv) all reasonable
fees and expenses of Kelley, Drye & Warren, counsel to the Trustee; (v) all fees
and expenses of Coopers & Lybrand relating to the letter referred to in Section
6(a) of the Underwriting Agreement; (vi) 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; (vii) the cost
of printing any preliminary and final prospectus relating to the Class A
Certificates, and the Registration Statement; and (viii) any other fees and
expenses incurred in connection with the performance of its obligations under
the Underwriting Agreement.
27
<PAGE> 28
3. The provisions hereof are subject to the provisions of Section 9 of
the Underwriting Agreement.
Dated: November __, 1994
FORD CREDIT AUTO RECEIVABLES
CORPORATION
By:______________________________
Name:
Title:
J.P. MORGAN SECURITIES INC.
By:______________________________
Name:
Title:
Acting on behalf of itself and as
the Representative of the several
Underwriters.
28
<PAGE> 29
SCHEDULE I
<TABLE>
<S> <C>
________________ . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_____________
________________ . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____________
________________ . . . . . . . . . . . . . . . . . . . . . . . . . . . . _____________
J.P. Morgan Securities Inc. . . . . . . . . . . . . . . . . . . . . . . _____________
________________ . . . . . . . . . . . . . . . . . . . . . . . . . . . .
=============
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $_____________
</TABLE>
29
<PAGE> 1
EXHIBIT 4.1
______________________________
FORD CREDIT 1994-B GRANTOR TRUST
ASSET BACKED CERTIFICATES
______________________________
FORD CREDIT AUTO RECEIVABLES CORPORATION
Seller
FORD MOTOR CREDIT COMPANY
Servicer
CHEMICAL BANK
Trustee and Class A Agent
_________________
POOLING AND SERVICING AGREEMENT
Dated as of November __, 1994
_________________
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I Creation of Trust . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II Conveyance of Receivables . . . . . . . . . . . . . . . . 2
ARTICLE III Reserved . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV Acceptance by Trustee . . . . . . . . . . . . . . . . . . 3
ARTICLE V Incorporation of Standard Terms
and Conditions of Agreement . . . . . . . . . . . . 3
ARTICLE VI Special Definitions and Terms . . . . . . . . . . . . . . 4
ARTICLE VII Additional Representations
and Warranties of the Seller. . . . . . . . . . . . 6
ARTICLE VIII Ford Motor Credit Company Not
to Resign as Servicer . . . . . . . . . . . . . . . 7
ARTICLE IX Agent for Service . . . . . . . . . . . . . . . . . . . . 7
ARTICLE X Additional Covenants of the Seller . . . . . . . . . . . 7
Schedule A -- List of Receivables
Schedule B -- Location of Receivables
i
<PAGE> 3
This Pooling and Servicing Agreement, dated as of November __, 1994, is made
with respect to the formation of the Ford Credit 1994-B Grantor Trust, among
FORD CREDIT AUTO RECEIVABLES CORPORATION, a Delaware corporation, as Seller
("Seller"), FORD MOTOR CREDIT COMPANY, a Delaware corporation, as Servicer
("Servicer"), and Chemical Bank, a New York banking corporation, as trustee (in
such capacity, the "Trustee") and as agent (the "Class A Agent").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
Section 1.1 Creation of Trust. Upon the execution of this
Agreement by the parties hereto, there is hereby created the Ford Credit 1994-B
Grantor Trust.
ARTICLE II
Section 2.1 Conveyance of Receivables. In consideration of
the Trustee's delivery to, or upon the order of, the Seller of Certificates
("Certificates") in an aggregate amount equal to the Original Pool Balance, the
Seller does hereby irrevocably sell, transfer, assign, and otherwise convey to
the Trustee, in trust for the benefit of the Certificateholders, without
recourse (subject to the obligations herein) all right, title and interest of
the Seller, whether now owned or hereafter acquired, in and to the following:
(i) the Receivables listed in Schedule A
hereto and all monies paid thereon and due thereon on or after the
Cutoff Date (including any monies received prior to the Cutoff Date
that are due on or after the CutOff Date and were not used to reduce
the principal balances of the Receivables);
(ii) the security interests in the Financed
Vehicles granted by Obligors pursuant to the Receivables;
2
<PAGE> 4
(iii) any proceeds from claims on any
physical damage, credit life, credit disability, or other insurance
policies covering Financed Vehicles or Obligors;
(iv) the Purchase Agreement, including the
right of the Seller to cause Ford Motor Credit Company to repurchase
Receivables from the Seller;
(v) Dealer Recourse;
(vi) rebates of premiums and other amounts
relating to insurance policies and other items financed under the
Receivables in effect as of the Cutoff Date; and
(vii) the proceeds of any and all of the
foregoing.
ARTICLE III
Reserved
ARTICLE IV
Section 4.1 Acceptance by Trustee. The Trustee does hereby
accept all consideration conveyed by the Seller pursuant to Section 2.1, and
declares that the Trustee shall hold such consideration upon the trusts herein
set forth for the benefit of all present and future Certificateholders, subject
to the terms and provisions of this Agreement.
ARTICLE V
Section 5.1 Incorporation of Standard Terms and Conditions of
Agreement. This Pooling and Servicing Agreement does hereby incorporate by
reference the Standard Terms and Conditions of Agreement for Ford Credit
Grantor Trusts dated as of November __, 1994 ("Standard Terms and Conditions of
Agreement"), in the form attached hereto.
3
<PAGE> 5
ARTICLE VI
Section 6.1 Special Definitions and Terms. Whenever used in
the Standard Terms and Conditions of Agreement and in this Pooling and
Servicing Agreement, the following words and phrases shall have the following
meanings:
The "Class A Percentage" means ___%.
The "Class B Percentage" means ___%
The "Corporate Trust Office" at the date hereof is located at
450 West 33rd Street - 15th Floor
New York, New York 10001
Attention: Corporate Trust Department
The "Cutoff Date" shall be November 1, 1994.
The first "Distribution Date" shall be December 15, 1994.
The "Optional Purchase Percentage" shall be 10%.
The "Original Pool Balance" is $1,175,002,732.19.
The "Pass-Through Rate" is ___% per annum.
The "Purchase Agreement" is the agreement dated as of November
__, 1994, relating to the purchase by the Seller from Ford Motor Credit Company
of the Receivables.
The "Required Deposit Rating" shall be a rating on (i)
short-term unsecured debt obligations of P-1 by Moody's Investors Service, Inc.
and (ii) short-term unsecured debt obligations of A-1+ by Standard & Poor's
Corporation; and any requirement that short-term unsecured debt obligations
have the "Required Deposit Rating" shall mean that such short-term unsecured
debt obligations have the foregoing required ratings from each of such rating
agencies.
The "Servicing Fee Rate" is 1.00% per annum.
4
<PAGE> 6
The "Specified Subordination Spread Account Balance" with
respect to any Distribution Date shall be $___________; except that in the
event that on any Distribution Date (i) the annualized average for the
preceding three Collection Periods (or such shorter number of Collection
Periods as have elapsed since the Cutoff Date) of the ratios of net losses
(i.e., the net balances of all Receivables which are determined to be
uncollectible in the Collection Period, less any recoveries on Receivables
charged off in the period or prior periods) to the Pool Balance as of the first
day of each such Collection Period exceeds _____% or (ii) the average for the
preceding three Collection Periods (or such shorter number of Collection
Periods as have elapsed since the Cutoff Date) of the ratios of the number of
Receivables that have been repossessed but not yet sold or are delinquent 60
days or more to the outstanding number of Receivables exceeds ____%, then the
Specified Subordination Spread Account Balance for such Distribution Date shall
be an amount equal to such percentage of the Pool Balance as of the opening of
business of the first day of such Collection Period as is determined by
deducting from twelve percent the following fraction, expressed as a
percentage: (x) 1 minus (y) a fraction, the numerator of which is the Class A
Certificate Balance and the denominator of which is the Pool Balance both as of
the opening of business of the first day of such Collection Period, but in no
event shall the Specified Subordination Spread Account Balance be more than
$___________ or less than $____________. On any Distribution Date on which the
aggregate balance of the Class A Certificates is $____________ or less after
giving effect to distributions on such Distribution Date, the Specified
Subordination Spread Account Balance shall be the greater of the balance
described above or $__________.
The "Subordination Initial Deposit" is
$___________.
5
<PAGE> 7
ARTICLE VII
Section 7.1 Additional Representations and Warranties of the
Seller. The Seller does hereby make the following representations and
warranties on which the Trustee shall be deemed to have relied in accepting the
Receivables in trust and executing and authenticating the Certificates:
(i) New and Used Vehicles. Approximately
97.9% of the aggregate Principal Balance of the Receivables,
constituting 97.1% of the Receivables, as of the Cutoff Date,
represent vehicles financed at new vehicle rates, and the remainder of
the Receivables represent vehicles financed at used vehicle rates;
(ii) Origination. Each Receivable shall
have an origination date on or after November 1, 1993;
(iii) Maturity of Receivables. Each
Receivable shall have an original maturity of not greater than 60
months;
(iv) Minimum Annual Percentage Rate. Each
Receivable shall have an Annual Percentage Rate equal to or greater
than 8.80%;
(v) Scheduled Payments. Each Receivable
shall have a first Scheduled Payment due on or prior to November 30,
1994 and no Receivable shall have a payment that is more than 30 days
overdue as of the Cutoff Date;
(vi) Location of Receivable Files. The
Receivable Files shall be kept at one or more of the locations listed
in Schedule B hereto;
(vii) No Extensions. The number of
Scheduled Payments shall not have been extended on any Receivable on
or before the Cutoff Date; and
6
<PAGE> 8
(viii) Rating Agencies. The rating agencies
rating the Certificates are Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group.
ARTICLE VIII
Section 8.1 Ford Motor Credit Company Not to Resign as
Servicer. Subject to the provisions of Section 18.3 of the Standard Terms and
Conditions of Agreement, Ford Motor Credit Company shall not resign from the
obligations and duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law. Notice of any
such determination permitting the resignation of Ford Motor Credit Company
shall be communicated to the Trustee at the earliest practicable time (and, if
such communication is not in writing, shall be confirmed in writing at the
earliest practicable time) and any such determination shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee concurrently with or
promptly after such notice. No such resignation shall become effective until
the Trustee or a successor Servicer shall have taken the actions required by
the last paragraph of Section 19.1 of the Standard Terms and Conditions of
Agreement and shall have assumed the responsibilities and obligations of Ford
Motor Credit Company in accordance with Section 19.2 of the Standard Terms and
Conditions of Agreement.
ARTICLE IX
Section 9.1 Agent for Service. The agent for service for the
Seller and the Servicer shall be J.D. Bringard, Esq., Ford Motor Credit
Company, The American Road, Dearborn, Michigan 48121.
ARTICLE X
Section 10.1 Additional Covenants of the Seller.
7
<PAGE> 9
(a) The Seller agrees with each nationally
recognized rating agency which has been requested by the Seller or an affiliate
to rate the Class A Certificates issued pursuant to this Agreement and which is
then rating such Certificates that it shall not issue any additional securities
that could reasonably be expected to affect materially and adversely the
Certificates issued pursuant to this Agreement unless it shall have first
obtained written confirmation from such rating agency that such issuance will
not result in the qualification, downgrading or withdrawal of the then current
rating assigned to the Class A Certificates. The Seller shall provide a copy
of any such written confirmation to the Trustee.
(b) The Seller shall not, without first receiving
written confirmation from each nationally recognized rating agency which has
been requested by the Seller or an affiliate to rate the Class A Certificates
and which is then rating such Certificates that the then current rating
assigned to the Class A Certificates will not result in the qualification,
downgrading or withdrawal of such rating, and, upon the Seller's receipt of
such written confirmation from each such rating agency, the Trustee shall,
without any exercise of its own discretion, provide its written consent to the
Seller, do any of the following:
(i) engage in any business or activity
other than those set forth in Article Third of the Seller's
Certificate of Incorporation, as amended;
(ii) incur any indebtedness, or assume or
guaranty any indebtedness of any other entity, other than (A) any
indebtedness incurred in connection with Notes (as defined in the
Seller's Certificate of Incorporation, as amended) and (B) any
indebtedness to Ford Motor Credit Company or any affiliate thereof
incurred in connection with the acquisition of receivables, which
indebtedness shall be subordinated to all other obligations of the
Seller;
(iii) dissolve or liquidate, in whole or in
part; consolidate or merge with or into any other entity or convey or
transfer its
8
<PAGE> 10
properties and assets substantially as an entirety to any entity,
unless:
(A) the entity (if other than the
Seller) formed or surviving the consolidation or merger of which
acquires the properties and assets of the Seller is organized and
existing under the laws of the State of Delaware, expressly assumes
the due and punctual payment of, and all obligations of the Seller,
including those obligations of the Seller under this Agreement, and
has a Certificate of Incorporation containing provisions identical to
the provisions of Article Third, Article Fourth and Article Fifteen of
the Seller's Certificate of Incorporation, as amended; and
(B) immediately after giving effect to the
transaction, no default or event of default has occurred and is
continuing under any indebtedness of the Seller or any agreements
relating to such indebtedness; or
(iv) without the affirmative vote of 100%
of the members of the Board of Directors of the Seller, institute
proceedings to be adjudicated bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against it, or
file a petition seeking or consent to reorganization or relief under
any applicable federal or state law relating to bankruptcy, or consent
to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the corporation or a
substantial part of its property, or make any assignment for the
benefit of creditors, or admit in writing its inability to pay its
debts generally as they become due, or take corporate action in
furtherance of any such action.
[The remainder of this page intentionally left blank.]
9
<PAGE> 11
IN WITNESS WHEREOF, the Seller, the Servicer, and the Trustee
have caused this Pooling and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.
FORD CREDIT AUTO
RECEIVABLES CORPORATION
[SEAL]
ATTEST: By: ___________________________
TITLE:
___________________________
TITLE:
FORD MOTOR CREDIT COMPANY
[SEAL]
ATTEST: By: ___________________________
TITLE:
___________________________
TITLE: Assistant Secretary
CHEMICAL BANK, as Trustee
ATTEST: By: ___________________________
TITLE:
___________________________
TITLE: Trust Officer
10
<PAGE> 12
CHEMICAL BANK, as Class A Agent
Pursuant to Section 14.7
hereof
ATTEST: By: ___________________________
TITLE:
___________________________
TITLE: Trust Officer
11
<PAGE> 13
SCHEDULE A
LIST OF RECEIVABLES
DELIVERED TO TRUSTEE
AT CLOSING
<PAGE> 14
SCHEDULE B
LOCATION OF RECEIVABLES
Indianapolis
5875 Castle Creek Pkwy. North Drive
Suite 240
Indianapolis, IN 46250-4308
Detroit-North
580 Kirts Boulevard
Suite 300
Troy, MI 48084
Chicago-North
9700 Higgins Road
Suite 720
Rosemont, IL 60018
Ohio South
9797 Springboro Pike
Suite 302
Miamisburg, OH 45343
Detroit/West
One ParkLane Blvd.
Suite 405E
Dearborn, MI 48126
Chicago South
900 Frontage Road (South)
Suite 310
Woodridge, IL 60517
Grand Rapids
3001 Fuller Ave. N.E.
Grand Rapids, MI 49505
Chicago - East
One River Place, Suite A
Lansing, IL 60438
Akron
3560 W. Market St.
Suite 105
Fairlawn, OH 44333-2600
<PAGE> 15
Louisville
502 Executive Park
Louisville, KY 40207
Milwaukee
10850 W. Park Place
Suite 110
Milwaukee, WI 53224
Chicago West
2500 W. Higgins Rd.
Suite 280
Hoffman Estates, IL 60195-2008
Saginaw
4901 Towne Centre Rd.
Suite 200
Saginaw, MI 48605
Findlay
3500 North Main Street
Findlay, OH 45840-1447
Cleveland
5700 Lombardo Centre
Suite 101
Seven Hills, OH 44131-2581
Philadelphia
Bay Colony Executive Park
575 E. Swedesford
Suite 100
Wayne, PA 19406
New Jersey South
5000 Dearborn Circle
Suite 200
Mt. Laurel, NJ 08054
Baltimore-West
1829 Reistertown Road
Baltimore, MD 21208-8861
2
<PAGE> 16
Long Island
972 Brush Hollow Road
5th Floor
Westbury, NY 11590
Washington, D.C.
2440 Research Blvd.
Suite 150
Rockville, MD 20850-3293
New Haven
116 Washington Ave.
Floor #4
North Haven, CT 06473
Norfolk
Greenbrier Pointe
1401 Greenbrier Pkwy.
Suite 350
Chesapeake, VA 23320
New Jersey North
103 Eisenhower Parkway
Roseland, NJ 07068-1069
Pittsburgh
1910 Cochran Rd.
Manor Oak Two
Suite 285
Pittsburgh, PA 15220
Richmond
10710 Midlothian Turnpike
Suite 306
Richmond, VA 23235
Syracuse
5788 Widewaters Pkwy.
DeWitt, NY 13214
Westchester
660 White Plains Road
Tarrytown, NY 10591-0010
3
<PAGE> 17
Mobile
1201 Montlimar Dr.
Suite 700
Mobile, AL 36609
Birmingham
3535 Grandview Parkway
Suite 340
Birmingham, AL 35243
Orlando
2600 Lake Lucien Drive
Suite 306, The Forum Bldg.
Maitland, FL 32751
Memphis
6555 Quince Road
Suite 300
Memphis, TN 38119
Atlanta - North
North Park Town Center
1000 Abernathy Rd. N.E.
Bldg. 400, Suite 180
Atlanta, GA 30328
Greensboro
1500 Pinecroft Rd.
Suite 220
Greensboro, NC 27407
Charlotte
5832 Farm Pond Lane
Suite 200
Charlotte, NC 28212
Jacksonville
9485 Regency Square Boulevard
Jacksonville, FL 32225
Jackson
Highland Village Center
4500 I-55 North
Suite 292
Jackson, MS 39211
4
<PAGE> 18
Columbia
250 Berryhill Road
Suite 201
Columbia, SC 29210
Miami
6303 Blue Lagoon Drive
Suite 200
Miami, FL 33126
Dothan
3160 West Main Street
Suite 1
Dothan, AL 36301-1180
Nashville
565 Marriott Drive
Suite 190, Highland Ridge
Nashville, TN 37210
Raleigh
3651 Trust Drive
Raleigh, NC 27604
Tampa
2502 Rocky Point Dr.
Suite 150, Lincoln Pointe
Tampa, FL 33607
Odessa
Ashford Park Office Center
Suite 201A
2626 John Ben Sheppard Parkway
Odessa, TX 79762
Lubbock
Suite 200
4010 82nd Street
Lubbock, TX 79424
Dallas
801 E. Campbell Road
Suite 600, Campbell Forum
Richardson, TX 75081
5
<PAGE> 19
Austin
1701 Directors Blvd.
Suite 320
Austin, TX 78744
Fort Worth
2350 W. Airport Hwy.
Suite 400, Center Park Tower
Bedford, TX 76022
Beaumont
2615 Calder
Suite 715
Beaumont, TX 77702
Houston-West
820 Gessner
Suite 700
Houston, TX 77024
Harlingen
1916 East Harrison
Harlingen, TX 78550
Corpus Christi
5350 South Staples
Suite 225
Corpus Christi, TX 78411
Little Rock
1701 Centerview Dr.
Suite 201
Little Rock, AR 72211
Amarillo
1616 S. Kentucky
Suite 130 Bldg. D
Amarillo, TX 79102
El Paso
1200 Golden Key Circle
Suite 104
El Paso, TX 79925
6
<PAGE> 20
Albuquerque
6100 Uptown Blvd., NE
Suite 300
Albuquerque, NM 87110
Houston-North
363 N. Sam Houston Pkwy. E.
Suite 700
Houston, TX 77760
San Antonio
1600 N.E. Loop 410
Suite 200
San Antonio, TX 78209
Tulsa
9820 East 41st St.
Suite 300
Tulsa, OK 74145
Minneapolis
11095 Viking Drive
Suite 308, One Southwest Crossing
Eden Prairie, MN 55344-7290
Wichita
7570 West 21st Street
Wichita, KS 67212
St. Louis
4227 Earth City Exp.
Suite 100
Earth City, MO 63045
Jefferson City
210 Prodo Drive
Jefferson City, MO 65109
Kansas City
8001 College Blvd.
Suite 110
Overland Park, MO 66210-1800
7
<PAGE> 21
Des Moines
4200 Corporate Dr.
Suite 107
West Des Moines, IA 50266
Omaha
10810 Farnam Drive
Suite 113
Omaha, NE 68154
Davenport
2535 Tech Dr.
Suite 300, Commerce Exch. Bldg.
Bettendorf, IA 52722
Denver
6300 S. Syracuse Way
Suite 195
Englewood, CO 80111
Fargo
3100 13th Ave. South
Suite 304
Fargo, ND 58103
Springfield
2155 East Sunshine
Suite 101
Springfield, MO 65804-1816
Waterloo
211 E. San Marnan Dr.
Waterloo, IA 50702
San Bernadino
1615 Orange Tree Lane
Suite 215
Redlands, CA 92374
Salt Lake City
310 E. 4500 South
Suite 340
Murray, UT 84121-0501
8
<PAGE> 22
Honolulu
1585 Kapiolani Blvd.
Suite 922, Ala Moano Pacific Center
Honolulu, HI 96814
Spokane
North 901 Monroe
Suite 350
Spokane, WA 99210-2148
Grand Junction
744 Horizon Ct.
Suite 330
Grand Junction, CO 81506
San Francisco
4301 Hacienda Dr.
Suite 400
Pleasanton, CA 94588
Portland
10220 S.W. Greenburg Rd.
Suite 415
Portland, OR 97223-5506
Sacramento
2720 Gateway Oaks Dr.
Suite 200
Sacramento, CA 95833
San Diego
3111 Camino Del Rio N.
Suite 1333
San Diego, CA 92108
Phoenix
4742 24th Street
Suite 215
Phoenix, AZ 85016
San Jose
1900 McCarthy Blvd.
Suite 400
Milpitas, CA 95035
9
<PAGE> 23
Seattle
13555 S.E. 36th Street
Suite 350
Bellevue, WA 98006
Orange
765 The City Drive
Suite 200
Orange, CA 92668
Anchorage
4300 B. Street
Suite 206
Anglo Building
Anchorage, AK 99503
Appleton
54 Park Place
Appleton, WI 54915
South Bend
4215 Edison Lakes Parkway
Suite 140
Mishawaka, IN 46545
Columbus
655 Metro Place South
Suite 470, Metro V
Dublin, OH 43017-0792
Henderson
618 North Green Street
Henderson, KY 42420
Lansing
2205 Jolly Rd.
Suite D
Okemos, MI 48864
Marshall
1408 North Michigan
Marshall, IL 62441
New Jersey-Central
101 Interchange Plaza
Cranbury, NJ 08512
10
<PAGE> 24
Huntington
3425 U.S. Route 60 East
Barboursville, WV 25504
Buffalo
95 John Muir Drive
Amherst, NY 14228
Manchester
4 Bedford Farms
Bedford, NH 03110
Harrisburg
3045 Market Street
Plaza 55 Complex
Camp Hill, PA 17011
Boston South
Southboro Place - 2nd Floor
352 Turnpike Rd.
Southboro, MA 01772
Boston North
100 Ames Pond Drive
Tewksbury, MA 01876
Portland
2401 Congress Street
Portland, ME 04102
Albany
5 Pine West Plaza
Albany, NY 12212
Roanoke
5238 Valley Pointe Pkwy.
Roanoke, VA 24019
Falls Church
1650 Tysons Blvd
Suite 500
Mclean, VA 22101-9550
11
<PAGE> 25
Bristol
1241 Volunteer Parkway
Suite 200
Bristol, TN 37625
Chattanooga
6025 Lee Highway
Suite 443
Chattanooga, TN 37421
Decatur
401 Lee Street
Suite 500
Decatur, AL 35602
Fayetteville
4317 Ramsey Street
Suite 300
Fayetteville, NC 28311
Athens
3708 Atlanta Highway
Athens, GA 30604
Knoxville
5500 Lonas Drive
Suite 260
Knoxville, TN 37909
Macon
5400 Riverside Drive
Suite 201
Macon, GA 31210
Pensacola
25 W. Cedar Street
Suite 316
Pensacola, Fl 32501
Savannah
6600 Abercorn Street
Suite 206
Savannah, GA 31405
12
<PAGE> 26
Tyler
821 East SE Loop 323
Suite 300
Tyler, TX 75701
Oklahoma City
4101 Perimeter Ctr Dr.
Suite 300, Perimeter Center
Oklahoma City, OK 73112-2304
Baltimore-East
Campbell Corporate Center One
4940 Campell Blvd., Suite 140
Whitemarsh Business Community
Baltimore, MD 21236
Billings
1643 Lewis Avenue
Suite 201
Billings, MT 59102
Cheyenne
6234 Yellowstone
Cheyenne, WY 82009
Cape Girardeau
2851 Independence
Cape Girardeau, MO 63701
Atlanta -South
1691 Phoenix Blvd.
Suite 300
Atlanta, GA 30349
Pasadena
800 East Colorado Blvd.
Suite 400
Pasadena, CA 91109
Colorado Springs
5575 Tech Center Dr.
Suite 220
Colorado Springs, CO 80919
13
<PAGE> 27
South Bay
301 E. Ocean Boulevard
Suite 1900
Long Beach, CA 90802
Ventura
260 Maple court
Suite 210
Ventura, CA 93003
Las Vegas
3900 Paradise Road
Suite 239
Las Vegas, NV 89109
Eugene
1600 Valley River Drive
Suite 190
Eugene, OR 97401
Tupelo
1 Mississippi Plaza
Tupelo, MS 38801
Charleston
4975 Lacross Road
Suite 150, Rivergate Center
North Charleston, SC 29418-6518
Fort Lauderdale
4410 N. State Rd #7
Suite 200, Headway Office Park
Ft Lauderdale, FL 33319
Western Carolina
215 Thompson Street
Hendersonville, NC 28739-2828
Ford Motor Credit Company
Central Collections
3200 Greenfield
Suite 280
Dearborn, MI 48120
14
<PAGE> 28
New Orleans
3330 W. Esplanade Avenue
Suite 200
Metairie, LA 70002
Lafayette
Saloom Office Park
Suite 350
100 Asma Boulevard
Lafayette, LA 70508
Shreveport
South Pointe Centre
3007 Knight Street
Suite 200
Shreveport, LA 71105
Commercial Lending
Suite 300
745 McClintock
Burr Ridge, IL 60521
15
<PAGE> 1
FORD CREDIT AUTO RECEIVABLES CORPORATION
SELLER
FORD MOTOR CREDIT COMPANY
SERVICER
Standard Terms and Conditions of Agreement
Dated as of November __, 1994
<PAGE> 2
TABLE OF CONTENTS
ARTICLES I-X
RESERVED
ARTICLE XI
Definitions
Section Page
- ------- ----
11.1 Definitions . . . . . . . . . . . . . . . . . . . . . XI-1
11.2 Usage of Terms . . . . . . . . . . . . . . . . . . . XI-17
11.3 Cutoff Date and Record Date . . . . . . . . . . . . . XI-17
11.4 References . . . . . . . . . . . . . . . . . . . . . XI-17
11.5 Compliance Certificates and Opinions . . . . . . . . XI-17
ARTICLE XII
The Receivables
12.1 Representations and Warranties of Seller . . . . . . XII-1
12.2 Repurchase Upon Breach . . . . . . . . . . . . . . . XII-5
12.3 Custody of Receivable Files . . . . . . . . . . . . . XII-6
12.4 Duties of Servicer as Custodian . . . . . . . . . . . XII-6
12.5 Instructions; Authority to Act . . . . . . . . . . . XII-7
12.6 Custodian's Indemnification . . . . . . . . . . . . . XII-7
12.7 Effective Period and Termination . . . . . . . . . . XII-8
ARTICLE XIII
Administration and Servicing of Receivables
13.1 Duties of Servicer . . . . . . . . . . . . . . . . . XIII-1
13.2 Collection of Receivable Payments . . . . . . . . . . XIII-2
13.3 Realization Upon Receivables . . . . . . . . . . . . XIII-2
13.4 [Reserved] . . . . . . . . . . . . . . . . . . . . . XIII-2
13.5 Maintenance of Security Interests
in Financed Vehicles . . . . . . . . . . . . . . . XIII-2
13.6 Covenants of Servicer . . . . . . . . . . . . . . . . XIII-3
13.7 Purchase of Receivables Upon Breach . . . . . . . . . XIII-3
13.8 Servicer Fee . . . . . . . . . . . . . . . . . . . . XIII-4
13.9 Servicer's Certificate . . . . . . . . . . . . . . . XIII-4
i
<PAGE> 3
Section Page
- ------- ----
13.10 Annual Statement as to Compliance;
Notice of Default . . . . . . . . . . . . . . . . XIII-5
13.11 Annual Independent Certified Public
Accountant's Report . . . . . . . . . . . . . . . XIII-5
13.12 Access to Certain Documentation and
Information Regarding Receivables . . . . . . . . XIII-6
13.13 Servicer Expenses . . . . . . . . . . . . . . . . . . XIII-6
ARTICLE XIV
Distributions; Subordination Spread Account;
Statements to Certificateholders
14.1 Accounts . . . . . . . . . . . . . . . . . . . . . . XIV-1
14.2 Collections . . . . . . . . . . . . . . . . . . . . . XIV-3
14.3 Application of Collections . . . . . . . . . . . . . XIV-4
14.4 Advances . . . . . . . . . . . . . . . . . . . . . . XIV-4
14.5 Additional Deposits . . . . . . . . . . . . . . . . . XIV-5
14.6 Distributions . . . . . . . . . . . . . . . . . . . . XIV-5
14.7 Subordination; Subordination Spread
Account; Priority of Distributions . . . . . . . . XIV-10
14.8 Net Deposits . . . . . . . . . . . . . . . . . . . . XIV-15
14.9 Statements to Class A Certificate-
holders . . . . . . . . . . . . . . . . . . . . . XIV-16
ARTICLE XV
[Intentionally Omitted]
ARTICLE XVI
The Certificates
16.1 The Certificates . . . . . . . . . . . . . . . . . . XVI-1
16.2 Authentication of Certificates . . . . . . . . . . . XVI-1
16.3 Registration of Transfer and Ex-
change of Certificates . . . . . . . . . . . . . . XVI-2
16.4 Mutilated, Destroyed, Lost, or
Stolen Certificates . . . . . . . . . . . . . . . XVI-4
16.5 Persons Deemed Owners . . . . . . . . . . . . . . . . XVI-4
16.6 Access to List of Certificate-
ii
<PAGE> 4
Section Page
- ------- ----
holders' Names and Addresses . . . . . . . . . . . XVI-4
16.7 Maintenance of Office or Agency . . . . . . . . . . . XVI-5
16.8 Book-Entry Certificates . . . . . . . . . . . . . . . XVI-5
16.9 Notices to Clearing Agency . . . . . . . . . . . . . XVI-7
16.10 Definitive Certificates . . . . . . . . . . . . . . . XVI-7
ARTICLE XVII
The Seller
17.1 Representations of Seller . . . . . . . . . . . . . . XVII-1
17.2 Liability of Seller; Indemnities . . . . . . . . . . XVII-3
17.3 Merger or Consolidation of, or
Assumption of the Obligations
of, Seller . . . . . . . . . . . . . . . . . . . . XVII-4
17.4 Limitation on Liability of Seller
and Others . . . . . . . . . . . . . . . . . . . . XVII-4
17.5 Seller May Own Certificates . . . . . . . . . . . . . XVII-5
ARTICLE XVIII
The Servicer
18.1 Representations of Servicer . . . . . . . . . . . . . XVIII-1
18.2 Indemnities of Servicer . . . . . . . . . . . . . . . XVIII-3
18.3 Merger or Consolidation of, or
Assumption of the Obligations of,
Servicer . . . . . . . . . . . . . . . . . . . . . XVIII-5
18.4 Limitation on Liability of Servicer
and Others . . . . . . . . . . . . . . . . . . . . XVIII-6
18.5 Delegation of Duties . . . . . . . . . . . . . . . . XVIII-6
ARTICLE XIX
Default
19.1 Events of Default . . . . . . . . . . . . . . . . . . XIX-1
19.2 Appointment of Successor . . . . . . . . . . . . . . XIX-3
19.3 Repayment of Advances . . . . . . . . . . . . . . . . XIX-4
19.4 Notification to Certificateholders . . . . . . . . . XIX-4
19.5 Waiver of Past Defaults . . . . . . . . . . . . . . . XIX-4
iii
<PAGE> 5
ARTICLE XX
The Trustee
Section Page
- ------- ----
20.1 Duties of Trustee . . . . . . . . . . . . . . . . . . XX-1
20.2 Trustee's Certificate . . . . . . . . . . . . . . . . XX-4
20.3 Trustee's Assignment of Purchased
Receivables . . . . . . . . . . . . . . . . . . . XX-4
20.4 Certain Matters Affecting Trustee . . . . . . . . . . XX-4
20.5 Trustee Not Liable for Certificates
or Receivables . . . . . . . . . . . . . . . . . . XX-7
20.6 Trustee May Own Certificates . . . . . . . . . . . . XX-8
20.7 Trustee's Fees and Expenses . . . . . . . . . . . . . XX-8
20.8 Indemnity of Trustee and Class A Agent . . . . . . . XX-9
20.9 Eligibility Requirements for Trustee . . . . . . . . XX-10
20.10 Resignation or Removal of Trustee . . . . . . . . . . XX-10
20.11 Successor Trustee . . . . . . . . . . . . . . . . . . XX-11
20.12 Merger or Consolidation of Trustee . . . . . . . . . XX-12
20.13 Appointment of Co-Trustee or
Separate Trustee . . . . . . . . . . . . . . . . . XX-12
20.14 Representations and Warranties of
Trustee . . . . . . . . . . . . . . . . . . . . . XX-14
20.15 Tax Returns . . . . . . . . . . . . . . . . . . . . . XX-15
20.16 Trustee May Enforce Claims Without
Possession of Certificates . . . . . . . . . . . . XX-15
20.17 Suits for Enforcement . . . . . . . . . . . . . . . . XX-15
20.18 Rights of Certificateholders to
Direct Trustee . . . . . . . . . . . . . . . . . . XX-15
ARTICLE XXI
Termination
21.1 Termination of the Trust . . . . . . . . . . . . . . XXI-1
21.2 Optional Purchase of All Receivables . . . . . . . . XXI-2
ARTICLE XXII
Miscellaneous Provisions
22.1 Amendment . . . . . . . . . . . . . . . . . . . . . . XXII-1
22.2 Protection of Title to Trust . . . . . . . . . . . . XXII-2
iv
<PAGE> 6
Section Page
- ------- ----
22.3 Limitation on Rights of Certifi-
cateholders . . . . . . . . . . . . . . . . . . . XXII-5
22.4 Governing Law . . . . . . . . . . . . . . . . . . . . XXII-7
22.5 Notices . . . . . . . . . . . . . . . . . . . . . . . XXII-7
22.6 Severability of Provisions . . . . . . . . . . . . . XXII-7
22.7 Assignment . . . . . . . . . . . . . . . . . . . . . XXII-8
22.8 Certificates Nonassessable and
Fully Paid . . . . . . . . . . . . . . . . . . . . XXII-8
22.9 Further Assurances . . . . . . . . . . . . . . . . . XXII-8
22.10 No Waiver; Cumulative Remedies . . . . . . . . . . . XXII-8
22.11 Third-Party Beneficiaries . . . . . . . . . . . . . . XXII-8
22.12 Actions by Certificateholders . . . . . . . . . . . . XXII-9
EXHIBITS
Exhibit A - Form of Class A Certificate
Exhibit B - Form of Class B Certificate
Exhibit C - Form of Depository Agreement
Exhibit D-1 - Form of Trustee's Certificate (assignment to Seller)
Exhibit D-2 - Form of Trustee's Certificate (assignment To
Servicer)
v
<PAGE> 7
FORD CREDIT GRANTOR TRUSTS
STANDARD TERMS AND CONDITIONS OF AGREEMENT
DATED AS OF NOVEMBER __, 1994
INTRODUCTION
These Standard Terms and Conditions of Agreement shall be applicable to
Ford Credit Grantor Trusts formed on or after the date hereof, with respect to
which a Pooling and Servicing Agreement incorporating by reference these
Standard Terms and Conditions of Agreement shall have been executed.
ARTICLE I THROUGH X RESERVED
ARTICLE XI
INTRODUCTION
Definitions
Section 11.1 Definitions. Whenever used in the Agreement (including
these Standard Terms and Conditions of Agreement), the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
"Advance" means the amount, as of the last day of a Collection Period,
which the Servicer is required to advance on the respective Receivable pursuant
to Section 14.4(a).
"Agreement" means the Pooling and Servicing Agreement executed by the
Seller, the Servicer and the Trustee as of the Cutoff Date, into which these
Standard Terms and Conditions of Agreement shall be incorporated by reference,
and all amendments and supplements thereto.
"Amount Financed" with respect to a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs.
XI-1
<PAGE> 8
"Annual Percentage Rate" or "APR" of a Receivable means the annual
rate of finance charges stated in the Receivable.
"Available Interest" means, for any Distribution Date, the sum of the
following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on Receivables allocable to interest (including
amounts withdrawn from the Payahead Account but excluding amounts deposited
into the Payahead Account), (ii) Liquidation Proceeds to the extent allocable
to interest due thereon in accordance with the Servicer's customary servicing
procedures, (iii) all Advances made by the Servicer of interest due on
Receivables and all amounts advanced by the Servicer pursuant to Section
14.4(b), and (iv) the Purchase Amount of each Receivable that became a
Purchased Receivable during the related Collection Period to the extent
attributable to accrued interest thereon; provided, however that in calculating
the Available Interest the following will be excluded: (i) amounts received on
Receivables to the extent that the Servicer has previously made an unreimbursed
Advance of interest; and (ii) Liquidation Proceeds with respect to a
particular Receivable to the extent of any unreimbursed Advances of interest.
"Available Principal" means, for any Distribution Date, the sum of the
following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on Receivables allocable to principal (including
amounts withdrawn from the Payahead Account but excluding amounts deposited
into the Payahead Account), (ii) Liquidation Proceeds attributable to principal
in accordance with the Servicer's customary servicing procedures, (iii) all
Advances made by the Servicer of principal due on the Receivables, (iv) to the
extent attributable to principal, the Purchase Amount of each Receivable that
became a Purchased Receivable during such Collection Period, and (v) partial
prepayments attributable to any refunded item included in the Amount Financed,
such as extended warranty protection plan costs, or physical damage, credit
life, disability insurance premiums, or any partial prepayment which causes a
reduction in the Obligor's periodic payment to below the Scheduled Payment as
of the Cutoff Date; provided, however, that in calculating the Available
Principal the
XI-2
<PAGE> 9
following will be excluded: (i) amounts received on Receivables to the extent
that the Servicer has previously made an unreimbursed Advance of principal; and
(ii) Liquidation with respect to a particular Receivable to the extent of any
unreimbursed Advances of principal.
"Book-Entry Certificates" shall mean a beneficial interest in the Class A
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 16.8.
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions or trust companies in New York, New York shall be
authorized or obligated by law, executive order, or governmental decree to
remain closed.
"Certificate" means the Class A Certificate and the Class B Certificate.
"Certificate Account" means the account designated as such, established
and maintained pursuant to Section 14.1.
"Certificateholder" or "Holder" means the Person in whose name the
respective Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to the Agreement, the interest evidenced by any Class A Certificate
registered in the name of the Seller, the Servicer, or any Person controlling,
controlled by, or under common control with the Seller or the Servicer, shall
not be taken into account in determining whether the requisite percentage
necessary to effect any such consent, waiver, request, or demand shall have
been obtained; provided, that the Trustee shall not be liable for the inclusion
in any such determination of any interest evidenced by any Class A Certificate
registered in the name of any Person controlling, controlled by, or under
common control with the Seller or the Servicer unless a Trust Officer in the
Corporate Trust Office with knowledge hereof and familiarity herewith had
actual knowledge that such Person so controlled, was controlled by, or was
under common control with, the Seller or the Servicer, as the case may be.
XI-3
<PAGE> 10
"Certificate Owner" shall mean, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency) and shall mean, with respect
to a Definitive Certificate, the Certificateholder.
"Certificate Register" and "Certificate Registrar" mean the register
maintained and the registrar appointed pursuant to Section 16.3.
"Class A Agent" shall have the meaning specified in Section 14.7.
"Class A Certificate" means any one of the Certificates executed by the
Trust and authenticated by the Trustee in substantially the form set forth in
Exhibit A hereto.
"Class A Certificate Balance" shall equal, initially, the Class A
Percentage of the Original Pool Balance and, thereafter, shall equal the
initial Class A Certificate Balance, reduced by all amounts distributed to the
Class A Certificateholders and allocable to principal.
"Class A Certificate Factor" means, as of a Distribution Date, a
seven-digit decimal figure equal to the Class A Certificate Balance as of the
close of business on such Distribution Date divided by the Class A Certificate
Balance as of the Cutoff Date.
"Class A Distributable Amount" means on any Distribution Date, the sum of
the Class A Principal Distributable Amount and the Class A Interest
Distributable Amount.
"Class A Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class A Interest Distributable Amount for
such Distribution Date plus any outstanding Class A Interest Carryover
Shortfall from the preceding Distribution Date plus interest on such
outstanding Class A Interest Carryover Shortfall, to the extent permitted by
law, at the Pass-Through Rate from such preceding Distribution Date
XI-4
<PAGE> 11
through the current Distribution Date, over the amount of interest that the
holders of the Class A Certificates actually received on such current
Distribution Date.
"Class A Interest Distributable Amount" means, for any Distribution Date,
thirty (30) days of interest at the Pass-Through Rate on the Class A
Certificate Balance as of the close of business on the last day of the
preceding Collection Period.
"Class A Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class A Principal Distributable Amount
plus any outstanding Class A Principal Carryover Shortfall from the preceding
Distribution Date over the amount of principal that the holders of the Class A
Certificates actually received on such current Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A Percentage of: (i) the principal
portion of all Scheduled Payments due during the preceding Collection Period;
(ii) the principal portion of all prepayments in full received during the
preceding Collection Period (and certain partial prepayments relating to
rebates of extended warranty contract costs and insurance premiums or which
cause a reduction in the Obligor's periodic payment to below the Scheduled
Payment as of the Cutoff Date) (without duplication of amounts included in
clause (i) above); (iii) the Principal Balance of each Receivable that became a
Purchased Receivable under an obligation that arose during the preceding
Collection Period (without duplication of amounts referred to in clauses (i)
and (ii) above) and (iv) the Principal Balance of each Receivable liquidated by
the Servicer during the preceding Collection Period.
"Class B Certificate" means any one of the Certificates executed by the
Trust and authenticated by the Trustee in substantially the form set forth in
Exhibit B hereto.
"Class B Certificate Balance" shall equal, initially, the Class B
Percentage of the Original Pool Balance and, thereafter, shall equal the
initial Class B Certificate Balance, reduced by all amounts distributed to
Class B Certificateholders (or deposited in the Subor-
XI-5
<PAGE> 12
dination Spread Account not including the Subordination Initial Deposit) and
allocable to principal and by the Class A Principal Carryover Shortfall and the
Class B Principal Carryover Shortfall.
"Class B Distributable Amount" means, with respect to any Distribution
Date, the sum of the Class B Principal Distributable Amount and the Class B
Interest Distributable Amount.
"Class B Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class B Interest Distributable Amount plus
any outstanding Class B Interest Carryover Shortfall on the preceding
Distribution Date over the amount of interest that the holders of the Class B
Certificates received (including amounts deposited in the Subordination Spread
Account) on such current Distribution Date.
"Class B Interest Distributable Amount" means, with respect to any
Distribution Date, thirty (30) days of interest at the Pass-Through Rate on the
Class B Certificate Balance as of the close of business on the last day of the
preceding Collection Period plus the excess, for each Receivable having an APR
greater than the sum of the Pass-Through Rate and the Servicing Fee Rate, of
the interest portion of the Scheduled Payment over the portion of such interest
equal to interest at the sum of the Pass-Through Rate and the Servicing Fee
Rate.
"Class B Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class B Principal Distributable Amount and
any outstanding Class B Principal Carryover Shortfall on the preceding
Distribution Date over the amount of principal that the holders of the Class B
Certificates received (including amounts deposited in the Subordination Spread
Amount) on such current Distribution Date.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class B Percentage of: (i) the principal
portion of all Scheduled Payments due during the preceding Collection Period,
(ii) the principal portion of all prepayments in full received during the
preceding Collection Period (and certain partial prepayments relating to
rebates of ex-
XI-6
<PAGE> 13
tended warranty contract costs and insurance premiums or which cause a
reduction in the Obligor's periodic payment to below the Scheduled Payment as
of the Cutoff Date) (without duplication of amounts included in clause (i)
above), (iii) the Principal Balance of each Receivable that became a Purchased
Receivable under an obligation that arose during the preceding Collection
Period (without duplication of amounts included in clauses (i) and (ii) above)
and (iv) the Principal Balance of each Receivable liquidated by the Servicer
during the preceding Collection Period.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 14.1.
"Collection Period" means a calendar month. Any amount stated "as of the
close of business of the last day of a Collection Period" shall give effect to
the following calculations as determined as of the end of the day on such last
day: 1) all applications of collections, 2) all current and previous
Payaheads, 3) all applications of Payahead Balances, 4) all Advances and
reductions of Outstanding Advances and 5) all distributions.
"Corporate Trust Office" means the office of the Trustee at which its
corporate trust business shall be administered, which office at the date of the
Agreement shall be specified therein.
"Cutoff Date" means the date specified as such in the Agreement.
"Dealer" means the dealer who sold a Financed Vehicle and who originated
and assigned the respective Receivable to Ford Motor Credit Company under an
existing
XI-7
<PAGE> 14
agreement between such dealer and Ford Motor Credit Company.
"Dealer Recourse" means, with respect to a Receivable (i) any amount paid
by a Dealer or credited against a reserve established for, or held on behalf
of, a Dealer in excess of that portion of finance charges rebated to the
Obligor which is attributable to the Dealer's participation, if any, in the
Receivable, and (ii) all recourse rights against the Dealer which originated
the Receivable and any successor Dealer.
"Definitive Certificates" shall have the meaning specified in Section
16.8.
"Delivery" when used with respect to Subordination Spread Account
Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Class A Agent by physical delivery to
the Class A Agent in the State of New York indorsed to, or registered in the
name of, the Class A Agent or indorsed in blank, and, with respect to "money" as
defined in Section 1-201(24) of the UCC, delivery thereof to the Class A Agent
in the State of New York, and with respect to a "certificated security" (as
defined in Section 8-102(1)(a) of the UCC) transfer thereof (i) by delivery of
such certificated security indorsed to, or registered in the name of, the Class
A Agent or indorsed in blank to a financial intermediary (as defined in Section
8-313(4) of the UCC) and the making by such financial intermediary of entries on
its books and records identifying such certificated securities as belonging
solely and exclusively to the Class A Agent (acting in its capacity under
Section 14.07) and the sending by such financial intermediary of a confirmation
to the Class A Agent of the purchase of such certificated security by the Class
A Agent, or (ii) by delivery thereof to a "clearing corporation" (as defined in
section 8-102(3) of the UCC) either in bearer form, in registered form
registered to the clearing corporation or to a "custodian bank" (as defined in
Section 8-102(4) of the UCC) or a nominee of either of them subject to the
clearing corporations exclusive
XI-8
<PAGE> 15
control and the making by such clearing corporation of appropriate entries on
its books reducing the appropriate securities account of the transferor and
increasing the appropriate securities account of a financial intermediary by
the amount of such certificated security, the identification by the clearing
corporation of the certificated securities for the sole and exclusive account
of the financial intermediary, the maintenance in the State of New York of such
certificated securities by such clearing corporation or a "custodian bank" (as
defined in Section 8-102(4) of the UCC) or the nominee of either subject to the
clearing corporation's exclusive control, the indorsement thereof to the
clearing corporation or such custodian bank or a nominee of either of them
subject to the clearing corporation's exclusive control, the sending of a
confirmation to the Class A Agent by the financial intermediary of the purchase
by the Class A Agent of such securities and the making by such financial
intermediary of entries on its books and records identifying such certificated
securities as belonging solely and exclusively to the Class A Agent (acting in
its capacity under Section 14.7) (all of the foregoing, "Physical Property"),
and, in any event, any such Physical Property in registered form shall be in
the name of the Class A Agent or its nominee; and such additional or
alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such Subordination Spread Account
Property to the Class A Agent (as defined herein), consistent with changes in
applicable law or regulations or the interpretation thereof; and
(b) with respect to any securities issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such property to an
appropriate book-entry account maintained with a Federal Reserve Bank by a
financial intermediary which is also a "depositary" pursuant to applicable
federal regulations and issuance by such financial intermediary of a deposit
advice or other written confirmation of such book-entry registration to the
Class A Agent of the purchase by the Class A
XI-9
<PAGE> 16
Agent of such book-entry securities; the making by such financial intermediary
of entries in its books and records identifying such book-entry security held
through the Federal Reserve System pursuant to Federal book-entry regulations
as belonging solely and exclusively to the Class A Agent acting in its capacity
under Section 14.07 and indicating that such custodian holds such Subordination
Spread Account Property solely as agent for the Class A Agent; and such
additional or alternative procedures as may hereafter become appropriate to
effect complete transfer of ownership of any such Subordination Spread Account
Property to the Class A Agent, consistent with changes in applicable law or
regulations or the interpretation thereof.
"Depository Agreement" means the agreement among the Seller, the Trustee,
and the initial Clearing Agency, dated as of the date of the Agreement,
substantially in the form attached hereto as Exhibit C.
"Determination Date" means the eighth Business Day but not later than the
10th day of each calendar month.
"Distribution Date" means, for each Collection Period, the 15th day of
the following month, or if the 15th day is not a Business Day, the next
following Business Day, commencing with the date specified in the Agreement.
"Event of Default" means an event specified in Section 19.1.
"Financed Vehicle" means a new or used automobile or light truck,
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics' liens, and any liens
which attach to the respective Receivable by operation of law.
"Liquidated Receivable" means a Receivable which, by its terms, is in
default and as to which the Servicer has determined, in accordance with its
customary servicing procedures, that eventual payment in full is
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unlikely or has repossessed and disposed of the Financed Vehicle.
"Liquidation Proceeds" means the monies collected from whatever source,
during the respective Collection Period, on a Liquidated Receivable, net of the
sum of any amounts expended by the Servicer for the account of the Obligor plus
any amounts required by law to be remitted to the Obligor.
"Monthly Remittance Condition" has the meaning assigned to such term in
Section 14.1(b) hereof.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle or any other Person who owes payments under the Receivable
(not including any Dealer in respect of Dealer Recourse).
"Officer's Certificate" means a certificate signed by the chairman of the
board, the president, any executive vice president, any vice president, the
treasurer, any assistant treasurer, or the controller of the Seller or the
Servicer, as appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but need
not be counsel to the Seller or Servicer, which counsel shall be acceptable to
the Trustee.
"Optional Purchase Percentage" means the percentage specified in the
Agreement.
"Original Pool Balance" means the Pool Balance as of the Cutoff Date, as
specified in the Agreement.
"Outstanding Advances" on a Receivable means the sum, as of the close of
business on the last day of a Collection Period, of all Advances as reduced by
payments as specified in Section 14.4(a) with respect to such Receivable.
"Pass-Through Rate" means the interest rate payable to
Certificateholders, as specified in the Agreement.
"Payahead" on a Receivable means the amount, as of the close of business
on the last day of a Collection
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Period, specified in Section 14.3 with respect to such Receivable.
"Payahead Account" means the account designated as such, established and
maintained pursuant to Section 14.1.
"Payahead Balance" on a Receivable means the sum, as of the close of
business on the last day of a Collection Period, of all Payaheads made by or on
behalf of the Obligor with respect to such Receivable (including any amount
paid by or on behalf of the Obligor prior to the Cutoff Date that is due on or
after the Cutoff Date and was not used to reduce the principal balance of such
Receivable), as reduced by applications of previous Payaheads with respect to
such Receivable, pursuant to Sections 14.3 and 14.4.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"Pool Balance" as of the close of business of the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Purchased Receivables and Liquidated Receivables); provided, that
where the Pool Balance is relevant in determining whether the requisite
percentage of Class A Certificateholders necessary to effect any consent,
waiver, request, or demand shall have been obtained, the Pool Balance shall be
deemed to be reduced by the amount equal to the Pool Balance (without giving
effect to this provision) represented by the interests evidenced by any Class A
Certificate registered in the name of the Seller, the Servicer, or any Person
controlling, controlled by, or under common control with the Seller or the
Servicer.
"Pool Factor" as of the last day of a Collection Period means a
seven-digit decimal figure equal to the Pool Balance divided by the Original
Pool Balance.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period, means the Amount Financed minus the sum of (a)
that portion of all Scheduled Payments due on or prior to such
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day allocable to principal using the actuarial or constant yield method, (b)
any refunded portion of extended warranty protection plan costs, or of physical
damage, credit life, or disability insurance premiums included in the Amount
Financed, (c) any payment of the Purchase Amount with respect to the Receivable
allocable to principal and (d) any prepayment in full or any partial
prepayments applied to reduce the principal balance of the Receivable.
"Purchase Amount" means the amount, as of the close of business on the
last day of a Collection Period, required to be paid by an Obligor to prepay in
full the respective Receivable under the terms thereof (which amount shall
include a full month's interest, in the month of payment, at the Annual
Percentage Rate).
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of respective Collection Period by the Servicer
pursuant to Section 13.7 or by the Seller pursuant to Section 12.2.
"Realized Losses" means, the excess of the Principal Balance of any
Liquidated Receivable (as reduced by any Payaheads) over Liquidation Proceeds
to the extent allocable to principal received in the Collection Period.
"Receivable" means any retail installment sale contract which shall
appear on Schedule A to the Agreement (which Schedule A may be in the form of
microfiche) and any amendments, modifications or supplements to such retail
installment sale contract which has not been released by the Trustee from the
Trust.
"Receivable Files" means the documents specified in Section 12.3.
"Record Date" means the fourteenth day of the current calendar month;
provided, however, that if Definitive Certificates are issued pursuant to
Section 16.10 hereof, subsequent to the issuance of such Definitive
Certificates the Record Date for any Distribution Date shall be the last day of
the Collection Period immediately preceding the month in which such
Distribution Date occurs.
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"Required Deposit Rating" means the rating specified in the Agreement.
"Residual Certificate" has the meaning assigned to such term in Section
16.1 hereof.
"Scheduled Payment" on a Receivable means that portion of the payment
required to be made by the Obligor during the respective Collection Period
sufficient to amortize the Principal Balance under the actuarial method over
the term of the Receivable and to provide interest at the APR.
"Seller" means Ford Credit Auto Receivables Corporation as the seller of
the Receivables under the Agreement, and each successor to Ford Credit Auto
Receivables Corporation (in the same capacity) pursuant to Section 17.3.
"Servicer" means Ford Motor Credit Company as the servicer of the
Receivables, and each successor to Ford Motor Credit Company (in the same
capacity) pursuant to Section 18.3 or 19.2.
"Servicer Fees" means the sum of the Servicing Fee and the Supplemental
Servicing Fee.
"Servicer's Certificate" means a certificate completed and executed by
the Servicer by any executive vice president, any vice president, the
treasurer, any assistant treasurer, the controller, or any assistant controller
of the Servicer pursuant to Section 13.9.
"Servicing Fee" means, with respect to a Collection Period, the fee
payable to the Servicer for services rendered during the respective Collection
Period, which shall be equal to one-twelfth of the Servicing Fee Rate
multiplied by the Pool Balance as of the first day of the Collection Period.
"Servicing Fee Rate" means the percentage set forth in the Agreement.
"Simple Interest Method" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such
payment that
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is allocated to interest is equal to the product of the fixed rate of interest
multiplied by the unpaid principal balance multiplied by the period of time
elapsed since the preceding payment of interest was made.
"Simple Interest Receivable" means any Receivable under which the portion
of a payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"State" means any state or commonwealth of the United States of America,
or the District of Columbia.
"Subordination Initial Deposit" means the amounts, if any, deposited into
the Subordination Spread Account on the date of initial issuance of the
Certificates pursuant to Section 14.7 and specified in the Agreement.
"Subordination Spread Account" means the account established and
maintained pursuant to Section 14.7.
"Subordination Spread Account Property" has the meaning specified in
Section 14.7(a)(ii).
"Supplemental Servicing Fee" means the fee payable to the Servicer for
certain services rendered during the respective Collection Period, determined
pursuant to and defined in Section 13.8.
"Total Available Amount" shall mean, for each Distribution Date, the sum
of the Available Interest and the Available Principal.
"Trust" means the trust created by the Agreement, the estate of which
shall consist of the Receivables (other than Purchased Receivables) and all
monies paid thereon other than amounts deposited or to be deposited in the
Payahead Account, and all monies due thereon, on or after the Cutoff Date;
security interests in the Financed Vehicles; funds deposited in the Collection
Account and the Certificate Account and proceeds thereof; any property
(including the right to receive Liquidation Proceeds) that shall have secured a
Receivable and that shall have been acquired by or on behalf of the Trustee;
proceeds from claims on any physical damage, credit life,
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or disability insurance policies covering Financed Vehicles or Obligors; any
Dealer Recourse; all right, title and interest of the Seller in and to the
Purchase Agreement; and the proceeds of any and all of the foregoing.
"Trustee" means the Person acting as Trustee under the Agreement, its
successor in interest, and any successor trustee pursuant to Section 20.11.
"Trustee Officer" means the chairman or vice-chairman of the board of
directors, the chairman or vice-chairman of the executive committee of the
board of directors, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
and any assistant controller, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Trustee's Certificate" means a certificate completed and executed by the
Trustee by a Trustee Officer pursuant to Section 20.2, substantially in the
form of, in the case of assignment to the Seller, Exhibit D-1 and in the case
of an assignment to the Servicer, Exhibit D- 2.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
Section 11.2 Usage of Terms. With respect to all terms in the
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by the Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
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Section 11.3 Cutoff Date and Record Date. All references to the
Record Date prior to the first Record Date in the life of the Trust shall be to
the Cutoff Date.
Section 11.4 Section References. All section references shall be to
Sections in these Standard Terms and Conditions of Agreement.
Section 11.5 Compliance Certificates and Opinions. Upon any
application or request by the Seller or the Servicer to the Trustee to take any
action under any provision herein, the Seller or the Servicer (as the case may
be) shall furnish to the Trustee an Officer's Certificate stating that all
conditions precedent, if any, provided for herein relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Agreement relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided herein shall include:
(1) a statement that each individual signing such cer-
tificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such indi-
vidual, he has made such examination or investigation as is necessary
to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
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(4) a statement as to whether or not, in the opinion of each
such individual, such condition or covenant has been complied with.
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ARTICLE XII
The Receivables
Section 12.1 Representations and Warranties of Seller. The Seller
makes the following representations and warranties as to the Receivables on
which the Trustee relies in accepting the Receivables in trust and executing and
authenticating the Certificates. Such representations and warranties speak as
of the execution and delivery of the Agreement, but shall survive the sale,
transfer, and assignment of the Receivables to the Trustee and, if applicable,
any subsequent assignment or transfer pursuant to Article XV:
(i) Characteristics of Receivables. Each Receivable (a) shall
have been originated in the United States of America by a Dealer for
the retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, shall have been fully and properly executed by the
parties thereto, shall have been purchased by the Seller from Ford
Motor Credit Company, which in turn shall have purchased such
Receivables from such Dealer under an existing dealer agreement with
Ford Motor Credit Company, and shall have been validly assigned by such
Dealer to Ford Motor Credit Company, which in turn shall have been
validly assigned by Ford Motor Credit Company to the Seller in
accordance with its terms, (b) shall have created or shall create a
valid, subsisting, and enforceable first priority security interest in
favor of Ford Motor Credit Company in the Financed Vehicle, which
security interest has been assigned by Ford Motor Credit Company to the
Seller, which in turn shall be assignable by the Seller to the Trustee,
(c) shall contain customary and enforceable provisions such that the
rights and remedies of the holder thereof shall be adequate for
realization against the collateral of the benefits of the security, (d)
shall provide for level monthly payments (provided that the payment in
the first or last month in the life of the Receivable may be minimally
different from the
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level payment) that fully amortize the Amount Financed by maturity and
yield interest at the Annual Percentage Rate, and (e) shall provide
for, in the event that such contract is prepaid, a prepayment that
fully pays the Principal Balance.
(ii) Schedule of Receivables. The information set forth in
Schedule A to the Agreement shall be true and correct in all material
respects as of the opening of business on the Cutoff Date, and no
selection procedures believed to be adverse to the Certificateholders
shall have been utilized in selecting the Receivables.
(iii) Compliance with Law. Each Receivable and the sale of
the Financed Vehicle shall have complied at the time it was originated
or made and at the execution of the Agreement shall comply in all
material respects with all requirements of applicable federal, State,
and local laws, and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, and State adaptations of the National Consumer Act and of the
Uniform Consumer Credit Code, and other consumer credit laws and equal
credit opportunity and disclosure laws.
(iv) Binding Obligation. Each Receivable shall represent
the genuine, legal, valid, and binding payment obligation in writing of
the Obligor, enforceable by the holder thereof in accordance with its
terms subject to the effect of bankruptcy, insolvency, reorganization,
or other similar laws affecting the enforcement of creditors' rights
generally.
(v) No Government Obligor. None of the Receivables shall be
due from the United States of America or any State or from
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<PAGE> 27
any agency, department, or instrumentality of the United States
of America or any State.
(vi) Security Interest in Financed Vehicle. Immediately
prior to the sale, assignment, and transfer thereof, each Receivable
shall be secured by a validly perfected first security interest in
the Financed Vehicle in favor of Ford Motor Credit Company as secured
party or all necessary and appropriate actions shall have been
commenced that would result in the valid perfection of a first security
interest in the Financed Vehicle in favor of Ford Motor Credit Company
as secured party.
(vii) Receivables in Force. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed Vehicle
have been released from the lien granted by the related Receivable in
whole or in part.
(viii) No Waiver. No provision of a Receivable shall have
been waived.
(ix) No Defenses. No right of rescission, setoff,
counterclaim, or defense shall have been asserted or threatened with
respect to any Receivable.
(x) No Liens. To the best of the Seller's knowledge, no
liens or claims shall have been filed for work, labor, or materials
relating to a Financed Vehicle that shall be liens prior to, or equal
or coordinate with, the security interest in the Financed Vehicle
granted by the Receivable.
(xi) No Default. Except for payment defaults continuing for
a period of not more than thirty days as of the Cutoff Date, no
default, breach, violation, or event permitting acceleration under the
terms of any Receivable shall have occurred; and no continuing
condition that with notice or the lapse of time would constitute a
default, breach, violation, or event permitting acceleration under the
XII-3
<PAGE> 28
terms of any Receivable shall have arisen; and the Seller shall
not waive any of the foregoing.
(xii) Insurance. Ford Motor Credit Company, in accordance
with its customary procedures, shall have determined that the Obligor
has obtained or agreed to obtain physical damage insurance covering the
Financed Vehicle.
(xiii) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the
Receivables from the Seller to the Trust and that the beneficial
interest in and title to the Receivables not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been
sold, transferred, assigned, or pledged by the Seller to any Person
other than the Trustee. Immediately prior to the transfer and
assignment herein contemplated, the Seller had good and marketable
title to each Receivable free and clear of all Liens, encumbrances,
security interests, and rights of others and, immediately upon the
transfer thereof, the Trustee for the benefit of the Certificateholders
shall have good and marketable title to each Receivable, free and clear
of all Liens, encumbrances, security interests, and rights of others;
and the transfer has been perfected under the UCC.
(xiv) Valid Assignment. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction
under which the sale, transfer, and assignment of such Receivable under
the Agreement or pursuant to transfers of the Certificates shall be
unlawful, void, or voidable. The Seller has not entered into any
agreement with any account debtor that prohibits, restricts or
conditions the assignment of any portion of the Receivables.
XII-4
<PAGE> 29
(xv) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Trustee a first perfected ownership interest in the Receivables shall
have been made.
(xvi) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the UCC.
(xvii) No Simple Interest Receivables. None of the
Receivables are Simple Interest Receivables.
(xviii) One Original. There shall be only one original
executed copy of each Receivable.
(xix) Agreement. The representations and warranties in the
Agreement shall be true.
Section 12.2 Repurchase Upon Breach. The Seller, the Servicer, or
the Trustee, as the case may be, shall inform the other parties to the Agreement
and Ford Motor Credit Company promptly, in writing, upon the discovery of any
breach of the Seller's representations and warranties pursuant to Section 12.1.
Unless the breach shall have been cured by the last day of the second Collection
Period following the discovery, the Trustee shall enforce the obligation of the
Seller under the Purchase Agreement, and, if necessary, the Seller shall enforce
the obligation of Ford Motor Credit Company under the Purchase Agreement, to
repurchase any Receivable materially and adversely affected by the breach as of
such last day (or, at the Seller's option, the last day of the first Collection
Period following the discovery). In consideration of the purchase of the
Receivable, the Seller shall remit the Purchase Amount, in the manner specified
in Section 14.5. The sole remedy of the Trustee, the Trust, or the
Certificateholders with respect to a breach of the Seller's representations and
warranties pursuant to Section 12.1 shall be to require the Seller to repurchase
Receivables pursuant to this Section 12.2 or to enforce the obligation of Ford
Motor Credit Company to the Seller to repurchase such Receivables pursuant to
the Purchase Agreement.
XII-5
<PAGE> 30
Section 12.3 Custody of Receivable Files. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Trustee,
upon the execution and delivery of the Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, to act as the agent
of the Trustee as custodian of the following documents or instruments which are
hereby constructively delivered to the Trustee with respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the
Obligor or a photocopy thereof.
(iii) The original certificate of title or such documents
that the Servicer or Ford Motor Credit Company shall keep on file, in
accordance with its customary procedures, evidencing the security
interest of Ford Motor Credit Company in the Financed Vehicle.
(iv) Any and all other documents that the Servicer or the
Seller shall keep on file, in accordance with its customary procedures,
relating to a Receivable, an Obligor, or a Financed Vehicle.
The Servicer shall provide an Officer's Certificate to the Trustee
confirming that the Servicer has received on behalf of the Trustee all the
documents and instruments necessary for the Servicer to act as the agent of the
Trustee for the purposes set forth in this Section, including the documents
referred to herein, and the Trustee is hereby authorized to rely on such
Officer's Certificate.
Section 12.4 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer shall hold the Receivable Files on
behalf of the Trustee for the use and benefit of all present and future
Certificateholders, and maintain such accurate and complete accounts, re-
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cords, and computer systems pertaining to each Receivable File as shall enable
the Trustee to comply with these Standard Terms and Conditions of Agreement.
In performing its duties as custodian the Servicer shall act with reasonable
care, using that degree of skill and attention that the Servicer exercises with
respect to the receivable files relating to all comparable automotive
receivables that the Servicer services for itself or others. In accordance
with its customary practices with respect to its retail installment sale
contracts, the Servicer shall conduct, or cause to be conducted, periodic
audits of the Receivable Files held by it under the Agreement, and of the
related accounts, records, and computer systems, in such a manner as shall
enable the Trustee to verify the accuracy of the Servicer's record keeping.
The Servicer shall promptly report to the Trustee any failure on its part to
hold the Receivable Files and maintain its accounts, records, and computer
systems as herein provided and promptly take appropriate action to remedy any
such failure. Nothing herein shall be deemed to require an initial review or
any periodic review by the Trustee of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to the
Agreement, or at such other office as shall be specified to the Trustee by
written notice not later than 90 days after any change in location. The
Servicer shall make available to the Trustee or its duly authorized
representatives, attorneys, or auditors a list of locations of the Receivable
Files, the Receivable Files, and the related accounts, records, and computer
systems maintained by the Servicer at such times as the Trustee shall instruct.
Section 12.5 Instructions; Authority to Act. All instructions from
the Trustee shall be in writing and signed by a Trust Officer, and the Servicer
shall be deemed to have received proper instructions with respect to the
Receivable Files upon its receipt of such written instructions.
Section 12.6 Custodian's Indemnification. The Servicer as custodian
shall indemnify the Trustee for any and all liabilities, obligations, losses,
compensatory damages, payments, costs, or expenses of any kind whatsoever that
may be imposed on, incurred, or asserted
XII-7
<PAGE> 32
against the Trustee as the result of any improper act or omission in
any way relating to the maintenance and custody by the Servicer as custodian of
the Receivable Files; provided, however, that the Servicer shall not be liable
for any portion of any such amount resulting from the willful misfeasance, bad
faith, or negligence of the Trustee.
Section 12.7 Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section
12.7. If Ford Motor Credit Company shall resign as Servicer in accordance with
the provisions of the Agreement or if all of the rights and obligations of the
Servicer shall have been terminated under Section 19.01, the appointment of the
Servicer as custodian shall be terminated by the Trustee, or by the Holders of
Class A Certificates evidencing not less than 25% of the Class A Certificate
Balance, in the same manner as the Trustee or such Holders may terminate the
rights and obligations of the Servicer under Section 19.1. As soon as
practicable after any termination of such appointment, the Servicer shall
deliver the Receivable Files and the related accounts and records maintained by
the Servicer to the Trustee or the Trustee's agent at such place or places as
the Trustee may reasonably designate.
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ARTICLE XIII
Administration and Servicing of Receivables
Section 13.1 Duties of Servicer. The Servicer shall manage, service,
administer, and make collections on the Receivables with reasonable care, using
that degree of skill and attention that the Servicer exercises with respect to
all comparable receivables that it services for itself or others. The
Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on such Receivables, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information
to Obligors, accounting for collections, furnishing monthly and annual
statements to the Trustee with respect to distributions, and making Advances
pursuant to Section 14.4. The Servicer shall follow its customary standards,
policies, and procedures in performing its duties as Servicer. Without
limiting the generality of the foregoing, the Servicer is authorized and
empowered by the Trustee to execute and deliver, on behalf of itself, the
Trust, the Certificateholders, or the Trustee or any of them, any and all
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to such
Receivables or to the Financed Vehicles securing such Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable, the Trustee
(in the case of a Receivable other than a Purchased Receivable) shall thereupon
be deemed to have automatically assigned, solely for the purpose of collection,
such Receivable to the Servicer. If in any enforcement suit or legal
proceeding it shall be held that the Servicer may not enforce a Receivable on
the ground that it shall not be a real party in interest or a holder entitled
to enforce the Receivable, the Trustee shall, at the Servicer's expense and
direction, take steps to enforce the Receivable, including bringing suit in its
name or the name of the Certificateholders. The Trustee shall furnish the
Servicer with any powers of attorney and other documents reasonably necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. The Servicer, at its expense, shall obtain on
behalf of the Trust all licenses, if any, required by the laws of any
jurisdiction to be held by the Trust in connection with
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ownership of the Receivables, and shall make all filings and pay all
fees as may be required in connection therewith during the term hereof.
Section 13.2 Collection of Receivable Payments. The Servicer shall
make reasonable efforts to collect all payments called for under the terms
and provisions of such Receivables as and when the same shall become due and
shall follow such collection procedures as it follows with respect to all
comparable receivables that it services for itself or others. The Servicer may
grant extensions, rebates, or adjustments on a Receivable, which shall not, for
the purposes of the Agreement (other than Section 13.6 hereof), modify the
original due dates and amounts of the Scheduled Payments. The Servicer may in
its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Receivable.
Section 13.3 Realization Upon Receivables. On behalf of the Trust,
the Servicer shall use reasonable efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of the
Financed Vehicle securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. The Servicer shall follow
such customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of comparable receivables, which may include
reasonable efforts to realize upon any Dealer Recourse and selling the Financed
Vehicle at public or private sale. The foregoing shall be subject to the
provision that, in any case in which the Financed Vehicle shall have suffered
damage, the Servicer shall not expend funds in connection with the repair or
the repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession will increase the Liquidation
Proceeds by an amount greater than the amount of such expenses.
Section 13.4 [Reserved]
Section 13.5 Maintenance of Security Interests in Financed Vehicles.
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to maintain perfection of the security interest
created by each Receivable in the related Fi-
XIII-2
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nanced Vehicle. The Trustee hereby authorizes the Servicer to take such steps
as are necessary to re-perfect such security interest on behalf of the Trust in
the event of the relocation of a Financed Vehicle or for any other reason.
Section 13.6 Covenants of Servicer. The Servicer shall not release
the Financed Vehicle securing each such Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment
in full by or on behalf of the Obligor thereunder or repossession, nor shall
the Servicer impair the rights of the Certificateholders in the Receivables,
nor shall the Servicer change the Annual Percentage Rate with respect to any
Receivable, nor shall the Servicer modify the number or amount of Scheduled
Payments under a Receivable.
Section 13.7 Purchase of Receivables Upon Breach. (a) The Servicer
or the Trustee shall inform the other party promptly, in writing, upon the
discovery of any breach pursuant to Section 13.2, 13.5 or 13.6. Unless the
breach shall have been cured by the last day of the second Collection Period
following such discovery (or, at the Servicer's election, the last day of the
first following Collection Period), the Servicer shall purchase any Receivable
materially and adversely affected by such breach as determined by the Trustee
(which shall include any Receivable as to which a breach of Section 13.6 has
occurred). In consideration of the purchase of such Receivable, the Servicer
shall remit the Purchase Amount in the manner specified in Section 14.5. For
purposes of this Section 13.7, the Purchase Amount shall consist in part of a
release by the Servicer of all rights of reimbursement with respect to
Outstanding Advances on the Receivable. The sole remedy of the Trustee, the
Trust, or the Certificateholders with respect to a breach pursuant to Section
13.2, 13.5 or 13.6 shall be to require the Servicer to purchase Receivables
pursuant to this Section 13.7.
(b) In the event that the Obligor with respect to a Receivable
shall have been declared bankrupt and at such time or thereafter the Servicer's
records relating to such Receivable shall record that the periodic payment
thereon has been reduced at or since such declaration and that such Receivable
has been extended
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beyond September 30, 1999, the Servicer shall pay an amount equal to the amount
of a prepayment which would cause such a reduction in the amount of the new
periodic payment over the remainder of the original scheduled life of the
Receivable.
Section 13.8 Servicer Fee. The Servicer shall be entitled to any
interest earned on the amounts deposited in the Collection Account and the
Payahead Account during such Collection Period plus all late fees, prepayment
charges (including, in the case of a Receivable that provides for payments
according to the "Rule of 78's" and that is prepaid in full, the difference
between the Principal Balance of such Receivable (plus accrued interest to the
date of prepayment) and the principal balance of such Receivable computed
according to the "Rule of 78's"), and other administrative fees and expenses or
similar charges allowed by applicable law with respect to Receivables during
such Collection Period (the "Supplemental Servicing Fee"). The Servicer also
shall be entitled to the Servicing Fee, as provided herein.
Section 13.9 Servicer's Certificate. (a) On or about the tenth day
of each calendar month, the Servicer shall deliver to the Trustee (with a copy
to each of the rating agencies requested to provide a rating on the Class A
Certificates) a Servicer's Certificate containing all information necessary to
make the distributions pursuant to Section 14.6 (including, if required,
withdrawals from or deposits to the Payahead Account and Advances by the
Servicer pursuant to Section 14.4) for the Collection Period preceding the date
of such Servicer's Certificate, and all information necessary for the Trustee
to send statements to Certificateholders pursuant to Section 14.9. Receivables
purchased or to be purchased by the Servicer or the Seller shall be identified
by the Servicer by the Seller's account number with respect to such Receivable
(as specified in Schedule A of the Agreement).
(b) On or about the fifth (but in no event later than the tenth)
calendar day of each calendar month, the Servicer shall deliver to the
underwriter(s) of the Class A Certificates the Class A Certificate Factor as of
the close of business on the Distribution Date occurring in that month.
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<PAGE> 37
Section 13.10 Annual Statement as to Compliance; Notice of Default.
(a) The Servicer shall deliver to the Trustee and to each of the rating
agencies requested by the Seller or an affiliate to provide a rating on the
Class A Certificates which is then rating the Class A Certificates, on or
before April 30 of each year beginning April 30, 1995, an Officer's
Certificate, dated as of December 31 of the preceding calendar year, stating
that (i) a review of the activities of the Servicer during the preceding
12-month (or shorter) period and of its performance under the Agreement has
been made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Servicer has fulfilled all its
obligations under the Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof. A copy of such
certificate and the report referred to in Section 13.11 may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
(b) The Servicer shall deliver to the Trustee and to each of the
rating agencies requested by the Seller or an affiliate to provide a rating on
the Class A Certificates which is then rating the Class A Certificates,
promptly after having obtained knowledge thereof, but in no event later than 5
Business Days thereafter, written notice in an Officer's Certificate of any
event which with the giving of notice or lapse of time, or both, would become
an Event of Default under Section 19.1. The Seller shall deliver to the
Trustee and to each of such rating agencies then rating the Class A
Certificates, promptly after having obtained knowledge thereof, but in no event
later than 5 Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under clause (ii) of Section 19.1.
Section 13.11 Annual Independent Certified Public Accountant's Report.
The Servicer shall cause a firm of independent certified public accountants,
who may also render other services to the Servicer or to the Seller or to Ford
Motor Credit Company, to deliver to the Trustee and each of the rating agencies
then rating the Class A Certificates on or before April 30 of each year
XIII-5
<PAGE> 38
beginning April 30, 1995 with respect to the prior calendar year a report
addressed to the Board of Directors of the Servicer and to the Trustee, to the
effect that such firm has audited the financial statements of the Servicer and
issued its report thereon and that such audit (1) was made in accordance with
generally accepted auditing standards, (2) included tests relating to
automotive loans serviced for others in accordance with the requirements of the
Uniform Single Audit Program for Mortgage Bankers (the "Program"), to the
extent the procedures in such Program are applicable to the servicing
obligations set forth in the Agreement, and (3) except as described in the
report, disclosed no exceptions or errors in the records relating to automobile
and light truck loans serviced for others that, in the firm's opinion,
paragraph four of such Program requires such firm to report.
The Report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
Section 13.12 Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to the Certificateholders
access to the Receivables Files in such cases where the Certificateholder shall
be required by applicable statutes or regulations to review such documentation.
Access shall be afforded without charge, but only upon reasonable request and
during the normal business hours at the respective offices of the Servicer.
Nothing in this Section shall affect the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section 13.12.
Section 13.13 Servicer Expenses. The Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and reports
to Certificateholders.
XIII-6
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ARTICLE XIV
Distributions; Subordination Spread Account;
Statements to Certificateholders
Section 14.1 Accounts. (a) The Servicer shall establish the
Collection Account and the Certificate Account in the name of the Trustee for
the benefit of the Certificateholders, and shall establish the Payahead Account
in the name of the Trustee on behalf of the Obligors. The Collection Account
and the Payahead Account shall be segregated trust accounts initially
established with the Trustee and maintained with the Trustee so long as (i) the
deposits of the Trustee have the Required Deposit Rating or (ii) the Collection
Account and the Payahead Account are maintained in the Corporate Trust
Department of the Trustee; provided, however, that all amounts held in the
Collection Account and the Payahead Account shall, to the extent permitted by
applicable laws, rules, and regulations, be invested as directed by the
Servicer by the bank or trust company then maintaining the accounts in
interest-bearing time deposits of such bank or trust company (provided that
such investments shall have the Required Deposit Rating) that mature not later
than the Distribution Date for the Collection Period to which such amounts
relate and any such time deposits so acquired shall be held until maturity and
provided, further that if the Servicer is required to remit collections daily
to the Collection Account pursuant to Section 14.2 then such remittances, and
any remittances to the Payahead Account, shall be invested at the written
direction of the Servicer as to specific investments in investments rated A-1+
by Standard & Poor's Ratings Group and P-1 by Moody's Investors Service, Inc.
or in other investments as may be permitted by each of such rating agencies, in
each case maturing in immediately available funds on the Distribution Date next
succeeding the date of investment. Such written direction shall certify that
any such investment is authorized by this Section. The Certificate Account
shall be a segregated trust account established and maintained with the
Trustee, and the amounts in such account shall not be invested. Should the
short-term unsecured debt obligations of the Trustee no longer have the
Required Deposit Rating then, unless the Collection Account and the Payahead
Account are maintained in the Corporate Trust Department of the Trustee, the
Servicer shall as soon as
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is reasonably practical, with the Trustee's assistance as necessary, cause the
Collection Account and the Payahead Account (i) to be moved to a bank or trust
company, the short-term unsecured debt obligations of which shall have the
Required Deposit Rating or (ii) to be moved to the Corporate Trust Department
of the Trustee.
(b) Notwithstanding the provisions of clause (a) above and of the
third paragraph of Section 14.6(a), for so long as (i) Ford Motor Credit
Company is the Servicer, (ii) the rating of Ford Motor Credit Company's
short-term unsecured debt is at least P-1 by Moody's Investors Service, Inc.
and is at least A-1 by Standard & Poor's Ratings Group and (iii) no Event of
Default shall have occurred (each, a "Monthly Remittance Condition"), Payaheads
need not be remitted to and deposited in the Payahead Account but instead may
be remitted to and held by the Servicer. So long as each Monthly Remittance
Condition is satisfied, the Servicer shall not be required to segregate or
otherwise hold separate any Payaheads remitted to the Servicer as aforesaid but
shall be required to remit Payaheads to the Certificate Account in accordance
with Section 14.6(a)(ii). At any time as any Monthly Remittance Condition is
not satisfied, the Servicer shall deposit in the Payahead Account the amount of
any Payaheads then held or received by it (which amount shall be at least equal
to the Payahead Balance as of the close of business on the last day of the
immediately preceding Collection Period). Notwithstanding the foregoing, if a
Monthly Remittance Condition is not satisfied the Servicer may utilize, with
respect to Payaheads, an alternative remittance schedule (which may include the
remittance schedule utilized by the Servicer before the Monthly Remittance
Condition became unsatisfied), if the Servicer provides to the Trustee written
confirmation from each rating agency which has an outstanding rating on the
Class A Certificates and was requested by the Seller or an affiliate to rate
the Class A Certificates that such alternative remittance schedule will not
result in the downgrading or withdrawal by such rating agencies of the ratings
then assigned to the Class A Certificates. The Trustee shall not be deemed to
have knowledge of any event or circumstance under clause (iii) of the first
sentence of this Section 14.1(b) that would require remittance of the Payaheads
to the Payahead Account unless the Trustee has received notice of such event or
circumstance from the Seller or the Servicer in
XIV-2
<PAGE> 41
an Officer's Certificate or from the Holders of Class A Certificates evidencing
not less than 25% of the Class A Certificate Balance or unless a Trustee
Officer in the Corporate Trust Office with knowledge hereof and familiarity
herewith has actual knowledge of such event or circumstance.
Section 14.2 Collections. The Servicer shall remit daily to the
Collection Account (i) all payments by or on behalf of the Obligors (including
Payaheads on the Receivables but excluding Purchased Receivables) and (ii) all
Liquidation Proceeds, both as collected during the Collection Period. Ford
Motor Credit Company, so long as it is acting as the Servicer, may make
remittances of collections on a less frequent basis than that specified in the
immediately preceding sentence. It is understood that such less frequent
remittances may be made only on the specific terms and conditions set forth
below in this Section 14.2 and only for so long as such terms and conditions
are fulfilled. Accordingly, notwithstanding the provisions of the first
sentence of this Section 14.2, the Servicer shall remit collections received
during a Collection Period to the Collection Account in immediately available
funds on the related Distribution Date but only for so long as each Monthly
Remittance Condition is satisfied. Notwithstanding the foregoing, if a Monthly
Remittance Condition is not satisfied the Servicer may utilize an alternative
remittance schedule (which may include the remittance schedule utilized by the
Servicer before the Monthly Remittance Condition became unsatisfied), if the
Servicer provides to the Trustee written confirmation from each rating agency
which has an outstanding rating on the Class A Certificates and was requested
by the Seller or an affiliate to rate the Class A Certificates that such
alternative remittance schedule will not result in the downgrading or
withdrawal by such rating agencies of the ratings then assigned to the Class A
Certificates. The Trustee shall not be deemed to have knowledge of any event
or circumstance under clause (iii) of the definition of Monthly Remittance
Condition that would require daily remittance by the Servicer to the Collection
Account unless the Trustee has received notice of such event or circumstance
from the Seller or the Servicer in an Officer's Certificate or from the Holders
of Class A Certificates evidencing not less than 25% of the Class A Certificate
Balance or a Trustee Officer in the Corporate Trust Office with
XIV-3
<PAGE> 42
knowledge hereof or familiarity herewith has actual knowledge of such event or
circumstance. For purposes of this Article XIV the phrase "payments by or on
behalf of Obligors" shall mean payments made by Persons other than the Servicer
or by other means.
Section 14.3 Application of Collections. For the purposes of this
Agreement, as of the close of business on the last day of each Collection
Period, all collections for the Collection Period with respect to each
Receivable (other than a Purchased Receivable) shall be applied by the Servicer
as follows:
Payments by or on behalf of the Obligor which are not late fees,
prepayment charges, or other administrative fees and expenses, or similar
charges, applied in accordance with Section 13.8 shall be applied first to
reduce Outstanding Advances made with respect to such Receivable, as
described in Section 14.4(a) below. Next, any excess shall be applied to the
Scheduled Payment with respect to such Receivable. Finally, any remaining
excess (except partial prepayments which cause a reduction in the Obligor's
periodic payment to below the Scheduled Payment as of the Cutoff Date) shall
be added to the Payahead Balance, and shall be applied to prepay the
Receivable, but only if the sum of such excess and the previous Payahead
Balance shall be sufficient to prepay the Receivable in full. Otherwise, any
remaining excess payments shall constitute a Payahead, and shall increase the
Payahead Balance.
Section 14.4 Advances. (a) As of the close of business on the last
day of each Collection Period, if the payments by or on behalf of the Obligor
on a Receivable (other than a Purchased Receivable) after application under
14.3 shall be less than the Scheduled Payment, whether as a result of any
extension granted to the Obligor or otherwise, the Payahead Balance, if any,
with respect to such Receivables shall be applied by the Servicer to the extent
of the shortfall, and such Payahead Balance shall be reduced accordingly.
Next, subject to the following sentence, the Servicer shall make an Advance of
any remaining shortfall. The Servicer
XIV-4
<PAGE> 43
will be obligated to make an Advance in respect of a Receivable only to the
extent that the Servicer, in its sole discretion, shall determine that the
Advance shall be recoverable from subsequent collections or recoveries on any
Receivable. With respect to each Receivable, the Advance shall increase
Outstanding Advances. Outstanding Advances shall be reduced by subsequent
payments by or on behalf of the Obligor, collections of Liquidation Proceeds
and payments of the Purchase Amount.
If the Servicer shall determine that an Outstanding Advance with
respect to any Receivable shall not be recoverable, the Servicer shall be
reimbursed from any collections made on other Receivables in the Trust, and
Outstanding Advances with respect to such Receivable shall be reduced
accordingly.
(b) In the event that an Obligor shall prepay a Receivable in
full, if the related contract did not require such Obligor to pay a full
month's interest, for the month of prepayment, at the Annual Percentage Rate,
the Servicer shall make an unreimbursable advance of the amount of such
interest.
Section 14.5 Additional Deposits. The Servicer shall deposit in the
Collection Account the aggregate Advances pursuant to Section 14.4(a) and the
aggregate advances pursuant to Section 14.4(b). To the extent that the
Servicer fails to make an advance pursuant to Section 14.4(b) on the date
required, the Class A Agent shall withdraw such amount from the Subordination
Spread Account and deposit such amount in the Collection Account. The Servicer
and the Seller shall deposit in the Collection Account the aggregate Purchase
Amount with respect to Purchased Receivables and the Servicer shall deposit
therein all amounts to be paid under Sections 21.2 and 13.7(b). All such
deposits with respect to a Collection Period shall be made, in immediately
available funds, on the Distribution Date related to such Collection Period.
Section 14.6 Distributions.
(a) On each Distribution Date, the Trustee shall cause to be made
the following transfers and distributions in the amounts set forth in the
Servicer's Certificate for such Distribution Date:
XIV-5
<PAGE> 44
(i) From the Collection Account to the Certificate Account,
in immediately available funds, the entire amount then on deposit in the
Collection Account; provided, however, that in the event that the Servicer is
required to make deposits to the Collection Account on a daily basis pursuant
to Section 14.2, the amount of the funds transferred from the Collection
Account to the Certificate Account will include only those funds that were
deposited in the Collection Account for the Collection Period related to such
Distribution Date.
(ii) From the Payahead Account, or from the Servicer in the
event the provisions of Section 14.1(b) above are applicable, to the
Certificate Account, in immediately available funds, (x) the portion of
Payaheads constituting Scheduled Payments or prepayments in full, required by
Sections 14.3 and 14.4(a), and (y) the Payahead Balance, if any, relating to
any Purchased Receivable.
(iii) From the Certificate Account to the Payahead Account, or
to the Servicer in the event the provisions of Sections 14.1(b) above are
applicable, in immediately available funds, the aggregate Payaheads required
by Section 14.3 for the Collection Period related to such Distribution Date.
(iv) From the Certificate Account to the Servicer, in
immediately available funds, repayment of Outstanding Advances pursuant to
Section 14.4(a).
(b) Prior to each Distribution Date, the Servicer shall on each
Determination Date calculate the Total Available Amount, the Available
Interest, the Available Principal, the Class A Distributable Amount and the
Class B Distributable Amount and, based on the Total Available Amount and the
other distributions to be made on such Distribution Date, determine the amount
distributable to Certificateholders of each Class.
XIV-6
<PAGE> 45
(c) On each Distribution Date, the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 13.09) shall, subject to subsection (d)
hereof, make the following distributions in the following order of priority:
(i) first, to the Servicer, from the Available Interest, the
Servicer Fee and all unpaid Servicer Fees from prior Collection Periods;
(ii) second, to the Class A Certificateholders:
(A) from the Class A Percentage of the Available
Interest (except as provided in the proviso to subsection (d)(i) below) (as
such Available Interest has been reduced by Servicer Fee payments), an amount
equal to the sum of the Class A Interest Distributable Amount and any
outstanding Class A Interest Carryover Shortfall as of the close of the
preceding Distribution Date (plus, to the extent not otherwise
provided for, interest on such Class A Interest Carryover Shortfall at the
Pass-Through Rate from such preceding Distribution Date through the current
Distribution Date, to the extent permitted by law);
(B) from the Class A Percentage of the Available
Principal, an amount equal to the sum of the Class A Principal Distributable
Amount and any outstanding Class A Principal Carryover Shortfall as of
the close of the preceding Distribution Date;
(iii) third, to the Class B Certificateholders subject to
Section 14.7(d) below:
(A) from the Available Interest (as such Available
Interest has been reduced by payments pursuant to clauses (i) and (ii)
above), an amount equal to the sum of the Class B Interest
Distributable Amount and any outstanding Class B Interest Carryover Short-
XIV-7
<PAGE> 46
fall as of the close of the preceding Distribution Date; and
(B) from the Class B Percentage of the Available
Principal, an amount equal to the sum of the Class B Principal Distributable
Amount and any outstanding Class B Principal Carryover Shortfall as of
the close of the preceding Distribution Date;
provided, however, that amounts otherwise distributable to the Class B
Certificateholders shall instead be deposited by the Trustee in the
Subordination Spread Account to the extent provided in Section 14.7(c) hereof
to cover any Subordination Spread Account deficiency resulting from payments on
such Distribution Date from the Subordination Spread Account pursuant to
Section 14.6(d) or otherwise.
(d) The rights of the Class B Certificateholders to receive
distributions in respect of the Class B Certificates shall be and hereby are
subordinated to the rights of the Class A Certificateholders to receive
distributions in respect of the Class A Certificates and the rights of the
Servicer to receive the Servicing Fee (and any accrued and unpaid Servicer Fees
from prior Collection Periods) in the event of delinquency or defaults on the
Receivables. Such subordination shall be effected as follows, and all payments
shall be effected pursuant to clause (i) below prior to any payments pursuant
to clause (ii):
(i) If the Class A Percentage of the Available Interest (as
such Available Interest has been reduced by Servicer Fee payments) is less
than the sum of the Class A Interest Distributable Amount and any Class A
Interest Carryover Shortfall (including interest on such Shortfall as
provided in paragraph (c)(ii)(A) above) from the preceding Distribution Date,
the Class A Certificateholders shall be entitled to receive distributions in
respect of such deficiency first, from the Class B Percentage of the
Available Interest; second, if such amounts are insufficient, from amounts on
deposit in the Subordination Spread Account; and third, if such amounts are
insufficient,
XIV-8
<PAGE> 47
from the Class B Percentage of the Available Principal; provided, however,
that if the amount required to be advanced by the Servicer pursuant to
Section 14.4(b) for the Collection Period shall not have been advanced by the
Servicer, the resulting shortfall shall be allocated pro rata among the Class
A Certificates and the Class B Certificates and any such shortfall with
respect of the Class A Certificates (and any Class A Carryover Shortfalls
attributable thereto) shall be paid only from amounts that are or become
available in the Subordination Spread Account after giving effect to any
deposit thereto on such day. Upon either the written instructions of the
Servicer or the written instructions of the Trustee (based solely on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 13.9), the Class A Agent shall release
from the amounts available in the Subordination Spread Account the amounts
required pursuant to Section 14.6(c)(ii) above and distribute such amounts to
the Trustee.
(ii) If the Class A Percentage of the Available Principal is
less than the sum of the Class A Principal Distributable Amount and any Class
A Principal Carryover Shortfall from the preceding Distribution Date, the
Class A Certificateholders shall be entitled to receive distributions in
respect of such deficiency first, from the Class B Percentage of the
Available Principal; second, if such amounts are insufficient, from amounts
on deposit in the Subordination Spread Account; and third, if such
amounts are insufficient, from the Class B Percentage of the Available
Interest. Upon either the written instructions of the Servicer or the
written instructions of the Trustee (based solely on the information
contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 13.9), the Class A Agent shall release
from the amounts available in the Subordination Spread Account the amounts
required pursuant to
XIV-9
<PAGE> 48
Section 14.6(c)(ii) above and distribute such amounts to the Trustee.
(e) Subject to Section 21.1 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of any Class of
record on the preceding Record Date either by wire transfer, in immediately
available funds to the account of such holder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder is the Seller or a
Clearing Agency and shall have provided to the Servicer appropriate
instructions prior to such Distribution Date, or, if not, by check mailed to
such Certificateholder (such check to be mailed as soon as reasonably
practicable on or after such Distribution Date) at the address of such holder
appearing in the Certificate Register, the amounts to be distributed to such
Certificateholder pursuant to such holder's Certificates.
Section 14.7 Subordination; Subordination Spread Account; Priority of
Distributions.
(a) (i) In order to effectuate the subordination provided for
herein, there shall be established and maintained with the Class A Agent a
separate trust account (the "Subordination Spread Account") to include the
money and other property deposited and held therein pursuant to this subsection
14.7(a)(i) and subsection 14.7(a)(ii). On the date of issuance of the
Certificates, the Seller shall deposit the Subordination Initial Deposit, if
any, into the Subordination Spread Account. The Subordination Spread Account
shall not be part of the Trust. Each of the Class A Certificateholders, on
behalf of itself and its successors and assigns (including, but not limited to,
any future Holder of a Class A Certificate) hereby appoints Chemical Bank,
acting in its capacity as agent for the purposes of this Section 14.7 and not
as Trustee, with respect to the Subordination Spread Account and the
Subordination Spread Account Property (the "Class A Agent"), and the Class A
Agent hereby accepts such appointment.
(ii) In order to provide for the prompt payment to the Class A
Certificateholders and the Servicer, in accordance with subsections 14.6(c)
XIV-10
<PAGE> 49
and 14.6(d), to give effect to the subordination provided for herein, and to
assure availability of the amounts maintained in the Subordination Spread
Account:
(A) The Seller, as initial holder of the Class B
Certificates, hereby sells, conveys, and transfers to the Class A Agent and
its successors and assigns, the Subordination Initial Deposit and all
proceeds thereof, subject, however, to the limitations set forth below, and
solely for the purpose of providing for payment of the Class A Distributable
Amount provided for in Section 14.6 and this Section; and
(B) The Seller, as initial holder of the Class B
Certificates, on behalf of itself and its successors and assigns hereby
sells, conveys, and transfers to the Class A Agent, all its right, title, and
interest in and to the Subordination Spread Account, subject, however, to the
limitations set forth below, and all proceeds of the foregoing, including,
without limitation, all other amounts and investments held from time to
time in the Subordination Spread Account (whether in the form of deposit
accounts, Physical Property, book- entry securities, or otherwise) subject,
however, to the limitations set forth below, and solely for the purpose of
providing for payment of the Class A Distributable Amount provided for in
Section 14.06 and this Section;
(all of the foregoing, subject to the limitations set forth below, the
"Subordination Spread Account Property"), to have and to hold all the aforesaid
property, rights and privileges unto the Class A Agent, its successors and
assigns, in trust for the uses and purposes, and subject to the terms and
provisions, set forth in this Section 14.7. The Class A Agent hereby
acknowledges such transfer and accepts the trust hereunder and shall hold and
distribute the Subordination Spread Account Property in accordance with the
terms and provisions of this Section 14.7.
XIV-11
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(i) The trust established pursuant to this Section 14.7
shall not under any circumstances be deemed to be part of or otherwise
includable in the Trust.
(b) On each Distribution Date, if the amount of the Subordination
Spread Account (after giving effect to all payments to be made from such
Account pursuant to Section 14.6(d) on such Date) is less than the Specified
Subordination Spread Account Balance for such Distribution Date, the Servicer
shall instruct the Trustee, after payment of any amounts required to be
distributed to Class A Certificateholders and the Servicer, to withhold from
amounts otherwise distributable to the Class B Certificateholders and not
otherwise distributed to Class A Certificateholders or the Servicer and deposit
in the Subordination Spread Account all such amounts, or such lesser amounts as
are sufficient to restore the amount in the Subordination Spread Account to the
Specified Subordination Spread Account Balance. For purposes of calculating
the Class B Certificate Balance, any amounts so deposited will be deemed to
have been paid to the Class B Certificateholders. Subject to Section 14.7(d),
if the amount of the Subordination Spread Account (after taking into account
any withdrawals therefrom pursuant to Section 14.7(e)) is greater than the
Specified Subordination Spread Account Balance for such Distribution Date, the
Class A Agent shall upon the written instruction of the Servicer release to the
Trustee and, the Trustee at the instruction of the Servicer, shall distribute
the amount of the excess to the Class B Certificateholders on a pro rata basis
in accordance with their ownership of the Class B Certificates. Amounts
properly distributed to the Class B Certificateholders pursuant to this Section
14.7(c), either directly from the Certificate Account without deposit in the
Subordination Spread Account or from the Subordination Spread Account, shall be
deemed released from the trust established by this Section 14.7, and Class B
Certificateholders shall in no event thereafter be required to refund any such
distributed amounts.
(c) (i) Amounts held in the Subordination Spread Account shall be
invested in the manner specified in Section 14.1(a), in accordance with written
instructions from the holders of Class B Certificates evidencing not less than
51% of the Class B Certificate
XIV-12
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Balance or their designee, and such investments shall not be sold or disposed
of prior to their maturity. All such investments shall be made in the name of
the Class A Agent or its nominee and all income and gain realized thereon shall
be solely for the benefit of the Class B Certificateholders and shall be
payable by the Class A Agent to the Class B Certificateholders on each
Distribution Date.
(ii) With respect to the Subordination Spread Account
Property, the Class B Certificateholders and the Class A Agent agree that:
(A) Any Subordination Spread Account Property that is
held in deposit accounts shall be held solely in the name of the Class A
Agent at one or more depository institutions having the Required Deposit
Rating. Each such Deposit Account shall be subject to the exclusive
custody and control of the Class A Agent, and the Class A Agent shall have
sole signature authority with respect thereto.
(B) Any Subordination Spread Account Property that
constitutes Physical Property shall be delivered to the Class A Agent in
accordance with paragraph (a) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Class A Agent or a
financial intermediary (as such term is defined in Section 8-313(4) of the
UCC) acting solely for the Class A Agent.
(C) Any Subordination Spread Account Property that is a
book-entry security held through the Federal Reserve System pursuant to
federal book-entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be maintained by the
Class A Agent, pending maturity or disposition, through continued book-entry
registration of such Subordination Spread Account Property as described in
such paragraph.
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(D) Property of a type which is not capable of being
delivered to the Class A Agent in accordance with the definition of
"Delivery" shall not constitute Subordination Spread Account Property.
Effective upon Delivery of any Subordination Spread Account Property in
the form of Physical Property or book-entry securities, the Class A Agent shall
be deemed to have represented that it has purchased such Subordination Spread
Account Property for value, in good faith, and without notice of any adverse
claim thereto.
(iii) Investment earnings attributable to the Subordination
Spread Account Property and proceeds therefrom shall be held by the Class A
Agent for the benefit of the Class B Certificateholders. Investment earnings
attributable to the Subordination Spread Account Property shall not be
available to satisfy the subordination provisions of this Agreement and shall
not otherwise be subject to any claims or rights of the Class A
Certificateholders or the Servicer. The Class A Agent shall cause all
investment earnings attributable to the Subordination Spread Account to be
distributed on each Distribution Date to the Class B Certificateholders.
Notwithstanding the foregoing, the Subordination Spread Account may contain
at any time uninvested cash in an amount not to exceed the maximum amount
insured by the FDIC without giving rise to any obligation to withdraw such
cash from the Subordination Spread Account. Realized losses, if any, on
investment of the Subordination Spread Account Property shall be charged
first against undistributed investment earnings attributable to the
Subordination Spread Account Property and then against the Subordination
Spread Account Property.
(iv) The Class A Agent shall not enter into any
subordination or intercreditor agreement with respect to the
Subordination Spread Account Property.
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(d) If the Servicer pursuant to Section 14.4 determines on
any Determination Date that it is required to make an Advance and does not do so
from its own funds, the Servicer shall promptly instruct the Class A Agent in
writing to withdraw funds, in an amount specified by the Servicer, from the
Subordination Spread Account and deposit them in the Certificate Account
maintained with the Trustee to cover any shortfall. Such payment shall be
deemed to have been made by the Servicer pursuant to Section 14.4 for purposes
of making distributions pursuant to this Agreement, but shall not otherwise
satisfy the Servicer's obligation to deliver the amount of the Advances to the
Class A Agent, and the Servicer shall within two Business Days replace any funds
in the Subordination Spread Account so used.
(e) Upon termination of this Agreement in accordance with
Section 21.2, any amounts on deposit in the Subordination Spread Account shall
be paid to the then holders of the Class B Certificates.
Section 14.8 Net Deposits. For so long as (i) Ford Motor Credit
Company shall be the Servicer, (ii) the Servicer shall be entitled pursuant to
Section 14.2 to remit collections on a monthly rather than daily basis, and
(iii) the Servicer shall be entitled pursuant to Section 14.1(b) to retain
Payaheads rather than deposit them in the Payahead Account, Ford Motor Credit
Company (in whatever capacity) may make the remittances pursuant to Sections
14.2 and 14.5 above, net of amounts to be distributed to Ford Motor Credit
Company (in whatever capacity) pursuant to Section 14.6(c). Nonetheless, the
Servicer shall account for all of the above described remittances and
distributions except for the Supplemental Servicing Fee in the Servicer's
Certificate as if the amounts were deposited and/or transferred separately.
Section 14.9 Statements to Class A Certificateholders. On each
Distribution Date, the Trustee shall include with each distribution to each
Class A Certificateholder, a statement (which statement shall also be provided
to each rating agency then rating the Class A Certificates) based on information
in the Servicer's Certificate furnished pursuant to Section 13.9, setting forth
for the Collection Period relating to such Distribution Date the following
information:
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(i) the amount of such distribution allocable to
principal;
(ii) the amount of such distribution allocable to
interest;
(iii) the Pool Balance as of the close of business on the
last day of the preceding Collection Period;
(iv) the amount of the Servicing Fee paid to the
Servicer with respect to the related Collection Period and the Class A
Certificateholder's Class A Percentage of the Servicing Fee and the amount
of any unpaid Servicing Fees and the change in such amount from that of the
prior Distribution Date;
(v) the amount of the Class A Principal and Interest
Carryover Shortfalls, if any, on such Distribution Date and the change in the
Class A Principal and Interest Carryover Shortfalls from the preceding
Distribution Date;
(vi) the Class A Certificate Factor and Class B
Certificate Balance as of such Distribution Date;
(vii) the amount otherwise distributable to the Class B
Certificateholders that is distributed to Class A Certificateholders on such
Distribution Date;
(viii) the balance of the Subordination Spread Account on
such Distribution Date, after giving effect to distributions made on such
Distribution Date and the change in such balance from the preceding
Distribution Date;
(ix) the aggregate Payahead Balance and the change in
such balance from the preceding Distribution Date; and
(x) the amount of Advances on such Distribution Date.
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Each amount set forth pursuant to subclauses (i), (ii), (iv) or (v) above shall
be expressed as a dollar amount per $1,000 of original principal balance of a
Class A Certificate.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of the Agreement, the Trustee
shall mail, to each Person who at any time during such calendar year shall have
been a holder of a Class A Certificate, a statement containing the sum of the
amounts set forth in clauses (i), (ii), (iv) and (v) and such other information,
if any, as the Servicer determines is necessary to ascertain the Class A
Certificateholder's share of the gross income and deductions of the Trust
(exclusive of the Supplemental Servicing Fee), for such calendar year or, in the
event such Person shall have been a holder of a Class A Certificate during a
portion of such calendar year, for the applicable portion of such year, for the
purposes of such Certificateholder's preparation of federal income tax returns.
XIV-17
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ARTICLE XV
[Intentionally Omitted]
ARTICLE XVI
The Certificates
Section 16.1 The Certificates. The Class A Certificates shall be
issued in denominations of $1,000; the Class B Certificates shall be issued in
denominations of $100,000 or in any amount in excess thereof each in fully
registered form and integral multiples thereof; provided, however, that one
Class A Certificate and one Class B Certificate may be issued in a denomination
equal to the residual amount (the "Residual Certificate"). The Certificates
shall be executed on behalf of the Trust by manual or facsimile signature of the
chairman of the board, vice chairman of the board, any vice president, or any
authorized Trust Officer of the Trustee under the Trustee's seal imprinted
thereon and attested on behalf of the Trust by the manual or facsimile signature
of the Secretary, any Assistant Secretary or any Trust Officer of the Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of such Certificates.
Section 16.2 Authentication of Certificates. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Seller, signed by its chairman of
the board, its president, or any vice president, without further corporate
action by the Seller, in authorized denominations, pursuant to the Agreement.
No Certificate shall entitle its holder to any benefit under the Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in
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Exhibit A or Exhibit B hereto executed by the Trustee by manual signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall
be dated the date of their authentication.
Section 16.3 Registration of Transfer and Exchange of Certificates.
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 16.7, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the initial Certificate
Registrar.
The Class B Certificates shall initially be retained by the Seller. No
transfer of a Class B Certificate shall be made unless the registration
requirements of the Securities Act of 1933, as amended, and any applicable State
securities laws are complied with, or such transfer is exempt from the
registration requirements under said Act and laws. In the event that a transfer
is to be made in reliance upon an exemption from said Act or laws, the Class B
Certificateholder desiring to effect such transfer and such Certificateholder's
prospective transferee must each certify in writing to the Seller and the
Trustee the facts surrounding such transfer and provide both the Seller and the
Trustee with a written Opinion of Counsel in form and substance satisfactory to
the Seller and the Trustee that such transfer may be made pursuant to an
exemption from said Act or laws, which Opinion of Counsel shall not be an
expense of the Seller or the Trustee. Neither the Seller nor the Trustee is
under an obligation to register the Class B Certificates under said Act or any
other securities law.
No transfer of a Class B Certificate shall be made unless the Class B
Certificateholder desiring to effect such transfer shall have given each rating
agency requested by the Seller or an affiliate to rate the Class A Certificates
and which then has an outstanding rating thereon, the Seller and the Trustee
prior written notice of such proposed transfer, and such rating agencies shall
have notified such Class B Certificateholder, the Seller and the Trustee, in
writing, that such proposed transfer will not result in the qualification,
downgrading or
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withdrawal of the rating then assigned to the Class A Certificates by such
rating agencies.
In addition to the restrictions on transfer of Class B Certificates set
forth in the two immediately preceding paragraphs, no transfer of a Class B
Certificate shall be made unless prior to such transfer the Holder of such Class
B Certificate delivers to the Seller and the Trustee either a ruling of the
Internal Revenue Service or an Opinion of Counsel, which shall be independent
outside counsel, satisfactory to the Trustee and each rating agency requested by
the Seller or an affiliate to rate the Class A Certificates and which has an
outstanding rating thereon in either case to the effect that the proposed
transfer (x) will not result in the arrangement contemplated by this Agreement
being treated as an association taxable as a corporation under either (I) the
Code, as from time to time in force or (II) the tax laws of the State of New
York and (y) will not have any adverse effect on the Federal income taxation of
the Trust or the Class A Certificateholders. The Class B Certificate shall not
be transferred separately from the right to receive all amounts in the
Subordination Spread Account, unless the ruling of the Internal Revenue Service
or the Opinion of Counsel referred to in the preceding sentence would permit
such transfer.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Trustee shall execute, authenticate, and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates in authorized denominations of a like aggregate amount dated the
date of authentication by the Trustee. At the option of a Holder, Certificates
may be exchanged for other Certificates of authorized denominations of a like
aggregate amount upon surrender of the Certificates to be exchanged at the
Corporate Trust Office.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder or his attorney duly authorized in writing. Each Certificate surrendered
for registration of transfer and exchange shall be cancelled and subsequently
disposed of by the Trustee.
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No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
Section 16.4 Mutilated, Destroyed, Lost, or Stolen Certificates. If
(a) any mutilated Certificate shall be surrendered to the Certificate Registrar,
or if the Certificate Registrar shall receive evidence to its satisfaction of
the destruction, loss, or theft of any Certificate and (b) there shall be
delivered to the Certificate Registrar and the Trustee such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, the Trustee on behalf of the Trust shall execute and the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost, or stolen Certificate, a new Certificate of like
tenor and denomination. In connection with the issuance of any new Certificate
under this Section 16.4, the Trustee and the Certificate Registrar may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section 16.4 shall constitute conclusive evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen, or
destroyed Certificate shall be found at any time.
Section 16.5 Persons Deemed Owners. The Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be registered
as the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 14.6 and for all other purposes whatsoever, and neither the
Trustee nor the Certificate Registrar shall be bound by any notice to the
contrary.
Section 16.6 Access to List of Certificate-holders' Names and
Addresses. The Trustee shall furnish or cause to be furnished to the Servicer,
within 15 days after receipt by the Trustee of a request therefor from the
Servicer in writing, a list, in such form as the Servicer may reasonably
require, of the names and ad-
XVI-4
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dresses of the Certificateholders as of the most recent Record Date. If three
or more Certificateholders, or one or more Holders of Class A Certificates
aggregating not less than 25% of the Class A Certificate Balance, apply in
writing to the Trustee, and such application states that the applicants desire
to communicate with other Certificateholders of such Class with respect to
their rights under the Agreement or under the Certificates and such application
shall be accompanied by a copy of the communication that such applicants
propose to transmit, then the Trustee shall, within five Business Days after
the receipt for such application, request from the Clearing Agency and make
available to such Certificateholders access during normal business hours to the
current list of Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed to hold neither the Servicer nor
the Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
Section 16.7 Maintenance of Office or Agency. The Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates and the Agreement may be served. The Trustee
initially designates the Corporate Trust Office as specified in the Agreement as
its office for such purposes. The Trustee shall give prompt written notice to
the Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 16.8 Book-Entry Certificates. The Class A Certificates, upon
original issuance, (except for the Residual Certificate) will be issued in the
form of typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Seller. The Class A Certificates delivered to The Depository
Trust Company shall initially be registered on the Certificate Register in the
name of CEDE & Co., the nominee of the initial Clearing Agency, and no
Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in the
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Class A Certificates, except as provided in Section 16.10. Unless and until
definitive, fully registered Class A Certificates (the "Definitive
Certificates") have been issued to Certificate Owners pursuant to Section
16.10:
(i) the provisions of this Section 16.8 shall be in full
force and effect;
(ii) the Seller, the Servicer, the Certificate Registrar, and
the Trustee may deal with the Clearing Agency for all purposes (including the
making of distributions on the Class A Certificates) as the authorized
representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section 16.8
conflict with any other provisions of this Agreement, the provisions of this
Section 16.8 shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by law
and agreements between such Certificate Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Depository Agreement,
unless and until Definitive Certificates are issued pursuant to Section 16.10,
the initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit distributions of principal and
interest on the Class A Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to
be taken based upon instructions or directions of Holders of Class A
Certificates evidencing a specified percentage of the Class A Certificate
Balance the Clearing Agency shall be deemed to represent such percentage only
to the extent that it has received instructions to such effect from
Certificate Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial
XVI-6
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interest in Class A Certificates and has delivered such instructions
to the Trustee.
Section 16.9 Notices to Clearing Agency. Whenever notice or other
communication to the Class A Certificateholders is required under this
Agreement, other than to the Holder of the Residual Certificate, unless and
until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 16.10, the Trustee and the Servicer shall give all such
notices and communications specified herein to be given to Holders of the Class
A Certificates to the Clearing Agency.
Section 16.10 Definitive Certificates. If (i)(A) the Seller advises
the Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the Depository Agreement, and (B)
the Trustee or the Seller is unable to locate a qualified successor, (ii) the
Seller at its option, advises the Trustee in writing that it elects to terminate
the book-entry system through the Clearing Agency, or (iii) after the occurrence
of an Event of Default, Certificate Owners representing beneficial interests
aggregating not less than 51% of the Class A Certificate Balance advise the
Trustee and the Clearing Agency through the Clearing Agency Participants in
writing that the continuation of a book-entry system through the Clearing Agency
is no longer in the best interests of the Certificate Owners, then the Trustee
shall notify the Clearing Agency and request that the Clearing Agency notify all
Certificate Owners of the occurrence of any such event and of the availability
of Definitive Certificates to Certificate Owners requesting the same and that
the Record Date for any Distribution Date subsequent to the issuance of
Definitive Certificates will be the last day of the Collection Period
immediately preceding the month in which such Distribution Date occurs. Prior
to the issuance of Definitive Certificates, the Trustee shall provide written
notice to Goldman, Sachs & Co., CS First Boston Corporation, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc. and Salomon
Brothers Inc that, upon the issuance of Definitive Certificates, the Record Date
for any Distribution Date will be the last day of the Collection Period
immediately preceding the month in which such Distribution Date occurs. Upon
surrender to the Trustee of the Class A Certificates by the Clearing Agency,
accompanied by
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registration instructions from the Clearing Agency for registration, the
Trustee shall issue the Definitive Certificates and deliver such Definitive
Certificates in accordance with the instructions of the Clearing Agency.
Neither the Seller, the Certificate Registrar nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on,
and shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder. The Trustee shall not
be liable if the Trustee or the Seller is unable to locate a qualified
successor Clearing Agency.
XVI-8
<PAGE> 64
ARTICLE XVII
The Seller
Section 17.1 Representations of Seller. The Seller makes the
following representations on which the Trustee relied in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of the Agreement and
shall survive the sale of the Receivables to the Trustee and, if applicable,
any subsequent assignment or transfer pursuant to Article XV:
(i) Organization and Good Standing. The Seller shall have
been duly organized and shall be validly existing as a corporation in
good standing under the laws of the State of Delaware, with power and
authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is presently
conducted, and had at all relevant times, and shall have, power,
authority, and legal right to acquire and own the Receivables.
(ii) Due Qualification. The Seller shall be duly qualified
to do business as a foreign corporation in good standing, and shall
have obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the
conduct of its business shall require such qualifications.
(iii) Power and Authority. The Seller shall have the power
and authority to execute and deliver the Agreement and to carry out
its terms. The Seller shall have full power and authority to sell and
assign the property to be sold and assigned to and deposited with the
Trustee as part of the Trust and shall have duly authorized such sale
and assignment to the Trustee by all necessary corporate action; and
the execution, delivery, and performance of the Agreement shall have
been
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duly authorized by the Seller by all necessary corporate action.
(iv) Valid Sale; Binding Obligation. The Agreement shall
evidence a valid sale, transfer, and assignment of the Receivables,
enforceable against creditors of and purchasers from the Seller; and a
legal, valid and binding obligation of the Seller enforceable in
accordance with its terms.
(v) No Violation. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the terms hereof
shall not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of
time) a default under, the articles of incorporation or by-laws of
the Seller, or any indenture, agreement, or other instrument to which
the Seller is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement, or other instrument;
nor violate any law or, to the best of the Seller's knowledge, any
order, rule, or regulation applicable to the Seller of any court or of
any federal or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Seller or
its properties.
(vi) No Proceedings. To the Seller's best knowledge, there
are no proceedings or investigations pending, or threatened, before
any court, regulatory body, administrative agency, or other govern-
mental instrumentality having jurisdiction over the Seller or its
properties: A) asserting the invalidity of the Agreement or the
Certificates; B) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by the
Agreement; C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validi-
XVII-2
<PAGE> 66
ty or enforceability of, the Agreement or the Certificates; or
D) relating to the Seller and which might adversely affect the federal
income tax attributes of the Certificates.
Section 17.2 Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under the Agreement.
(i) The Seller shall indemnify, defend, and hold harmless
the Trustee and the Trust from and against any taxes that may at any
time be asserted against the Trustee or the Trust with respect to, and
as of the date of, the sale of the Receivables to the Trust or the
issuance and original sale of the Certificates, including any sales,
gross receipts, general corporation, tangible personal property,
privilege, or license taxes (but, in the case of the Trust, not
including any taxes asserted with respect to ownership of the
Receivables or federal or other income taxes arising out of the
transactions contemplated by the Agreement) and costs and expenses in
defending against the same.
(ii) The Seller shall indemnify, defend, and hold harmless
the Trustee from and against any loss, liability, or expense incurred
by reason of (a) the Seller's willful misfeasance, bad faith, or neg-
ligence (other than errors in judgment) in the performance of its
duties under the Agreement, or by reason of reckless disregard of its
obligations and duties under the Agreement and (b) the Seller's
violation of federal or state securities laws in connection with the
registration or the sale of the Certificates.
Indemnification under this Section 17.2 shall survive the termination
of this Agreement and shall include, without limitation, reasonable fees and
expenses of counsel and expenses of litigation. If the Seller shall have made
any indemnity payment to the Trustee pursuant to this Section and the Trustee
thereafter shall
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collect any of such amounts from others, the Trustee shall repay such amounts
to the Seller, without interest.
Section 17.3 Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (i) into which the Seller may be merged or
consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Seller shall be a party, (iii) succeeding to the business of the
Seller, or (iv) more than 50% of the voting stock of which is owned directly or
indirectly by Ford Motor Company, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, will be the successor to the Seller under this Agreement
without the execution or filing of any document or any further act on the part
of any of the parties to this Agreement; provided, however, that (x) the Seller
shall have delivered to the Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger, or succession and such
agreement or assumption comply with this Section 17.3 and that all conditions
precedent, if any, provided for in the Agreement relating to such transaction
have been complied with and (y) the Seller shall have delivered to the Trustee
an Opinion of Counsel either (A) stating that, in the opinion of such Counsel,
all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary fully to preserve and protect
the interest of the Trustee in the Receivables, and reciting the details of
such filings, or (B) stating that, in the opinion of such Counsel, no such
action shall be necessary to preserve and protect such interest. The Seller
shall provide notice of any merger, consolidation, or succession pursuant to
this Section 17.3 to each rating agency then providing a rating for the
Certificates. Notwithstanding anything herein to the contrary, the execution
of the foregoing agreement or assumption and compliance with clauses (x) or (y)
above shall be conditions to the consummation of the transactions referred to
in clauses (i), (ii), or (iii) above.
Section 17.4 Limitation on Liability of Seller and Others. The
Seller and any director or officer or employee or agent of the Seller may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Seller
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shall not be under any obligation to appear in, prosecute, or defend any legal
action that shall not be incidental to its obligations under the Agreement, and
that in its opinion may involve it in any expense or liability.
Section 17.5 Seller May Own Certificates. The Seller and any Person
controlling, controlled by, or under common control with the Seller may in its
individual or any other capacity become the owner or pledgee of Certificates
with the same rights as it would have if it were not the Seller or an affiliate
thereof, except as otherwise provided in the definition of "Certificateholder"
specified in Section 11.1 and except as otherwise specifically provided herein.
Certificates so owned by or pledged to the Seller or such controlling or
commonly controlled Person shall have an equal and proportionate benefit under
the provisions of the Agreement, without preference, priority, or distinction
as among all of the Certificates.
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ARTICLE XVIII
The Servicer
Section 18.1 Representations of Servicer. The Servicer makes the
following representations on which the Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of the Agreement and
shall survive the sale of the Receivables to the Trustee and, if applicable,
any subsequent assignment or transfer pursuant to Article XV:
(i) Organization and Good Standing. The Servicer shall have
been duly organized and shall be validly existing as a corporation in
good standing under the laws of the state of its incorporation, with
power and authority to own its properties and to conduct its business
as such properties shall be currently owned and such business is
presently conducted, and had at all relevant times, and shall have,
power, authority, and legal right to acquire, own, sell, and service
the Receivables and to hold the Receivable Files as custodian on
behalf of the Trustee;
(ii) Due Qualification. The Servicer shall be duly
qualified to do business as a foreign corporation in good standing,
and shall have obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the
conduct of its business (including the servicing of the Receivables as
required by the Agreement) shall require such qualifications;
(iii) Power and Authority. The Servicer shall have the
power and authority to execute and deliver the Agreement and to carry
out its terms; and the execution, delivery, and performance of the
Agreement shall have been duly authorized by the Servicer by all
necessary corporate action;
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(iv) Binding Obligation. The Agreement shall constitute a
legal, valid, and binding obligation of the Servicer enforceable in
accordance with its terms;
(v) No Violation. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the terms hereof
shall not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of
time) a default under, the articles of incorporation or by-laws of
the Servicer, or any indenture, agreement, or other instrument to
which the Servicer is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, or
other instrument (other than the Agreement); nor violate any law or,
to the best of the Servicer's knowledge, any order, rule, or
regulation applicable to the Servicer of any court or of any federal
or state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its
properties; and
(vi) No Proceedings. There are no proceedings or
investigations pending, or, to the Servicer's best knowledge,
threatened, before any court, regulatory body, administrative agency,
or other governmental instrumentality having jurisdiction over the
Servicer or its properties: A) asserting the invalidity of the
Agreement or the Certificates, B) seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by the Agreement, C) seeking any determination or ruling
that might materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability
of, the Agreement or the Certificates, or D) relating to the Servicer
and which might adversely affect the federal income tax attributes of
the Certificates.
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Section 18.2 Indemnities of Servicer. The Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under the Agreement.
(i) The Servicer shall defend, indemnify, and hold harmless
the Trustee, the Trust, and the Certificateholders from and against
any and all costs, expenses, losses, damages, claims, and liabilities,
arising out of or resulting from the use, ownership, or operation by
the Servicer or any affiliate thereof of a Financed Vehicle.
(ii) The Servicer shall indemnify, defend, and hold harmless
the Trustee and the Trust from and against any taxes that may at any
time be asserted against the Trustee or the Trust with respect to the
transactions contemplated herein, including, without limitation, any
sales, gross receipts, general corporation, tangible personal
property, privilege, or license taxes (but, in the case of the Trust,
not including any taxes asserted with respect to, and as of the date
of, the sale of the Receivables to the Trust or the issuance and
original sale of the Certificates, or asserted with respect to
ownership of the Receivables, or federal or other income taxes arising
out of the transactions contemplated by the Agreement) and costs and
expenses in defending against the same.
(iii) The Servicer shall indemnify, defend, and hold
harmless the Trustee, the Trust, and the Certificateholders from and
against any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Trustee,
the Trust, or the Certificateholders through, the negligence, willful
misfeasance, or bad faith of the Servicer in the performance of its
duties under the Agreement or by reason of reckless disregard of its
obligations and duties under the Agreement.
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(iv) The Servicer shall indemnify, defend, and hold harmless
the Trustee from and against all costs, expenses, losses, claims,
damages, and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties herein
contained, except to the extent that such cost, expense, loss, claim,
damage, or liability: (a) shall be due to the willful misfeasance,
bad faith, or negligence (except for errors in judgment) of the
Trustee; (b) relates to any tax other than the taxes with respect to
which either the Seller or the Servicer shall be required to in-
demnify the Trustee; (c) shall arise from Trustee's breach of any of
its representations or warranties set forth in Section 20.14; (d)
shall be one as to which the Seller is required to indemnify the
Trustee; or (e) shall arise out of or be incurred in connection with
the performance by the Trustee of the duties of successor Servicer
hereunder.
In addition to the foregoing indemnities, if the Trustee is entitled to
indemnification by the Seller pursuant to Section 17.2 and the Seller is unable
for any reason to provide such indemnification to the Trustee, then the
Servicer shall be liable for any indemnification that the Trustee is entitled
to under Section 17.2.
For purposes of this Section, in the event of the termination of the
rights and obligations of Ford Motor Credit Company (or any successor thereto
pursuant to Section 18.3) as Servicer pursuant to Section 19.1, or a
resignation by such Servicer pursuant to this Agreement, such Servicer shall be
deemed to be the Servicer pending appointment of a successor Servicer (other
than the Trustee) pursuant to Section 19.2.
Indemnification under this Section 18.2 by Ford Motor Credit Company
(or any successor thereto pursuant to Section 18.3) as Servicer, with respect
to the period such Person was (or was deemed to be) the Servicer, shall survive
the termination of such Person as Servicer or a resignation by such Person as
Servicer as well as the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer shall have made any indemnity
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payments pursuant to this Section and the recipient thereafter collects any of
such amounts from others, the recipient shall promptly repay such amounts to
the Servicer, without interest.
Section 18.3 Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (i) into which the Servicer may be merged
or consolidated, (ii) resulting from any merger, conversion, or consolidation
to which the Servicer shall be a party, or (iii) succeeding to the business of
the Servicer, or so long as Ford Motor Credit Company acts as Servicer, any
corporation more than 50% of the voting stock of which is owned directly or
indirectly by Ford Motor Company, which corporation in any of the foregoing
cases executes an agreement of assumption to perform every obligation of the
Servicer under this Agreement, will be the successor to the Servicer under this
Agreement without the execution or filing of any paper or any further act on
the part of any of the parties to this Agreement; provided, however, that (x)
the Servicer shall have delivered to the Trustee an Officer's Certificate and
an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section 18.3 and
that all conditions precedent provided for in the Agreement relating to such
transaction have been complied with and (y) the Servicer shall have delivered
to the Trustee an Opinion of Counsel either (A) stating that, in the opinion of
such Counsel, all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables, and
reciting the details of such filings, or (B) stating that, in the opinion of
such Counsel, no such action shall be necessary to preserve and protect such
interest. The Servicer shall provide notice of any merger, consolidation or
succession pursuant to this Section 18.3 to each rating agency then providing a
rating for the Certificates. Notwithstanding anything herein to the contrary,
the execution of the foregoing agreement or assumption and compliance with
clauses (x) or (y) above shall be conditions to the consummation of the
transactions referred to in clauses (i), (ii), or (iii) above.
Section 18.4 Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the
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directors or officers or employees or agents of the Servicer shall be under any
liability to the Trust or the Certificateholders, except as provided under the
Agreement, for any action taken or for refraining from the taking of any action
pursuant to the Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Servicer or any such person against any
liability that would otherwise be imposed by reason of willful misfeasance or
bad faith in the performance of duties or by reason of reckless disregard of
obligations and duties under the Agreement, or by reason of negligence in the
performance of its duties under the Agreement (except for errors in judgment).
The Servicer and any director, officer or employee or agent of the Servicer may
rely in good faith on any Opinion of Counsel or on any Officer's Certificate or
certificate of auditors believed to be genuine and to have been signed by the
proper party in respect of any matters arising under this Agreement.
Except as provided in the Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
the Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of the Agreement and
the rights and duties of the parties to the Agreement and the interests of the
Certificateholders under the Agreement. In such event, the legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs, and liabilities of the Servicer.
Section 18.5 Delegation of Duties. So long as Ford Motor Credit
Company acts as Servicer, the Servicer may at any time without notice or
consent delegate substantially all its duties under this Agreement to any
corporation more than 50% of the voting stock of which is owned, directly or
indirectly, by Ford Motor Company. The Servicer may at any time perform
specific duties as servicer under the Agreement through sub-contractors;
provided that no such delegation or subcontracting shall relieve the Servicer
of its responsibilities with respect to such duties as to which the Servicer
shall remain primarily responsible with respect thereto.
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ARTICLE XIX
Default
Section 19.1 Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Servicer to deliver to the Trustee
for distribution to Certificateholders or deposit in the Subordination
Spread Account any proceeds or payment required to be so delivered
under the terms of the Certificates and the Agreement that shall
continue unremedied for a period of three Business Days after written
notice of such failure is received by the Servicer from the Trustee or
after discovery of such failure by an officer of the Servicer; or
(ii) Failure on the part of the Servicer or the Seller duly
to observe or to perform in any material respect any other covenants
or agreements of the Servicer or the Seller (as the case may be) set
forth in the Certificates or in the Agreement, which failure shall (a)
materially and adversely affect the rights of Certificateholders and
(b) continue unremedied for a period of 90 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given (1) to the Servicer or the Seller (as
the case may be), by the Trustee, or (2) to the Servicer or the Seller
(as the case may be), and to the Trustee by the Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate
Balance; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for the Servicer
in any insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, or for the winding up or
liquidation of its respective
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affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 90 consecutive days; or
(iv) The consent by the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities, or similar proceedings
of or relating to the Servicer of or relating to substantially all of
its property; or the Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, either the Trustee, or the Holders of the Class A Certificates
evidencing not less than 51% of the Class A Certificate Balance, by notice then
given in writing to the Servicer (and to the Trustee if given by the
Certificateholders) (with a copy to each rating agency requested to provide a
rating on the Certificates) may terminate all of the rights and obligations of
the Servicer under the Agreement. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under the
Agreement, whether with respect to the Certificates or the Receivables or
otherwise, shall, without further action, pass to and be vested in the Trustee
or such successor Servicer as may be appointed under Section 19.2; and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, whether to complete the transfer and endorsement of
the Receivables and related documents, or otherwise.
The predecessor Servicer shall cooperate with the successor Servicer
and the Trustee in effecting the termination of the responsibilities and rights
of the predecessor Servicer under the Agreement, including the transfer to the
successor Servicer for administration by
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it of all cash amounts that shall at the time be held by the predecessor
Servicer for deposit, or shall thereafter be received with respect to a
Receivable and the delivery of the Receivable Files, and the related accounts
and records maintained by the Servicer. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Receivable Files to the successor Servicer and amending the Agreement to
reflect such succession as Servicer pursuant to this Section 19.1 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses.
Section 19.2 Appointment of Successor. (a) Upon the Servicer's
receipt of notice of termination pursuant to Section 19.1 or the Servicer's
resignation in accordance with the terms of the Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under the
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the later
of (x) the date 45 days from the delivery to the Trustee of written notice of
such resignation (or written confirmation of such notice) in accordance with
the terms of the Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of the
Servicer's resignation or termination hereunder, the Trustee shall appoint a
successor Servicer, and the successor Servicer shall accept its appointment by
a written assumption in form acceptable to the Trustee. In the event that a
successor Servicer has not been appointed at the time when the predecessor
Servicer has ceased to act as Servicer in accordance with this Section 19.2,
the Trustee without further action shall automatically be appointed the
successor Servicer. Notwithstanding the above, the Trustee shall, if it shall
be legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, any established institution, having a net worth of not
less than $100,000,000 and whose regular business shall include the servicing
of automotive receivables, as the successor to the Servicer under the
Agreement.
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(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicer Fees
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of the Agreement.
(c) In connection with such appointment, the Trustee may make such
arrangements for the compensation of such successor Servicer out of payments on
Receivables as it and such successor Servicer shall agree; provided, however,
that no such compensation shall be in excess of that permitted the predecessor
Servicer under the Agreement. The Trustee and such successor Servicer shall
take such action, consistent with the Agreement, as shall be necessary to
effectuate any such succession.
Section 19.3 Repayment of Advances. If the identity of the Servicer
shall change, the predecessor Servicer shall be entitled to receive to the
extent of available funds reimbursement for Outstanding Advances pursuant to
Section 14.3 and 14.4, in the manner specified in Section 14.6, with respect to
all Advances made by the predecessor Servicer.
Section 19.4 Notification to Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article XIX, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to each of the rating agencies then rating the Certificates.
Section 19.5 Waiver of Past Defaults. The Holders of Class A
Certificates evidencing not less than 51% of the Class A Certificate Balance
may, on behalf of all Holders of Certificates, waive any default by the
Servicer in the performance of its obligations hereunder and its consequences,
except a default in making any required deposits to or payments from the
Collection Account or the Certificate Account in accordance with the Agreement.
Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been remedied
for every purpose of the Agreement. No such waiver shall
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extend to any subsequent or other default or impair any right
consequent thereon.
XIX-5
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ARTICLE XX
The Trustee
Section 20.1 Duties of Trustee. The Trustee, both prior to the
occurrence of an Event of Default and after an Event of Default shall have been
cured or waived, shall undertake to perform such duties as are specifically set
forth in the Agreement. If an Event of Default shall have occurred and shall
not have been cured or waived and, in the case of an Event of Default described
in Section 19.1, the Trustee has received notice of such Event of Default
pursuant to Section 13.10(b), the Trustee shall exercise such of the rights and
powers vested in it by the Agreement, and shall use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs; provided, however, that if the
Trustee shall assume the duties of the Servicer pursuant to Section 19.2, the
Trustee in performing such duties shall use the degree of skill and attention
customarily exercised by a servicer with respect to automobile receivables that
it services for itself or others.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders, or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of the Agreement, shall examine them to determine whether they
conform to the requirements of the Agreement.
The Trustee shall take and maintain custody of the Schedule of
Receivables included as an exhibit to the Agreement and shall retain all
Servicer's Certificates identifying Receivables that become Purchased
Receivables.
No provision of the Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act
(other than errors in judgment), or its own bad faith; provided, however, that:
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(i) Prior to the occurrence of an Event of Default, and
after the curing or waiving of all such Events of Default that may
have occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of the Agreement, the
Trustee shall not be liable except for the performance of such duties
and obligations as shall be specifically set forth in the Agreement,
no implied covenants or obligations shall be read into the Agreement
against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely on the truth of the
statements and the correctness of the opinions expressed upon any
certificates or opinions furnished to the Trustee and conforming to
the requirements of the Agreement;
(ii) The Trustee shall not be liable for an error of
judgment made in good faith by a Trustee Officer, unless it shall be
proved that the Trustee shall have been negligent in ascertaining the
pertinent facts;
(iii) The Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in
accordance with the Agreement or at the direction of the Holders of
Class A Certificates evidencing not less than 25% of the Class A
Certificate Balance relating to the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under the
Agreement;
(iv) The Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer
referred to in Section 19.1, or of any failure by the Seller to comply
with the obligations of the Seller referred to in Section 19.1, unless
a Trustee Officer assigned to the Trustee's Corporate Trust Department
obtains actual knowledge of such failure (it being understood that
knowledge of the Servicer or the Servicer as custodian, in its
capacity as
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agent for the Trustee, is not attributable to the Trustee) or
the Trustee receives written notice of such failure from the Servicer
or the Seller, as the case may be, or the Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate
Balance; and
(v) Without limiting the generality of this Section or
Section 20.4, the Trustee shall have no duty (i) to see to any
recording, filing, or depositing of the Agreement, any agreement
referred to therein, or any financing statement or continuation state-
ment evidencing a security interest in the Receivables or the
Financed Vehicles, or to see to the maintenance of any such recording,
filing, or depositing or to any rerecording, refiling or redepositing
of any thereof, (ii) to see to any insurance of the Financed Vehicles
or Obligors or to effect or maintain any such insurance, (iii) to see
to the payment or discharge of any tax, assessment, or other
governmental charge or any Lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust, (iv) to
confirm or verify the contents of any reports or certificates of the
Servicer delivered to the Trustee pursuant to the Agreement believed
by the Trustee to be genuine and to have been signed or presented by
the proper party or parties, or (v) to inspect the Financed Vehicles
at any time or ascertain or inquire as to the performance or
observance of any of the Seller's or the Servicer's representations,
warranties, or covenants or the Servicer's duties and obligations as
Servicer and as custodian of the Receivable Files under the Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in the Agreement
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shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under the
Agreement except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers, and privileges of,
the Servicer in accordance with the terms of the Agreement.
Section 20.2 Trustee's Certificate. Upon request of the Seller or
Servicer, on or as soon as practicable after each Distribution Date on which
Receivables shall be assigned to the Seller or the Servicer, as applicable,
pursuant to Section 20.3, the Trustee shall execute a Trustee's Certificate (in
the form of Exhibit D-1 or D-2, as applicable), based on the information
contained in the Servicer's Certificate for the related Collection Period,
amounts deposited to the Certificate Account and notices received pursuant to
the Agreement, identifying the Receivables repurchased by the Seller pursuant
to Section 12.2 or purchased by the Servicer pursuant to Section 13.7 or 21.2
during such Collection Period, and shall deliver such Trustee's Certificate,
accompanied by a copy of the Servicer's Certificate for such Collection Period
to the Seller or the Servicer, as the case may be. The Trustee's Certificate
submitted with respect to such Distribution Date shall operate, as of such
Distribution Date, as an assignment, without recourse, representation, or
warranty, to the Seller or the Servicer, as the case may be, of all the
Trustee's right, title, and interest in and to such repurchased Receivable, and
all security and documents relating thereto, such assignment being an
assignment outright and not for security.
Section 20.3 Trustee's Assignment of Purchased Receivables. With
respect to all Receivables repurchased by the Seller pursuant to Section 12.2
or purchased by the Servicer pursuant to Section 13.7 or 21.2, the Trustee
shall by a Trustee's Certificate (in the form of Exhibit D-1 or D-2, as
applicable) assign, without recourse, representation, or warranty, to the
Seller or the Servicer (as the case may be) all the Trustee's right, title, and
interest in and to such Receivables, and all security and documents relating
thereto.
Section 20.4 Certain Matters Affecting Trustee. Except as otherwise
provided in Section 20.1:
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(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, certificate of auditors, or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond, or other paper or document believed
by it to be genuine and to have been signed or presented by the proper
party or parties.
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it under the
Agreement in good faith and in accordance with such Opinion of
Counsel.
(iii) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by the Agreement, or to
institute, conduct, or defend any litigation under the Agreement or in
relation to the Agreement, at the request, order, or direction of any
of the Certificateholders pursuant to the provisions of the Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses, and
liabilities that may be incurred therein or thereby; nothing contained
in the Agreement, however, shall relieve the Trustee of the
obligations, upon the occurrence of an Event of Default (that shall
not have been cured or waived), to exercise such of the rights and
powers vested in it by the Agreement, and to use the same degree of
care and skill in their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(iv) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it
to be authorized or within the discretion or rights or powers
conferred upon it by the Agreement.
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(v) Prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default that may have occurred,
the Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, bond, or other paper or document, unless requested in
writing so to do by Holders of Class A Certificates evidencing not
less than 25% of the Class A Certificate Balance; provided, however,
that if the payment within a reasonable time to the Trustee of the
costs, expenses, or liabilities likely to be incurred by it in the
making of such investigation shall be, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it
by the terms of the Agreement, the Trustee may require reasonable
indemnity against such cost, expense, or liability as a condition to
so proceeding. The reasonable expense of every such examination shall
be paid by the Servicer or, if paid by the Trustee, shall be reim-
bursed by the Servicer upon demand. Nothing in this clause (v) shall
affect the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under the Agreement either directly or
by or through agents or attorneys or a custodian. The Trustee shall
not be responsible for any misconduct or negligence of any such agent
or custodian appointed with due care by it hereunder or of the
Servicer in its capacity as Servicer or custodian.
(vii) Subsequent to the sale of the Receivables by the
Seller to the Trustee, the Trustee shall have no duty of independent
inquiry, except as may be required by Section 20.1, and the Trustee
may rely upon the representations and warranties and covenants of the
Seller and the Servicer contained in the Agree-
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ment with respect to the Receivables and the Receivable Files.
Section 20.5 Trustee Not Liable for Certificates or Receivables.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Seller or the Servicer, as the case may be, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee shall make
no representations as to the validity or sufficiency of the Agreement or of the
Certificates (other than the certificate of authentication on the
Certificates), or of any Receivable or related document. The Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity, and enforceability of any security interest in any Financed
Vehicle or any Receivable, or the perfection and priority of such a security
interest or the maintenance of any such perfection and priority, or for or with
respect to the efficacy of the Trust or its ability to generate the payments to
be distributed to Certificateholders under the Agreement, including, without
limitation: the existence, condition, location, and ownership of any Financed
Vehicle; the review of any Receivable File therefor; the existence and
enforceability of any physical damage insurance thereon; the existence and
contents of any Receivable or any Receivable File or any computer or other
record thereof; the validity of the assignment of any Receivable to the Trust
or of any intervening assignment; the completeness of any Receivable or any
Receivable File; the performance or enforcement of any Receivable; the
compliance by the Seller or the Servicer with any warranty or representation
made under the Agreement or in any related document and the accuracy of any
such warranty or representation prior to the Trustee's receipt of notice or
other discovery of any noncompliance therewith or any breach thereof; any
investment of monies by the Servicer or any loss resulting therefrom (it being
understood that the Trustee shall remain responsible for any Trust property
that it may hold); the acts or omissions of the Seller, the Servicer, or any
Obligor; an action of the Servicer taken in the name of the Trustee; or any
action by the Trustee taken at the instruction of the Servicer; provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under the Agreement. Except with respect to a claim based
on the fail-
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ure of the Trustee to perform its duties under the Agreement or based on the
Trustee's negligence or willful misconduct, no recourse shall be had for any
claim based on any provision of the Agreement, the Certificates, or any
Receivable or assignment thereof against the Trustee in its individual
capacity, the Trustee shall not have any personal obligation, liability, or
duty whatsoever to any Certificateholder or any other Person with respect to
any such claim, and any such claim shall be asserted solely against the Trust
or any indemnitor who shall furnish indemnity as provided in the Agreement.
The Trustee shall not be accountable for the use or application by the Seller
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Servicer in respect of the
Receivables. Any obligation of the Trustee to give any notice or statement to
any rating agency hereunder shall constitute only a best efforts obligation and
such notice or statement shall be so provided only as a matter of courtesy and
accommodation, the Trustee having no liability to any rating agency or any
other Person for any failure to so provide such notice or statement. The
Trustee may rely on the accuracy of such certification until it receives from
the Seller an Officer's Certificate superseding such certification.
Section 20.6 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Certificates and may deal with the Seller and the Servicer in banking
transactions with the same rights as it would have if it were not Trustee.
Section 20.7 Trustee's Fees and Expenses. The Servicer shall pay to
the Trustee, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts created by the Agreement and in the exercise and
performance of any of the Trustee's powers and duties under the Agreement, and
the Servicer, shall pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements, and advances (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) incurred or made by the Trustee in
accordance with any
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provisions of the Agreement except any such expense, disbursement, or advance
as may be attributable to its willful misfeasance, negligence, or bad faith,
and the Servicer shall indemnify the Trustee for, and hold it harmless against
any loss, liability, or expense incurred without willful misfeasance,
negligence, or bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties under the Agreement.
Additionally, the Seller, pursuant to Section 17.2, and the Servicer, pursuant
to Section 18.2, respectively, shall indemnify the Trustee with respect to
certain matters, and Certificateholders, pursuant to Section 20.04 shall, upon
the circumstances therein set forth, indemnify the Trustee under certain
circumstances. The provisions of this Section 20.7 shall survive the
termination of this Agreement.
Section 20.8 Indemnity of Trustee and Class A Agent. The Trustee
shall be indemnified by the Servicer and held harmless against any loss,
liability, fee, disbursement, or expense (including any compensation or expense
referred to in Section 20.7) arising out of or incurred in connection with the
acceptance or performance of the trusts and duties contained in the Agreement
to the extent that (i) the Trustee shall not be entitled to indemnity for such
loss, liability, fee, disbursement, or expense by the Seller pursuant to
Section 17.2 or Section 20.7, the Servicer pursuant to Section 18.2, or the
Certificateholders pursuant to Section 20.4; (ii) such loss, liability, fee,
disbursement, or expense shall not have been incurred by reason of the
Trustee's willful misfeasance, bad faith, or negligence (except for errors in
judgment); and (iii) such loss, liability, fee, disbursement, or expense shall
not have been incurred by reason of the Trustee's breach of its representations
and warranties pursuant to Section 20.14. The Class A Agent shall be
indemnified by the Servicer and held harmless against any loss, liability, fee,
disbursement, or expense arising out of or incurred in connection with the
acceptance or performance of its duties contained in the Agreement except to
the extent that such loss, liability, fee, disbursement, or expense shall have
been incurred by reason of the Class A Agent's willful misfeasance or gross
negligence; provided, however, that notwithstanding
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the foregoing, the Class A Agent shall be entitled to indemnification pursuant
to this Section 20.8 with respect to any actions of the Class A Agent taken in
accordance with the written instructions of the Servicer or of the Trustee
pursuant to Sections 14.7(d)(i) or 14.7(d)(ii).
Section 20.9 Eligibility Requirements for Trustee. The Trustee
under the Agreement shall at all times be a corporation having an office in the
same state as the location of the Corporate Trust Office as specified in the
Agreement; organized and doing business under the laws of such state or the
United States of America; authorized under such laws to exercise corporate
trust powers; and having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by federal or state authorities. If
such corporation shall publish reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section 20.9, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 20.9, the Trustee shall resign immediately in the
manner and with the effect specified in Section 20.10.
Section 20.10 Resignation or Removal of Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer. Upon receiving such notice of
resignation, the Servicer shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the resigning Trustee and one copy to the successor Trustee. If no successor
Trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 20.9 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee
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shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or
a receiver of the trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation, or liquidation, then
the Servicer may remove the Trustee. If it shall remove the Trustee under the
authority of the immediately preceding sentence, the Servicer shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor Trustee and shall promptly pay all fees owed to the outgoing
Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 20.10 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to Section 20.11 and payment of all fees and expenses owed and any
other amounts due hereunder to the outgoing Trustee. The Servicer shall
provide notice of such resignation or removal of the Trustee to each of the
rating agencies then rating the Certificates.
Section 20.11 Successor Trustee. Any successor Trustee appointed
pursuant to Section 20.10 shall execute, acknowledge, and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such
appointment under the Agreement, and thereupon the resignation or removal of
the predecessor Trustee shall become effective and such successor Trustee,
without any further act, deed, or conveyance, shall become fully vested with
all the rights, powers, duties, and obligations of its predecessor under the
Agreement, with like effect as if originally named as Trustee. The predecessor
Trustee shall upon payment of its fees and expenses and any other amounts due
it hereunder deliver to the successor Trustee all documents and statements and
monies held by it under the Agreement; and the Servicer and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in
the successor Trustee all such rights, powers, duties, and obligations.
No successor Trustee shall accept appointment as provided in this
Section 20.11 unless at the time of
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such acceptance such successor Trustee shall be eligible pursuant to Section
20.9.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 20.11, the Servicer shall mail notice of the successor of such Trustee
under the Agreement to all Holders of Certificates at their addresses as shown
in the Certificate Register. If the Servicer shall fail to mail such notice
within 10 days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Servicer.
Section 20.12 Merger or Consolidation of Trustee. Any corporation
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion, or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 20.9, without the execution
or filing of any instrument or any further act on the part of any of the
parties hereto; anything herein to the contrary notwithstanding.
Section 20.13 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of the Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such title to the
Trust, or any part thereof, and, subject to the other provisions of this
Section 20.13, such powers, duties, obligations, rights, and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by
it of a request so to do, or in the case an Event of Default shall have
occurred and be continuing, the Trustee alone shall have the power to make such
appointment. No co-
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trustee or separate trustee under the Agreement shall be required to meet the
terms of eligibility as a successor trustee pursuant to Section 20.9 and no
notice of a successor trustee pursuant to Section 20.11 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required pursuant to Section 20.11.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as
Trustee under the Agreement or as successor to the Servicer under the
Agreement), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties, and
obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) No trustee under the Agreement shall be personally
liable by reason of any act or omission of any other trustee under the
Agreement;
(iii) The Servicer and the Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee; and
(iv) All duties owed hereunder to the Trustee by the
Servicer shall be deemed to be owed to each separate trustee and
co-trustee.
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Any notice, request, or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to the Agreement and
the conditions of this Article XX. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of the Agreement, specifically including every provision of the
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Each such instrument shall be filed with the
Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee,
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of the Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign, or be removed, all of its estates,
properties, rights, remedies, and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 20.14 Representations and Warranties of Trustee. The Trustee
shall make the following representations and warranties on which the Seller and
Certificateholders shall rely:
(i) The Trustee is a New York corporation duly organized,
validly existing, and in good standing under the laws of the State of
New York.
(ii) The Trustee has full corporate power, authority, and
legal right to execute, deliver, and perform the Agreement, and shall
have taken all necessary action to authorize the execution, delivery,
and performance by it of the Agreement.
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(iii) The Agreement shall have been duly executed and
delivered by the Trustee.
Section 20.15 Tax Returns. The Servicer shall prepare or shall
cause to be prepared any tax returns required to be filed by the Trust and
shall remit such returns to the Trustee for signature at least five days before
such returns are due to be filed. The Trustee, upon request, will furnish the
Servicer with all such information known to the Trustee as may be reasonably
required in connection with the preparation of all tax returns of the Trust,
and shall, upon request, execute such returns.
Section 20.16 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements, and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
Section 20.17 Suits for Enforcement. If an Event of Default shall
occur and be continuing, the Trustee, in its discretion may, subject to the
provisions of Section 20.01, proceed to protect and enforce its rights and the
rights of the Certificateholders under this Agreement by a suit, action, or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable, or other remedy as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders.
Section 20.18 Rights of Certificateholders to Direct Trustee.
Holders of Class A Certificates evidencing not less than 51% of the Class A
Certificate Balance
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shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided,
however, that, subject to Section 20.1, the Trustee shall have the
right to decline to follow any such direction if the Trustee being
advised by counsel determines that the action so directed may not
lawfully be taken, or if the Trustee in good faith shall, by a Trustee
Officer, determine that the proceedings so directed would be illegal
or subject it to personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and
provided further that nothing in this Agreement shall impair the right
of the Trustee to take any action deemed proper by the Trustee and
which is not inconsistent with such direction by the
Certificateholders.
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ARTICLE XXI
Termination
Section 21.1 Termination of the Trust. The respective obligations
and responsibilities of the Seller, the Servicer, and the Trustee created
hereby and the Trust created by the Agreement shall terminate upon (i) the
purchase as of the last day of any Collection Period by the Servicer at its
option, pursuant to Section 21.2, of the corpus of the Trust and the subsequent
distribution to Certificateholders pursuant to Section 14.6 of the amount
required to be deposited pursuant to Section 21.2 or (ii) the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust;
provided, however, that in no event shall the trust created by the Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Hurley David Smith, currently residing in Clarkston,
Michigan, living on the date of the Agreement. The Servicer shall promptly
notify the Trustee of any prospective termination pursuant to this Section
21.1.
Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to Certificateholders mailed not earlier than the 15th
day and not later than the 25th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment, and (C) if applicable, that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made
only upon presentation and surrender of the Certificates at the office of the
Trustee therein specified. The Trustee shall give such notice to the
Certificate Registrar (if other than the Trustee) at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts
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distributable on such Distribution Date pursuant to Section 14.6.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If
within one year after the second notice all the Certificates shall not have
been surrendered for cancellation, the Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to the Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall be distributed by the Trustee to the Edison Institute,
Dearborn, Michigan.
Section 21.2 Optional Purchase of All Receivables. On the last day
of any Collection Period as of which the Pool Factor shall be less than the
Optional Purchase Percentage, the Servicer shall have the option to purchase
the corpus of the Trust. To exercise such option, the Servicer shall deposit
pursuant to Section 14.5 in the Collection Account an amount equal to the
aggregate Purchase Amount for the Receivables, plus the appraised value of any
other property held by the Trust, such value to be determined by an appraiser
mutually agreed upon by the Servicer and the Trustee, and shall succeed to all
interests in and to the Trust.
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ARTICLE XXII
Miscellaneous Provisions
Section 22.1 Amendment. The Agreement may be amended by the Seller,
the Servicer, the Trustee and the Class A Agent, without the consent of any of
the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in the Agreement, or to add any other provisions with respect to
matters or questions arising under the Agreement that shall not be inconsistent
with the provisions of the Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder. The Agreement also may be
amended by the Seller, the Servicer, the Trustee and the Class A Agent, without
the consent of any of the Certificateholders, to provide for the transfer of
the Class B Certificates; provided, however, that the conditions specified in
the third and fourth paragraphs of Section 16.3 shall be satisfied prior to
such transfer; provided, further, that such amendment shall not change the
timing of or the amount of any distributions that the Class A
Certificateholders are entitled to receive hereunder.
The Agreement may also be amended from time to time by the Seller, the
Servicer, the Trustee and the Class A Agent with the consent of the Holders of
Class A Certificates and Class B Certificates, each voting as a Class (which
consent of any Holder of a Certificate given pursuant to this Section or
pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Certificate and of any
Certificate issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon the Certificate),
evidencing not less than 51% of the Class A Certificate Balance and Class B
Certificate Balance, respectively, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the
Agreement, or of modifying in any manner the rights of the Holders of
Certificates; provided, however, that no such amendment shall (a) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions
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that shall be required to be made on any Certificate or change the Pass Through
Rate or the Specified Subordinated Spread Account Balance or (b) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the Holders of all Certificates then outstanding.
Prior to the execution of any such amendment or consent, the Servicer
will provide and the Trustee shall distribute written notification of the
substance of such amendment or consent to each of the rating agencies then
rating the Certificates.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment
or consent to each Certificateholder.
It shall not be necessary for the consent of Certificateholders
pursuant to this Section 22.1 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of Certificateholders provided for in this Agreement) and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may prescribe,
including the establishment of record dates pursuant to paragraph number 2 of
the Depository Agreement.
Prior to the execution of any amendment to the Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by the Agreement and
the Opinion of Counsel referred to in Section 22.2(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under the Agreement or otherwise.
Section 22.2 Protection of Title to Trust.
(a) The Seller shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner
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and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Certificateholders and the Trustee in the
Receivables and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the Trustee file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or
might make any financing statement or continuation statement filed by the
Seller in accordance with paragraph (a) above seriously misleading within the
meaning of Section 9-402(7) of the UCC, unless it shall have given the Trustee
at least five days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) The Seller and the Servicer shall give the Trustee at least
60 days' prior written notice of any relocation of its principal
executive office if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and shall
promptly file any such amendment. The Servicer shall at all times maintain
each office from which it shall service Receivables, and its principal
executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Certificate
Account and Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under the Agreement of the Receivables
to the Trust, the Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate
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clearly the interest of the particular grantor trust in such Receivable and
that such Receivable is owned by the Trust. Indication of the Trust's
ownership of a Receivable shall be deleted from or modified on the Servicer's
computer systems when, and only when, the Receivable shall have been paid in
full or repurchased.
(f) If at any time the Seller or the
Servicer shall propose to sell, grant a security interest in, or otherwise
transfer any interest in automotive receivables to any prospective purchaser,
lender, or other transferee, the Servicer shall give to such prospective
purchaser, lender, or other transferee computer tapes, records, or print-outs
(including any restored from back-up archives) that, if they shall refer in any
manner whatsoever to any Receivable, shall indicate clearly that such
Receivable has been sold and is owned by the Trust.
(g) The Servicer shall permit the
Trustee and its agents at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
any Receivable.
(h) Upon request, the Servicer shall
furnish to the Trustee, within twenty Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Trust,
together with a reconciliation of such list to the Schedule of Receivables and
to each of the Servicer's Certificates furnished before such request indicating
removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee:
(1) promptly after the execution and delivery of the Agreement
and of each amendment thereto, an Opinion of Counsel either (A)
stating that, in the opinion of such Counsel, all financing statements
and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in
the Receivables, and reciting the details of such filings or referring
to prior Opinions of Counsel in which such details are given, or (B)
stating
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that, in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three
months after the Cutoff Date, an Opinion of Counsel, dated as of a
date during such 90-day period, either (A) stating that, in the
opinion of such Counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables,
and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) stating
that, in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2)
above shall specify any action necessary (as of the date of such opinion) to be
taken in the following year to preserve and protect such interest.
(j) The Seller shall, to the extent
required by applicable law, cause the Certificates to be registered with the
Securities and Exchange Commission pursuant to Section 12(b) or Section 12(g)
of the Securities Exchange Act of 1934 within the time periods specified in
such sections.
(k) For the purpose of facilitating
the execution of the Agreement and for other purposes, the Agreement may be
executed in any number of counterparts, each of which counterparts shall be
deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.
Section 22.3 Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate the
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise
XXII-5
<PAGE> 103
affect the rights, obligations, and liabilities of the parties to the
Agreement or any of them.
No Certificateholder shall have any right to vote (except as provided
in Section 22.1 or 19.5) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties to the Agreement,
nor shall anything in the Agreement set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken pursuant to any provision of the Agreement.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of the Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to the Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, and unless also (i) the default
arises from the Seller's or the Servicer's failure to remit payments when due
hereunder, or (ii) the Holders of Class A Certificates evidencing not less than
25% of the Class A Certificate Balance shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
under the Agreement and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses, and liabilities to be
incurred therein or thereby, and the Trustee, for 30 days after its receipt of
such notice, request, and offer of indemnity, shall have neglected or refused
to institute any such action, suit or proceeding and during such 30-day period
no request or waiver inconsistent with such written request has been given to
the Trustee pursuant to this Section or Section 19.5; no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of the Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right, under the Agreement except in the
manner provided in the Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement
XXII-6
<PAGE> 104
of the provisions of this Section 22.3, each Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 22.4 GOVERNING LAW. THE AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 22.5 Notices. All demands, notices, and communications upon
or to the Seller, the Servicer, the Trustee, or any rating agency under the
Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given
upon receipt (a) in the case of the Seller or the Servicer, to the agent for
service as specified in the Agreement, or at such other address as shall be
designated by the Seller or the Servicer in a written notice to the Trustee,
(b) in the case of the Trustee, at the Corporate Trust Office, (c) in the case
of Moody's Investors Service, Inc., at the following address: Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007, and (d) in the case of Standard & Poor's Ratings Group, at the following
address: Standard & Poor's Ratings Group, 25 Broadway, 20th Floor, New York,
New York 10004, Attention: Asset Backed Surveillance Department. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in
the Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder shall receive such notice.
Section 22.6 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of the Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of the Agreement and shall in no way affect the validity
or enforceability of the other provisions of the Agreement or of the
Certificates or the rights of the Holders thereof.
XXII-7
<PAGE> 105
Section 22.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 17.3 and 18.3 and as provided
in the provisions of the Agreement concerning the resignation of the Servicer,
the Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Trustee and the Holders of Class A Certificates
evidencing not less than 66-2/3% of the Class A Certificate Balance.
Section 22.8 Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Trustee pursuant to Section 16.2 or Section 16.3,
Certificates shall be deemed fully paid.
Section 22.9 Further Assurances. The Seller and the Servicer agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the Trustee more
fully to effect the purposes of this Agreement, including, without limitation,
the execution of any financing statements or continuation statements relating
to the Receivables for filing under the provisions of the Uniform Commercial
Code of any applicable jurisdiction.
Section 22.10 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges therein provided are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
Section 22.11 Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the
Certificateholders, and their respective successors and permitted assigns.
Except as otherwise provided in this Article XIII, no other person will have
any right or obligation hereunder.
XXII-8
<PAGE> 106
Section 22.12 Actions by Certificateholders. (a) Wherever in
this Agreement a provision is made that an action may be taken or a notice,
demand, or instruction given by Certificateholders, such action, notice, or
instruction may be taken or given by any Certificateholder, unless such
provision requires a specific percentage of Certificateholders.
(b) Any request, demand,
authorization, direction, notice, consent, waiver, or other act by a
Certificateholder shall bind such Certificateholder and every subsequent holder
of such Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done or omitted to
be done by the Trustee or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Certificate.
* * * *
XXII-9
<PAGE> 107
EXHIBIT 4.2(A)
[FORM OF CLASS A CERTIFICATE -- SEE REVERSE FOR CERTAIN DEFINITIONS]
[The following legend to be inserted if this Certificate is issued to CEDE &
Co.:]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
FORD CREDIT 1994-B GRANTOR TRUST
____% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of retail installment sale contracts
secured by new and used automobiles and light trucks and sold to the Trust by
Ford Credit Auto Receivables Corporation.
(This Certificate does not represent an interest in or obligation of Ford
Credit Auto Receivables Corporation or Ford Motor Credit Company or any of
their respective affiliates thereof, except to the extent described below.)
NUMBER CUSIP _________
$______________
THIS CERTIFIES THAT ____________ is the registered owner of a
___________________________ dollar nonassessable, fully-paid, fractional
undivided interest in the Ford Credit 1994-B Grantor Trust (the "Trust") formed
by Ford Credit Auto
<PAGE> 108
Receivables Corporation, a Delaware corporation (the "Seller"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of November __,
1994 (the "Agreement"), among the Seller, the Ford Motor Credit Company, as
Servicer (the "Servicer"), and Chemical Bank, as Trustee (the "Trustee") and as
Class A Agent, a summary of certain of the pertinent provisions of which is set
forth below. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Agreement. This
Certificate is one of the duly authorized Certificates designated as "____%
Asset Backed Certificates, Class A" (herein called the "Class A Certificates").
Also issued under the Agreement are Certificates designated as "____% Asset
Backed Certificates, Class B" (the "Class B Certificates"). The Class B
Certificates and the Class A Certificates are hereinafter collectively called
the "Certificates." The aggregate undivided interest in the Trust evidenced by
all Class A Certificates is [93]%. This Class A Certificate is issued under
and is subject to the terms, provisions, and conditions of the Agreement, to
which Agreement the holder of this Class A Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of
the Trust includes (as more fully described in the Agreement) a pool of retail
installment sale contracts for new and used automobiles and light trucks (the
"Receivables"), certain monies due thereunder on or after November 1, 1994,
security interests in the vehicles financed thereby, certain bank accounts and
the proceeds thereof, property (including the right to receive Liquidation
Proceeds) securing the Receivables and held by the Trustee, proceeds from
claims on physical damage, credit life and disability insurance policies
covering vehicles financed thereby and the obligors thereunder, certain other
items financed by the obligors, certain interests of the Seller in Dealer
Recourse, all right, title and interest of the Seller in and to the Purchase
Agreement and any and all proceeds of the foregoing.
Under the Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next Business Day
(the "Distribution Date"), commencing on December 15, 1994 to the person in
whose name this Class A Certificate is registered at either the close of
business on the fourteenth day of the current calendar month or, after the
issuance of Definitive Certificates pursuant to the Agreement, the last day of
the Collection Period immediately preceding the month in which such
Distribution Date occurs (the "Record Date"), such Class A Certificateholder's
A-2
<PAGE> 109
fractional undivided interest in the lesser of (a) the sum of the Class A
Distributable Amount and any outstanding Class A Interest Carryover Shortfall
(plus interest on such Class A Interest Carryover Shortfall at the Pass-Through
Rate from such preceding Distribution Date through the current Distribution
Date, to the extent permitted by law and, with respect to the Class A Interest
Distributable Amount only, to the extent provided in the Agreement) and any
Class A Principal Carryover Shortfall and (b) the sum of (i) the Total
Available Amount (but with respect to the Class A Interest Distributable Amount
only to the extent provided in the Agreement) and (ii) amounts available in the
Subordination Spread Account.
The holder of this Class A Certificate by virtue of the acceptance
hereof assents to the appointment, pursuant to Section 14.7 of the Agreement,
of Chemical Bank acting solely as agent, and not as Trustee, for such holder
with respect to the Subordination Spread Account and the Subordination Spread
Account Property.
Distributions on this Class A Certificate will be made by the
Trustee by check or money order mailed to the Class A Certificateholder of
record in the Certificate Register without the presentation or surrender of
this Class A Certificate or the making of any notation hereon except that with
respect to Class A Certificates registered in the name of Cede & Co., the
nominee for the Clearing Agency, distributions will be made in the form of
immediately available funds. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Class A Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Class A
Certificate at the office or agency maintained for that purpose by the Trustee
in the Borough of Manhattan, The City of New York. The Record Date otherwise
applicable to such distribution shall not be applicable.
Reference is hereby made to the further provisions of this Class A
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Class A Certificate shall not
A-3
<PAGE> 110
entitle the holder hereof to any benefit under the Agreement or be valid for
any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in
its individual capacity has caused this Class A Certificate to be duly
executed.
FORD CREDIT 1994-B GRANTOR
TRUST
By: CHEMICAL BANK, as Trustee
By: ________________________
Name:
Title:
DATED:
[SEAL]
ATTEST:
_________________________
TRUST OFFICER
This is one of the Class A Certificates referred to
in the within-mentioned Agreement.
CHEMICAL BANK, as Trustee
By: ______________________
Authorized Officer
A-4
<PAGE> 111
[Reverse of Certificate]
The Certificates do not represent an obligation of, or an interest
in, the Seller, the Servicer, the Trustee or any affiliate of any of them. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in
the Agreement. A copy of the Agreement may be examined during normal business
hours at the principal office of the Seller, and at such other places, if any,
designated by the Seller, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Holders of Class A
Certificates and Class B Certificates, each voting as a Class, evidencing not
less than 51% of the Class A Certificate Balance and Class B Certificate
Balance, respectively. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and on all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Registrar upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by the Trustee in its capacity
as Certificate Registrar, or by any successor Certificate Registrar, in the
Borough of Manhattan, The City of New York, accompanied by a written instrument
of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
A-5
<PAGE> 112
The Class A Certificates are issuable only as registered
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; however, one Certificate may be issued in a denomination equal to the
residual amount. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the
Trustee or the Certificate Registrar may treat the person in whose name this
Class A Certificate is registered as the owner hereof for all purposes, and
neither the Trustee, the Certificate Registrar, nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Servicer of the Receivables may at its option purchase the corpus of the Trust
at a price specified in the Agreement, and such purchase of the Receivables and
other property of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable only as of the last day of any
Collection Period as of which the Pool Balance is less than 10% of the original
aggregate principal balance of the Receivables.
The recitals contained herein (other than the certificate of
authentication herein) shall be taken as the statements of the Seller or the
Servicer, as the case may be, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity
or sufficiency of this Certificate (other than the certificate of
authentication herein), or of any Receivable or related document.
A-6
<PAGE> 113
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
_________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
_________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________________________________________________ Attorney
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
__________________________*
Signature Guaranteed
__________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-7
<PAGE> 114
EXHIBIT 4.2(B)
[FORM OF CLASS B CERTIFICATE -- SEE REVERSE FOR CERTAIN DEFINITIONS]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR SOLD
UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN OPINION OF COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED AND THE SATISFACTION OF CERTAIN OTHER
REQUIREMENTS SPECIFIED IN THE AGREEMENT. EACH HOLDER OF THIS CERTIFICATE
ACKNOWLEDGES AND AGREES THAT IT HAS ASSIGNED, SOLD, CONVEYED AND TRANSFERRED
ALL ITS RIGHT, TITLE AND INTEREST IN AND TO THE SUBORDINATION SPREAD ACCOUNT
AND THE SUBORDINATION SPREAD ACCOUNT PROPERTY IN ACCORDANCE WITH SECTION 14.7
OF THE AGREEMENT.
Ford Credit 1994-B Grantor Trust
____% ASSET BACKED CERTIFICATE
CLASS B
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of retail installment sale contracts
secured by new and used automobiles and light trucks and sold to the Trust by
Ford Credit Auto Receivables Corporation.
(This Certificate does not represent an interest in or obligation of Ford
Credit Auto Receivables Corporation or Ford Motor Credit Company or any of
their respective affiliates thereof, except to the extent described below.)
NUMBER
CUSIP ___________
R-1
$_______________
THIS CERTIFIES THAT Ford Credit Auto Receivables Corporation is the
registered owner of a ___________
<PAGE> 115
____________________________________________________ __________ dollar and
__________ cent nonassessable, fully-paid, fractional undivided interest in the
Ford Credit 1994-B Grantor Trust (the "Trust") formed by Ford Credit Auto
Receivables Corporation, a Delaware corporation (the "Seller"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of November __,
1994 (the "Agreement"), among the Seller, the Ford Motor Credit Company, as
Servicer (the "Servicer"), and Chemical Bank, as Trustee (the "Trustee") and as
Class A Agent, a summary of certain of the pertinent provisions of which is set
forth below. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Agreement. This
Certificate is one of the duly authorized Certificates designated as "____%
Asset Backed Certificates, Class B" (herein called the "Class B Certificates").
Also issued under the Agreement are Certificates designated as "____% Asset
Backed Certificates, Class A" (the "Class A Certificates"). The Class B
Certificates and the Class A Certificates are hereinafter collectively called
the "Certificates." The aggregate undivided interest in the Trust evidenced by
all Class B Certificates is [7]%. This Class B Certificate is issued under and
is subject to the terms, provisions, and conditions of the Agreement, to which
Agreement the holder of this Class B Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The property of the Trust
includes (as more fully described in the Agreement) a pool of retail
installment sale contracts for new and used automobiles and light trucks (the
"Receivables"), certain monies due thereunder on or after November 1, 1994,
security interests in the vehicles financed thereby, certain bank accounts and
the proceeds thereof, property (including the right to receive Liquidation
Proceeds) securing the Receivables, proceeds from claims on physical damage,
credit life and disability insurance policies covering vehicles financed
thereby and the obligors thereunder, certain other items financed by the
obligors, certain interests of the Seller in Dealer Recourse, all right, title
and interest of the Seller in and to the Purchase Agreement and any and all
proceeds of the foregoing. The rights of the holders of the Class B
Certificates are subordinated to the rights of the holders of the Class A
Certificates, as set forth in the Agreement.
B-2
<PAGE> 116
Under the Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on December 15, 1994, to the person in whose
name this Class B Certificate is registered at either the close of business on
the fourteenth day of the current calendar month or, after the issuance of
Definitive Certificates pursuant to the Agreement, the last day of the
Collection Period immediately preceding the month in which such Distribution
Date occurs (the "Record Date"), such Class B Certificateholder's fractional
undivided interest in the lesser of (a) the sum of the Class B Distributable
Amount and any outstanding Class B Interest Carryover Shortfall and any Class B
Principal Carryover Shortfall and (b) the sum of (i) the Total Available Amount
and (ii) amounts available in the Subordination Spread Account in excess of the
Specified Subordinated Spread Account Balance for the next succeeding
Distribution Date, in each case after giving effect to (A) the amounts required
to be distributed to the holders of Class A Certificates pursuant to the
subordination of the rights of the holders of Class B Certificates and (B) the
amounts required to be deposited in the Subordination Spread Account and to pay
the Servicing Fee (including any unpaid Servicing Fees with respect to prior
Collection Periods) payable to the Servicer on such Distribution Date.
Each holder of this Class B Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Class B Certificate are
subordinated to the rights of the Class A Certificateholders to receive
distributions in respect of the Class A Certificates and the rights of the
Servicer to receive the Servicing Fee (and any unpaid Servicing Fees from prior
Collection Periods) in the event of delinquency or defaults on the Receivables.
Each holder of this Class B Certificate acknowledges and agrees that, in order
to give effect to the subordination provisions provided in the Agreement, it
has assigned, sold, conveyed and transferred all its right, title and interest
in and to the Subordination Spread Account on the terms and conditions set
forth in the Agreement.
Distributions on this Class B Certificate will be made by the Trustee
by wire transfer, check or money order mailed to the Class B Certificateholder
of record
B-3
<PAGE> 117
in the Certificate Register without the presentation or surrender of this Class
B Certificate or the making of any notation hereon. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Class B Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Class B Certificate at the office or agency maintained for that purpose by the
Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Class B
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Class B Certificate shall not entitle the holder hereof to any benefit under
the Agreement or be valid for any purpose.
B-4
<PAGE> 118
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class B Certificate to be duly executed.
FORD CREDIT 1994-B GRANTOR TRUST
CHEMICAL BANK, as Trustee
DATED:__________ By: ______________________________
Name:
Title:
[SEAL]
ATTEST:
__________________
Trust Officer
This is one of the Class B Certificates referred to
in the within-mentioned Agreement.
CHEMICAL BANK, as Trustee
By: ___________________________
Authorized Officer
B-5
<PAGE> 119
[Reverse of Certificate]
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer, the Trustee or any affiliate of any of them. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in
the Agreement. A copy of the Agreement may be examined during normal business
hours at the principal office of the Seller, and at such other places, if any,
designated by the Seller, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Holders of Class A
Certificates and Class B Certificates, each voting as a Class, evidencing not
less than 51% of the Class A Certificate Balance and Class B Certificate
Balance, respectively. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and on all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class B Certificates are issuable only as registered Certificates
without coupons in denominations of $100,000 and integral multiples thereof;
however, one Certificate may be issued in a denomination equal to the residual
amount. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate denomination, as
B-6
<PAGE> 120
requested by the holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Class B
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The Servicer of the
Receivables may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable only as of the last day of any
Collection Period as of which the Pool Balance is less than 10% of the original
aggregate principal balance of the Receivables.
The recitals contained herein (other than the certificate of
authentication herein) shall be taken as the statements of the Seller or the
Servicer, as the case may be, and the Trustee assumes no responsibility for the
correctness thereof. The Trustee makes no representations as to the validity
or sufficiency of this Certificate (other than the certificate of
authentication herein), or of any Receivable or related document.
B-7
<PAGE> 121
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
_________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
_________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
___________________________________________________________ Attorney to trans-
fer said Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:
___________________________*
Signature Guaranteed
___________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
B-8
<PAGE> 122
EXHIBIT 4.2(c)
[LETTERHEAD]
LETTER OF REPRESENTATIONS
(To be Completed by Issuer and Trustee)
_____________________________________________
(Name of Issuer)
_____________________________________________
(Name of Trustee)
_______________
Date
Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street: 49th Floor
New York, NY 10041-0099
Re:____________________________________________
____________________________________________
____________________________________________
(Issue Description)
Ladies and Gentlemen:
This letter sets forth our understanding with respect to certain
matters relating to the above-referenced issue (the "Securities"). Trustee
will act as trustee with respect to the Securities pursuant to a trust
indenture dated ______________, 199___ (the "Document"). "Underwriter"
is distributing the Securities through The Depository Trust Company ("DTC").
To induce DTC to accept the Securities as eligible for deposit at DTC,
and to act in accordance with its Rules with respect to the Securities, Issuer
and Trustee make the following representations to DTC:
1. Prior to closing on the Securities on ___________________, 199____,
there shall be deposited with DTC one Security certificate registered in the
name of DTC's nominee, Cede & Co., for each
<PAGE> 123
stated maturity of the Securities in the face amounts set forth on Schedule A
hereto, the total of which represents 100% of the principal amount of such
Securities. If, however, the aggregate principal amount of any maturity
exceeds $150 million, one certificate will be issued with respect to each $150
million of principal amount and an additional certificate will be issued with
respect to any remaining principal amount. Each $150 million certificate shall
bear the following legend:
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer or its
agent for registration of transfer, exchange, or payment and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC). ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
2. In the event of any solicitation of consents from or voting by
holders of the Securities, Issuer or Trustee shall establish a record date for
such purposes (with no provision for revocation of consents or votes by
subsequent holders) and shall, to the extent possible, send notice of such
record date to DTC not less than 13 calendar days in advance of such record
date. Notices to DTC pursuant to this Paragraph by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-6896 or (212) 709-6897, and receipt
of such notices shall be confirmed by telephoning (212) 709-6870. Notices to
DTC pursuant to this Paragraph by mail or by any other means shall be sent to
DTC's Reorganization Department as indicated in Paragraph 4.
3. In the event of a full or partial redemption, Issuer or Trustee
shall send a notice to DTC specifying: (a) the amount of the redemption or
refunding; (b) in the case of a refunding, the maturity date(s) established
under the refunding; and (c) the date such notice is to be mailed to Security
holders or published (the "Publication Date"). Such notice shall be sent to
DTC by a secure means (e.g., legible telecopy, registered or certified mail,
overnight delivery) in a timely manner designed to assure that such notice is
in DTC's possession no later than the close of business on the business day
before or, if possible, two business days before the Publication Date. Issuer
or Trustee shall forward such notice either in a separate secure transmission
for each CUSIP number or in a secure transmission for multiple CUSIP numbers
(if applicable) which includes a manifest or list of each CUSIP number
submitted in that transmission. (The party sending such notice shall have a
method to verify subsequently the use of such means and the timeliness of such
notice.) The Publication Date shall be not less than 30 days nor more than 60
days prior to the redemption date or, in the case of an advance refunding, the
date that the proceeds are deposited in escrow. Notices to DTC pursuant to
this Paragraph by telecopy shall be sent to DTC's Call Notification Department
at (516) 277-4039 or (516) 227-4190. If the party sending the notice does not
receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (516) 227-4070. Notices to DTC pursuant
to this Paragraph by mail or by any other means shall be sent to:
Manager: Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
4. In the event of an invitation to tender the Securities, notice by
Issuer or Trustee to Security holders specifying the terms of the tender and
the Publication Date of such notice shall be sent to DTC by a secure means in
the manner set forth in the preceding Paragraph. Notices to DTC pursuant to
this Paragraph and notices of other corporate actions (including mandatory
tenders, exchanges, and capital changes) by telecopy shall be sent to DTC's
Reorganization Department at (212) 709-1093
-2-
<PAGE> 124
or (212) 709-1094, and receipt of such notices shall be confirmed by
telephoning (212) 709-6884. Notices to DTC pursuant to the above by mail or by
any other means shall be sent to:
Manager: Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
5. All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.
6. Trustee shall send DTC written notice with respect to the dollar
amount per $1,000 original face value (or other minimum authorized denomination
if less than $1,000 face value) payable on each payment date allocated as to
the interest and principal portions thereof preferably 5, but not less than 2,
business days prior to such payment date. Such notices, which shall also
contain the current pool factor and Trustee contact's name and telephone
number, shall be sent by telecopy to DTC's Dividend Department at (212)
709-1723, or if by mail or by any other means to:
Manager: Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York, NY 10004-2695
7. NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND CROSS OUT
THE OTHER:] [The interest accrual period is record date to record date.] [The
interest accrual period is payment date to payment date.]
8. Interest payments and principal payments that are part of periodic
principal-and-interest payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns in same-day funds on each payment date (or the
equivalent in accordance with existing arrangements between Issuer or Trustee
and DTC). Such payments shall be made payable to the order of Cede & Co.
Absent any other existing arrangements, such payments shall be addressed as
follows:
Manager: Cash Receipts
Dividend Department
The Depository Trust Company
7 Hanover Square; 24th Floor
New York, NY 10004-2695
9. [NOTE: ISSUER MUST REPRESENT ONE OF THE FOLLOWING, AND CROSS OUT
THE OTHER:]
Securities Eligible for DTC's Same-Day Funds Settlement ("SDFS")
System.
Other principal payments (redemption payments) shall be made in
same-day funds by Trustee in the manner set forth in the SDFS Paying Agent
Operating Procedures, a copy of which previously has been furnished to Trustee.
Securities Eligible for DTC's Next-Day Funds Settlement ("NDFS")
System.
Other principal payments (redemption payments) shall be made in
next-day funds by Trustee to Cede & Co., as nominee of DTC, or its registered
assigns, on each payment date. Such payments shall be made payable to the
order of Cede & Co., and shall be addressed as follows:
NDFS Redemptions Manager
Reorganization/Redemptions Department
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
-3-
<PAGE> 125
10. DTC may direct Issuer or Trustee to use any other number or address as the
number or address to which notices or payments of interest or principal may be
sent.
11. In the event of a redemption, acceleration, or any other similar
transaction (e.g., tender made and accepted in response to Issuer's or
Trustee's invitation) necessitating a reduction in the aggregate principal
amount of Securities outstanding or an advance refunding of part of the
Securities outstanding. DTC, in its discretion: (a) may request Issuer or
Trustee to issue and authenticate a new Security certificate; or (b) may make
an appropriate notation on the Security certificate indicating the date and
amount of such reduction in principal except in the case of final maturity, in
which case the certificate will be presented to Issuer or Trustee prior to
payment, if required.
12. In the event that Issuer determines that beneficial owners of Securities
shall be able to obtain certificated Securities, Issuer or Trustee shall notify
DTC of the availability of certificates. In such event, Issuer or Trustee shall
issue, transfer, and exchange certificates in appropriate amounts, as required
by DTC and others.
13. DTC may discontinue providing its services as securities depository with
respect to the Securities at any time by giving reasonable notice to Issuer or
Trustee (at which time DTC will confirm with Issuer or Trustee the aggregate
principal amount of Securities outstanding). Under such circumstances, at DTC's
request Issuer and Trustee shall cooperate fully with DTC by taking appropriate
action to make available one or more separate certificates evidencing
Securities to any DTC Participant having Securities credited to its DTC
accounts.
14. Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its Participants or to any person having an interest in the
Securities any information contained in the Security certificate(s); and (b)
acknowledges that neither DTC's Participants nor any person having an interest
in the Securities shall be deemed to have notice of the provisions of the
Security certificates by virtue of submission of such certificate(s) to DTC.
15. Nothing herein shall be deemed to require Trustee to advance funds on
behalf of Issuer.
Very truly yours,
<TABLE>
<S> <C>
Notes:
A. If there is a Trustee (as defined
in this Letter of Representations),
Trustee as well as Issuer must sign
this Letter. If there is no Trustee,
in signing this Letter Issuer itself _______________________________________________
undertakes to perform all of the (Issuer)
obligations set forth herein.
B. Schedule B contains statements By: ____________________________________________
that DTC believes accurately (Authorized Officer's Signature)
describe DTC, the method of effecting
book-entry transfers of securities _______________________________________________
destributed through DTC, and certain (Trustee)
related matters.
_______________________________________________
(Authorized Officer's Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By ___________________________________
cc: Underwriter
Underwriter's Counsel
</TABLE>
-4-
<PAGE> 126
SCHEDULE A
(Describe Issue)
<TABLE>
<CAPTION>
CUSIP Principal Amount Maturity Date Interest Rate
- ----- ---------------- ------------- -------------
<S> <C> <C> <C>
</TABLE>
<PAGE> 127
EXHIBIT 4.2(D)
Trustee's Certificate
pursuant to Section 20.3
of the Pooling and Servicing
Agreement
Chemical Bank, as trustee (the "Trustee") of the Ford Credit 1994-B Grantor
Trust created pursuant to the Pooling and Servicing Agreement (including the
Standard Terms and Conditions of Agreement incorporated by reference therein,
the "Pooling and Servicing Agreement") dated as of November __, 1994, among
Ford Credit Auto Receivables Corporation, as Seller (the "Seller"), Ford Motor
Credit Company, as Servicer and the Trustee, does hereby sell, transfer,
assign, and otherwise convey to the Seller, without recourse, representation,
or warranty, all of the Trustee's right, title, and interest in and to all of
the Receivables (as defined in the Pooling and Servicing Agreement) identified
in the attached Servicer's Certificate as "Purchased Receivables," which are to
be repurchased by the Seller pursuant to Section 12.2 and all security and
documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ____ day of __________,
19__.
_________________________
<PAGE> 128
EXHIBIT D-2
Trustee's Certificate
pursuant to Section 20.3
of the Pooling and Servicing
Agreement
Chemical Bank, as trustee (the "Trustee") of the Ford Credit 1994-B Grantor
Trust created pursuant to the Pooling and Servicing Agreement (including the
Standard Terms and Conditions of Agreement incorporated by reference therein,
the "Pooling and Servicing Agreement") dated as of November __, 1994, among
Ford Credit Auto Receivables Corporation, as Seller, Ford Motor Credit Company,
as Servicer (the "Servicer") and the Trustee, does hereby sell, transfer,
assign, and otherwise convey to the Servicer, without recourse, representation,
or warranty, all of the Trustee's right, title, and interest in and to all of
the Receivables (as defined in the Pooling and Servicing Agreement) identified
in the attached Servicer's Certificate as "Purchased Receivables," which are to
be purchased by the Servicer pursuant to Section 13.7 or 21.2, and all security
and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ____ day of __________,
19__.
___________________________
<PAGE> 1
EXHIBIT 5.1
FORD
[LOGO]
Ford Motor Credit Company The American Road
P.O. Box 6044
Hurley D. Smith Dearborn, MI 48121-6044
Secretary and Corporate Counsel
313-594-9876
November 8, 1994
Ford Motor Auto Receivables Corporation
The American Road
Dearborn, Michigan 48121
Dear Sirs:
The undersigned, Secretary and Corporate Counsel of Ford Credit Auto
Receivables Corporation (the "Company"), has acted as counsel for the Company
in connection with Registration Statement No. 33-54125, as amended (the
"Registration Statement"), filed by the Company on behalf of the Ford Credit
1994-B Grantor Trust (the "Trust") with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, respecting the issuance by the
Trust of certificates representing fractional undivided interests in the Trust.
The Certificates are to be issued pursuant to a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), to be entered into among the Company,
Ford Motor Credit Company and Chemical Bank, as trustee (the "Trustee").
In that connection, I have examined, or caused to be examined,
originals, or copies certified or otherwise identified to my satisfaction, of
such documents, corporate records and other instruments as I have deemed
necessary or appropriate for the purposes of this opinion. Based upon the
foregoing, I am of the opinion that the Certificates, when duly executed and
authenticated by the Trustee in accordance with the terms of the Pooling and
Servicing Agreement and issued and delivered against payment therefor, will be
legally issued, fully paid and nonassessable.
I hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement. In giving this consent, I do not admit that I am in
the category of persons whose consent is required under Section 7 of the
Securities Act or the Rules and Regulations of the Commission issued
thereunder.
Very truly yours,
/s/ Hurley D. Smith
<PAGE> 1
EXHIBIT 8.1
November 8, 1994
Ford Credit Auto Receivables Corporation
The American Road
Dearborn, Michigan 48121
Re: Ford Credit 1994-B Grantor Trust
Asset Backed Certificates, Class A
Ladies and Gentlemen:
We are members of the New York Bar and have acted as special counsel to
Ford Credit Auto Receivables Corporation, a Delaware corporation, as seller
(the "Seller"), in connection with (a) the sale and assignment of certain
retail installment sale contracts for new and used automobiles and light trucks
(the "Receivables") by the Seller to Chemical Bank, as trustee (the "Trustee")
for a grantor trust (the "Trust") to be formed pursuant to a Pooling and
Servicing Agreement, dated as of November 1, 1994 (the "Pooling and Servicing
Agreement"), among the Seller, Ford Motor Credit Company, as servicer (the
"Servicer"), the Trustee and the Class A Agent, in exchange for Ford Credit
1994-B Grantor Trust Asset Backed Certificates, Class A (the "Class A
Certificates") and for Ford Credit 1994-B Grantor Trust Asset Backed
Certificates, Class B (the "Class B Certificates", and together with the Class
A Certificates, the "Certificates") and (b) the sale of the Class A
Certificates to the several underwriters.
We are admitted to the Bar of the State of New York and we express no
opinion as to the laws of any other jurisdiction except the laws of the United
States of America to the extent specifically referred to herein.
In connection with our engagement, we have examined and relied upon the
registration statement on
<PAGE> 2
May 10, 1994
Page 2
Form S-3, No. 33-54125, filed with the Securities and Exchange Commission on
June 13, 1994, and Amendment No. 1 thereto, filed with the Securities and
Exchange Commission on November 8, 1994 (together, the "Registration
Statement") for the Ford Credit 1994-B Grantor Trust, the form of Pooling and
Servicing Agreement, and such other documents as we have deemed necessary. In
addition, we have examined and considered executed originals or counterparts,
or certified or other copies identified to our satisfaction as being true
copies of such certificates, instruments, documents and other corporate records
of the Seller and such matters of fact and law as we deem necessary for the
purposes of the opinion expressed below. Capitalized terms not otherwise
defined herein have the meanings given to them in the Pooling and Servicing
Agreement.
In our examination we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified or
photostatic copies, and the authenticity of the originals of such latter
documents. As to any facts material to the opinions expressed herein which
were not independently established or verified, we have relied upon statements
and representations of officers and other representatives of the Seller, Ford
Motor Credit Company, and others.
In rendering our opinion, we have also considered and relied upon the
Internal Revenue Code of 1986, as amend (the "Code"), administrative rulings,
judicial decisions, regulations, and such other authorities as we have deemed
appropriate. The statutory provisions, regulations, interpretations and other
authorities upon which our opinion is based are subject to change, and such
changes could apply retroactively. In addition, there can be no assurance that
positions contrary to those stated in our opinion will not be taken by the
Internal Revenue Service.
Based on and subject to the foregoing, we are of the opinion that for
federal income tax purposes, the Trust created by the Pooling and Servicing
Agreement will not be classified as an association taxable as a corpora-
<PAGE> 3
May 10, 1994
Page 3
tion and, instead, under subpart E, part I of subchapter J of the Code, the
Trust will be treated as a grantor trust and, subject to characterization of
certain fees and other amounts payable to the Seller, the Class B
Certificateholder, or the Servicer by the Trust as stripped coupons, each Class
A Certificateholder will be treated as the owner of an undivided interest in
the income and corpus of the Trust.
Except for the opinion expressed above, we express no opinion as to any
other tax consequences of the transaction to any party under federal, state,
local, or foreign laws. We consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to Skadden, Arps, Slate,
Meagher & Flom under the caption "Legal Opinions" in the prospectus included in
the Registration Statement.
Very truly yours,
<PAGE> 1
EXHIBIT 10.1
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of this ___ day of November 1994, by and
between FORD MOTOR CREDIT COMPANY, a Delaware corporation (the "Seller"),
having its principal executive office at The American Road, Dearborn, Michigan
48121, and FORD CREDIT AUTO RECEIVABLES CORPORATION, a Delaware corporation
(the "Purchaser"), having its principal executive office at The American Road,
Dearborn, Michigan 48121.
WHEREAS, in the regular course of its business, the Seller purchases
certain motor vehicle retail installment sale contracts secured by new and used
automobiles and light duty trucks from motor vehicle dealers.
WHEREAS, the Seller and the Purchaser wish to set forth the terms pursuant
to which the Receivables (as hereinafter defined) are to be sold by the Seller
to the Purchaser, which Receivables will be transferred by the Purchaser,
pursuant to the Pooling and Servicing Agreement (as hereinafter defined) to the
Ford Credit 1994-B Grantor Trust to be created thereunder, which Trust will
issue certificates representing fractional undivided interests in such
Receivables and the other property of the Trust (the "Certificates").
NOW, THEREFORE, in consideration of the foregoing, other good and valuable
consideration, and the mutual terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the meaning set forth in the
Pooling and Servicing Agreement. As used in this Agreement, the following
terms shall, unless the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms of the
terms defined):
<PAGE> 2
"Agreement" shall mean this Purchase Agreement and all amendments
hereof and supplements hereto.
"Assignment" shall mean the document of assignment attached to this
Agreement as Exhibit A.
"Class A Certificate" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Class B Certificate" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Closing Date" shall mean November ___, 1994.
"Collections" shall mean all amounts collected by the Servicer (from
whatever source) on or with respect to the Receivables.
"Cut-Off Date" shall mean November 1, 1994.
"Distribution Date" shall mean, for each Collection Period, the 15th day of
the following month or, if such fifteenth day is not a Business Day, the next
succeeding Business Day.
"Obligor" shall have the meaning specified in the Pooling and Servicing
Agreement.
"Person" shall have the meaning specified in the Pooling and Servicing
Agreement.
"Pooling and Servicing Agreement" shall mean the Pooling and Servicing
Agreement by and among the Seller, as servicer, the Purchaser, as seller, and
Chemical Bank, as trustee and as agent for the holders of the Class A
Certificates, dated as of November ___, 1994.
"Prospectus" shall have the meaning assigned to such term in the
Underwriting Agreement.
"Purchaser" shall mean Ford Credit Auto Receivables Corporation, a Delaware
corporation, its successors and assigns.
"Rating Agency" shall mean Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group or any successors thereto.
2
<PAGE> 3
"Receivable" shall mean any retail installment sale contract which
appears on Exhibit B hereto and any amendments, modifications or supplements to
such retail installment sale contract.
"Receivable Files" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Receivables Purchase Price" shall mean $________________.
"Repurchase Event" shall have the meaning specified in Section 6.2
hereof.
"Schedule of Receivables" shall mean the list of Receivables annexed
hereto as Exhibit B.
"Seller" shall mean Ford Motor Credit Company, a Delaware corporation,
its successors and assigns.
"Servicing Fee" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Trust" shall mean the Ford Credit 1994-B Grantor Trust.
"UCC" shall mean the Uniform Commercial Code, as in effect from time to
time in the relevant jurisdictions.
"Underwriting Agreement" shall mean the Underwriting Agreement by and
between J.P. Morgan Securities Inc., as representatives of the several
underwriters, and the Purchaser, as seller, dated November ___, 1994.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1 Purchase and Sale of Receivables
On the Closing Date, subject to the terms and conditions of this
Agreement, the Seller agrees to sell to the Purchaser, and the Purchaser agrees
to purchase
3
<PAGE> 4
from the Seller, the Receivables and the other property relating thereto (as
defined below).
(a) Sale of Receivables. On the Closing Date and simultaneously with
the transactions pursuant to the Pooling and Servicing Agreement, the Seller
shall sell, transfer, assign and otherwise convey to the Purchaser, without
recourse, all right, title and interest of the Seller, whether now owned or
hereafter acquired, in and to the following: (i) the Receivables, and all
monies paid thereon and due thereon on or after the Cut-Off Date (including any
monies received prior to the Cut-Off Date that are due on or after the Cut-Off
Date and were not used to reduce the principal balance of the Receivable); (ii)
the security interests in the Financed Vehicles granted by Obligors pursuant to
the Receivables; (iii) any proceeds from claims on any physical damage, credit
life, credit disability, or other insurance policies covering Financed Vehicles
or Obligors; (iv) Dealer Recourse; (v) rebates of premiums and other amounts
relating to insurance policies and other items financed under the Receivables
in effect as of the Cut-Off Date; and (vi) the proceeds of any and all of the
foregoing.
(b) Receivables Purchase Price. In consideration for the Receivables
and other properties described in Section 2.1(a), the Purchaser shall, on the
Closing Date, pay to the Seller the Receivables Purchase Price. An amount
equal to _______% of the Receivables Purchase Price shall be paid to the Seller
in cash. The remaining _______% of the Receivables Purchase Price shall be
deemed paid and returned to the Purchaser and be considered a contribution to
capital. The portion of the Receivables Purchase Price to be paid in cash
shall be by federal wire transfer (same day) funds.
2.2 The Closing. The sale and purchase of the Receivables shall take
place at a closing (the "Closing") at the offices of Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, New York 10022 on the Closing Date,
simultaneously with the closings under: (a) the Pooling and Servicing
Agreement pursuant to which (i) the Purchaser will assign all of its right,
title and interests in and to the Receivables and other property to the Trustee
for the benefit of the Certificateholders; and (ii) the Purchaser will deposit
the foregoing into the Trust in exchange for the Class A Certificates and Class
4
<PAGE> 5
B Certificates; and (b) the Underwriting Agreement, pursuant to which the
Purchaser will sell to the underwriters named therein (the "Underwriters") the
Class A Certificates.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Warranties of the Purchaser. The Purchaser hereby represents and
warrants to the Seller as of the date hereof and as of the Closing Date:
(a) Organization, etc. The Purchaser has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
State of Delaware, and has full corporate power and authority to execute and
deliver this Agreement and to perform the terms and provisions hereof and
thereof.
(b) Due Authorization and No Violation. This Agreement has been duly
authorized, executed and delivered by the Purchaser, and is the valid, binding
and enforceable obligation of the Purchaser except as the same may be limited
by insolvency, bankruptcy, reorganization or other laws relating to or
affecting the enforcement of creditors' rights or by general equity principles.
The consummation of the transactions contemplated by this Agreement, and the
fulfillment of the terms thereof, will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under (in each
case material to the Purchaser), or result in the creation or imposition of any
lien, charge or encumbrance (in each case material to the Purchaser) upon any
of the property or assets of the Purchaser pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement, guarantee, lease financing
agreement or similar agreement or instrument under which the Purchaser is a
debtor or guarantor, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or the By-laws of the Purchaser.
(c) No Litigation. No legal or governmental proceedings are pending
to which the Purchaser is a party or of which any property of the Purchaser is
the
5
<PAGE> 6
subject, and no such proceedings are threatened or contemplated by governmental
authorities or threatened by others, other than such proceedings which will not
have a material adverse effect upon the general affairs, financial position,
net worth or results of operations (on an annual basis) of the Purchaser and
will not materially and adversely affect the performance by the Purchaser of
its obligations under, or the validity and enforceability of, this Agreement.
3.2 Representations and Warranties of the Seller.
(a) The Seller hereby represents and warrants to the Purchaser as of
the date hereof and as of the Closing Date:
(i) Organization, etc. The Seller has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the State of Delaware, and is duly qualified to transact
business and is in good standing in each jurisdiction in the United
States of America in which the conduct of its business or the
ownership of its property requires such qualification.
(ii) Power and Authority. The Seller has full power and
authority to sell and assign the property sold and assigned to the
Purchaser hereunder and has duly authorized such sale and assignment
to the Purchaser by all necessary corporate action. This Agreement
has been duly authorized, executed and delivered by the Seller and
shall constitute the legal, valid and binding obligation of the Seller
except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the enforcement
of creditors' rights or by general equity principles.
(iii) No Violation. The consummation of the transactions
contemplated by this Agreement, and the fulfillment of the terms
thereof, will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under (in each case
material to the Seller and its subsidiaries considered as a whole), or
result in the creation or imposition of any lien,
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<PAGE> 7
charge or encumbrance (in each case material to the
Seller and its subsidiaries considered as a whole) upon any of the
property or assets of the Seller pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement, guarantee, lease
financing agreement or similar agreement or instrument under which the
Seller is a debtor or guarantor, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or the
By-Laws of the Seller.
(iv) No Proceedings. No legal or governmental proceedings are
pending to which the Seller is a party or of which any property of the
Seller is the subject, and no such proceedings are threatened or
contemplated by governmental authorities or threatened by others,
other than such proceedings which will not have a material adverse
effect upon the general affairs, financial position, net worth or
results of operations (on an annual basis) of the Seller and its
subsidiaries considered as a whole and will not materially and
adversely affect the performance by the Seller of its obligations
under, or the validity and enforceability of, this Agreement.
(b) The Seller makes the following representations and warranties as
to the Receivables on which the Purchaser relies in accepting the Receivables.
Such representations and warranties speak as of the execution and delivery of
this Agreement, but shall survive the sale, transfer, and assignment of the
Receivables to the Purchaser and the subsequent assignment and transfer
pursuant to the Pooling and Servicing Agreement:
(i) Characteristics of Receivables. Each Receivable (a) shall
have been originated in the United States of America by a Dealer for
the retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, shall have been fully and properly executed by the
parties thereto, shall have been purchased by the Seller from such
Dealer under an existing dealer agreement with the Seller, shall have
been validly assigned by such Dealer to the Seller, (b) shall have
created or shall create a valid, subsisting, and enforceable first
priority security interest in favor of the
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<PAGE> 8
Seller in the Financed Vehicle, which security interest shall
be assignable by the Seller to the Purchaser, (c) shall contain
customary and enforceable provisions such that the rights and remedies
of the holder thereof shall be adequate for realization against the
collateral of the benefits of the security, (d) shall provide for
level monthly payments (provided that the payment in the first or last
month in the life of the Receivable may be minimally different from
the level payment) that fully amortize the Amount Financed by maturity
and yield interest at the Annual Percentage Rate, and (e) shall
provide for, in the event that such contract is prepaid, a prepayment
that fully pays the Principal Balance.
(ii) Schedule of Receivables. The information set forth in
Exhibit B to this Agreement shall be true and correct in all material
respects as of the opening of business on the Cut-Off Date, and no
selection procedures believed to be adverse to the Certificateholders
shall have been utilized in selecting the Receivables from those
receivables which meet the criteria contained herein. The computer
tape regarding the Receivables made available to the Purchaser and its
assigns is true and correct in all respects.
(iii) Compliance with Law. Each Receivable and the sale of
the Financed Vehicle shall have complied at the time it was originated
or made and at the execution of this Agreement shall comply in all
material respects with all requirements of applicable federal, state,
and local laws, and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, and state adaptations of the National Consumer Act and of the
Uniform Consumer Credit Code, and other consumer credit laws and equal
credit opportunity and disclosure laws.
(iv) Binding Obligation. Each Receivable shall represent the
genuine, legal, valid,
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<PAGE> 9
and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms subject
to the effect of bankruptcy, insolvency, reorganization, or other
similar laws affecting the enforcement of creditors' rights generally.
(v) No Government Obligor. None of the Receivables shall be
due from the United States of America or any state or from any agency,
department, or instrumentality of the United States of America or any
state.
(vi) Security Interest in Financed Vehicle. Immediately prior
to the sale, assignment, and transfer thereof, each Receivable shall
be secured by a validly perfected first security interest in the
Financed Vehicle in favor of the Seller as secured party or all
necessary and appropriate actions shall have been commenced that would
result in the valid perfection of a first security interest in the
Financed Vehicle in favor of the Seller as secured party.
(vii) Receivables in Force. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed Vehicle
have been released from the lien granted by the related Receivable in
whole or in part.
(viii) No Waiver. No provision of a Receivable shall have
been waived.
(ix) No Defenses. No right of rescission, setoff,
counterclaim, or defense shall have been asserted or threatened with
respect to any Receivable.
(x) No Liens. To the best of the Seller's knowledge, no liens
or claims shall have been filed for work, labor, or materials relating
to a Financed Vehicle that shall be liens prior to, or equal or
coordinate with, the security interest in the Financed Vehicle granted
by the Receivable.
(xi) No Default. Except for payment defaults continuing for a
period of not more than
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thirty days as of the Cut-Off Date, no default, breach,
violation, or event permitting acceleration under the terms of any
Receivable shall have occurred; and no continuing condition that with
notice or the lapse of time would constitute a default, breach,
violation, or event permitting acceleration under the terms of any
Receivable shall have arisen; and the Seller shall not waive any of
the foregoing.
(xii) Insurance. The Seller, in accordance with its customary
procedures, shall have determined that the Obligor has obtained or
agreed to obtain physical damage insurance covering the Financed
Vehicle.
(xiii) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the
Receivables from the Seller to the Purchaser and that the beneficial
interest in and title to the Receivables not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been
sold, transferred, assigned, or pledged by the Seller to any Person
other than the Purchaser. Immediately prior to the transfer and
assignment herein contemplated, the Seller had good and marketable
title to each Receivable free and clear of all Liens, encumbrances,
security interests, and rights of others and, immediately upon the
transfer thereof, the Purchaser shall have good and marketable title
to each Receivable, free and clear of all Liens, encumbrances,
security interests, and rights of others; and the transfer has been
perfected under the UCC.
(xiv) Valid Assignment. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction
under which the sale, transfer, and assignment of such Receivable
under this Agreement shall be unlawful, void, or voidable. The Seller
has not entered into any agreement with any account debtor that
prohibits, restricts or conditions the Assignment of any portion of
the Receivables.
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(xv) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Purchaser a first perfected ownership interest in the Receivables
shall have been made.
(xvi) One Original. There shall be only one original executed
copy of each Receivable.
(xvii) New and Used Vehicles. Approximately 97.9% of the
aggregate Principal Balance of the Receivables, constituting 97.1% of
the Receivables, as of the Cutoff Date, represent vehicles financed at
new vehicle rates, and the remainder of the Receivables represent
vehicles financed at used vehicle rates;
(xviii) Origination. Each Receivable shall have an
origination date on or after November 1, 1993;
(xix) Maturity of Receivables. Each Receivable shall have an
original maturity of not greater than 60 months;
(xx) Minimum Annual Percentage Rate. Each Receivable shall
have an Annual Percentage Rate equal to or greater than 8.8%;
(xxi) Scheduled Payments. Each Receivable shall have a first
Scheduled Payment due on or prior to November 30, 1994 and no
Receivable shall have a payment that is more than 30 days overdue as
of the Cut-Off Date;
(xxii) Location of Receivable Files. The Receivable Files
shall be kept at one or more of the locations listed in Schedule A
hereto; and
(xxiii) No Extensions. The number of Scheduled Payments shall
not have been extended on any Receivable on or before the Cut-Off
Date.
(xxiv) Other Data. The numerical data relating to the
characteristics of the Receivables contained in the Prospectus are
true and correct in all material respects.
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(xxv) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the UCC.
(xxvi) No Simple Interest Receivables. None of the
Receivables are Simple Interest Receivables.
(xxvii) Agreement. The representations and warranties in this
Agreement shall be true.
ARTICLE IV
CONDITIONS
4.1 Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to purchase the Receivables is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Seller hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the seller shall have performed
all obligations to be performed by it hereunder on or prior to the Closing
Date.
(b) Computer Files Marked. The Seller shall, at its own expense, on
or prior to the Closing Date, indicate in its computer files that the
Receivables have been sold to the Purchaser pursuant to this Agreement and
deliver to the Purchaser the Schedule of Receivables certified by an officer of
the Seller to be true, correct and complete.
(c) Documents to be delivered by the Seller at the Closing.
(i) The Assignment. At the Closing, the Seller will execute
and deliver the Assignment. The Assignment shall be substantially
in the form of Exhibit A hereto.
(ii) Evidence of UCC Filing. On or prior to the Closing Date,
the Seller shall record
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and file, at its own expense, a UCC-1 financing statement in
each jurisdiction in which required by applicable law, executed by the
Seller, as seller or debtor, and naming the Purchaser, as purchaser or
secured party, naming the Receivables and the other property conveyed
hereunder as collateral, meeting the requirements of the laws of each
such jurisdiction and in such manner as is necessary to perfect the
sale, transfer, assignment and conveyance of such Receivables to the
Purchaser. The Seller shall deliver a file-stamped copy, or other
evidence satisfactory to the Purchaser of such filing, to the
Purchaser on or prior to the Closing Date.
(iii) Other Documents. Such other documents as the Purchaser
may reasonably request.
(d) Other Transactions. The transactions contemplated by the Pooling
and Servicing Agreement shall be consummated on the Closing Date.
4.2 Conditions to Obligation of the Seller. The obligation of the Seller
to sell the Receivables to the Purchaser is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Purchaser hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Purchaser shall have
performed all obligations to be performed by it hereunder on or prior to the
Closing Date.
(b) Receivables Purchase Price. At the Closing Date, the Purchaser
will deliver to the Seller the Receivables Purchase Price, as provided in
Section 2.1(b).
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ARTICLE V
COVENANTS OF THE SELLER
The Seller covenants and agrees with the Purchaser as follows,
provided, however, that to the extent that any provision of this ARTICLE V
conflicts with any provision of the Pooling and Servicing Agreement, the
Pooling and Servicing Agreement shall govern:
5.1 Protection of Right, Title and Interest.
(a) The Seller shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Purchaser in the Receivables and in the proceeds
thereof. The Seller shall deliver (or cause to be delivered) to the Purchaser
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) The Seller shall not change its name, identity, or corporate
structure in any manner that would, could, or might make any financing
statement or continuation statement filed by the Seller in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given the Purchaser at least five days' prior
written notice thereof and shall have promptly filed appropriate amendments to
all previously filed financing statements or continuation statements.
(c) The Seller shall give the Purchaser at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Seller shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the
United States of America.
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(d) The Seller shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit the reader thereof to
know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each).
(e) The Seller shall maintain its computer systems so that, from and
after the time of sale hereunder of the Receivables to the Purchaser, the
Seller's master computer records (including any back-up archives) that refer to
a Receivable shall indicate clearly the interest of the Purchaser in such
Receivable and that such Receivable is owned by the Purchaser. Indication of
the Purchaser's ownership of a Receivable shall be deleted from or modified on
the Seller's computer systems when, and only when, the Receivable shall have
been paid in full or repurchased.
(f) If at any time the Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in automotive receivables to
any prospective purchaser, lender, or other transferee, the Seller shall give
to such prospective purchaser, lender, or other transferee computer tapes,
records, or print-outs (including any restored from back-up archives) that, if
they shall refer in any manner whatsoever to any Receivable, shall indicate
clearly that such Receivable has been sold and is owned by the Purchaser.
(g) The Seller shall permit the Purchaser and its agents at any time
during normal business hours to inspect, audit, and make copies of and
abstracts from the Seller's records regarding any Receivable.
(h) Upon request, the Seller shall furnish to the Purchaser, within
twenty Business Days, a list of all Receivables (by contract number and name of
Obligor) then owned by the Purchaser, together with a reconciliation of such
list to the Schedule of Receivables.
5.2 Other Liens or Interests. Except for the conveyances hereunder and
pursuant to the Pooling and Servicing Agreement, the Seller will not sell,
pledge, assign or transfer any Receivable to any other Person, or grant,
create, incur, assume or suffer to exist any Lien
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on any interest therein, and the Seller shall defend the right, title, and
interest of the Purchaser in, to and under such Receivables against all claims
of third parties claiming through or under the Seller; provided, however, that
the Seller's obligations under this Section 5.2 shall terminate upon the
termination of the Trust pursuant to the Pooling and Servicing Agreement.
5.3 Costs and Expenses. The Seller agrees to pay all reasonable
costs and disbursements in connection with the perfection, as against all third
parties, of the Purchaser's right, title and interest in and to the
Receivables.
5.4 Indemnification.
(a) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages,
claims, and liabilities, arising out of or resulting from the failure of a
Receivable to be originated in compliance with all requirements of law and for
any breach of any of the Seller's representations and warranties contained
herein.
(b) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages,
claims, and liabilities, arising out of or resulting from the use, ownership,
or operation by the Seller or any affiliate thereof of a Financed Vehicle.
(c) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all taxes that may at any time be asserted
against the Purchaser with respect to the transactions contemplated herein,
including, without limitation, any sales, gross receipts, general corporation,
tangible personal property, privilege, or license taxes and costs and expenses
in defending against the same.
(d) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Purchaser through,
the negligence, willful misfeasance, or bad faith of the Seller in the
performance of
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its duties under this Agreement or by reason of reckless disregard of the
Seller's obligations and duties under the Agreement.
(e) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against all costs, expenses, losses, claims, damages, and
liabilities arising out of or incurred in connection with the acceptance or
performance of the Seller's trusts and duties as Servicer under the Pooling and
Servicing Agreement, except to the extent that such cost, expense, loss, claim,
damage, or liability shall be due to the willful misfeasance, bad faith, or
negligence (except for errors in judgment) of the Purchaser.
These indemnity obligations shall be in addition to any obligation that
the Seller may otherwise have.
5.5 Sale. Seller agrees to treat this conveyance for all purposes
(including without limitation tax and financial accounting purposes) as a sale
on all relevant books, records, tax returns, financial statements and other
applicable documents.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 Obligations of Seller. The obligations of the Seller under this
Agreement shall not be affected by reason of any invalidity, illegality or
irregularity of any Receivable.
6.2 Repurchase Events. The Seller hereby covenants and agrees with
the Purchaser for the benefit of the Purchaser, the Trustee and the
Certificateholders, that the occurrence of a breach of any of the Seller's
representations and warranties contained in Section 3.2(b) hereof shall
constitute events obligating the Seller to repurchase Receivables hereunder
("Repurchase Events"), at the Purchase Amount from the Purchaser or from the
Trust. The repurchase obligation of the Seller shall constitute the sole
remedy to the Certificateholders, or to the Trustee, or to the Purchaser
against the Seller with respect to any Repurchase Event.
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6.3 Seller's Assignment of Purchased Receivables. With respect to
all Receivables repurchased by the Seller pursuant to this Agreement, the
Purchaser shall assign, without recourse, representation or warranty, to the
Seller all the Purchaser's right, title and interest in and to such
Receivables, and all security and documents relating thereto.
6.4 Trust. The Seller acknowledges that: the Purchaser will,
pursuant to the Pooling and Servicing Agreement, sell the Receivables to the
Trust and assign its rights under this Agreement to the Trustee for the benefit
of the Certificateholders, and that the representations and warranties
contained in this Agreement and the rights of the Purchaser under Sections 6.2
and 6.3 hereof are intended to benefit such Trust and any Certificateholder.
The Seller hereby consents to such sales and assignments.
6.5 Amendment. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Seller and the Purchaser;
provided, however, that any such amendment that materially adversely affects
the rights of the Certificateholders under the Pooling and Servicing Agreement
must be consented to by the Holders of 51% of the Class A Certificate Balance
and 51% of the Class B Certificate Balance.
6.6 Accountants' Letters.
(a) Coopers & Lybrand will review the characteristics of the
Receivables described in the Schedule of Receivables set forth as Exhibit B
hereto and will compare those characteristics to the information with respect
to the Receivables contained in the Prospectus.
(b) Seller will cooperate with the Purchaser and Coopers & Lybrand in
making available all information and taking all steps reasonably necessary to
permit such accountants to complete the review set forth in Section 6.6(a)
above and to deliver the letters required of them under the Underwriting
Agreement.
(c) Coopers & Lybrand will deliver to the Purchaser a letter, dated
the date of the Prospectus, in the form previously agreed to by the Seller and
the
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Purchaser, with respect to the financial and statistical information contained
in the Prospectus under the caption "Delinquencies, Repossessions and Net
Losses" and with respect to such other information as may be agreed in the form
of letter.
6.7 Waivers. No failure or delay on the part of the Purchaser in
exercising any power, right or remedy under this Agreement or the Assignment
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy.
6.8 Notices. All communications and notices pursuant hereto to either
party shall be in writing or by telegraph or telex and addressed or delivered
to it at its address (or in case of telex, at its telex number at such address)
shown in the opening portion of this Agreement or at such other address as may
be designated by it by notice to the other party and, if mailed or sent by
telegraph or telex, shall be deemed given when mailed, communicated to the
telegraph office or transmitted by telex.
6.9 Costs and Expenses. The Seller will pay all expenses incident to the
performance of its obligations under this Agreement and the Seller agrees to
pay all reasonable out-of-pocket costs and expenses of the Purchaser, excluding
fees and expenses of counsel, in connection with the perfection as against
third parties of the Purchaser's right, title and interest in and to the
Receivables and the enforcement of any obligation of the Seller hereunder.
6.10 Representations to the Seller. The respective agreements,
representations, warranties and other statements by the Seller and the
Purchaser set forth in or made pursuant to this Agreement shall remain in full
force and effect and will survive the closing under Section 2.2 hereof.
6.11 Confidential Information. The Purchaser agrees that it will neither
use nor disclose to any person the names and addresses of the Obligors, except
in connection with the enforcement of the Purchaser's rights
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hereunder, under the Receivables, under any Pooling and Servicing Agreement or
as required by law.
6.12 Headings and Cross-References. The various headings in this Agreement
are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this
Agreement to Section names or numbers are to such Sections of this Agreement.
6.13 GOVERNING LAW. THIS AGREEMENT AND THE ASSIGNMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
6.14 Counterparts. This Agreement may be executed in two or more
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereby have caused this Purchase Agreement
to be executed by their respective officers thereunto duly authorized as of the
date and year first above written.
FORD MOTOR CREDIT COMPANY
By: _________________________
Name:
Title:
FORD CREDIT AUTO RECEIVABLES
CORPORATION
By: _________________________
Name:
Title:
21
<PAGE> 22
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated as
of November ___, 1994, between the undersigned and FORD CREDIT AUTO RECEIVABLES
CORPORATION (the "Purchaser") (the "Purchase Agreement"), the undersigned does
hereby sell, assign, transfer and otherwise convey unto the Purchaser, without
recourse, all right, title and interest of the undersigned, whether now owned
or hereafter acquired, in and to the following: (i) the Receivables, and all
monies paid thereon and due thereon on or after the Cut-Off Date (including any
monies received prior to the Cut-Off Date that are due on or after the Cut-Off
Date and were not used to reduce the principal balance of the Receivables);
(ii) the security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables; (iii) any proceeds from claims on any physical
damage, credit life, credit disability, or other insurance policies covering
Financed Vehicles or Obligors; (iv) Dealer Recourse; (v) rebates of premiums
and other amounts relating to insurance policies and other items financed under
the Receivables in effect as of the Cut-Off Date; and (vi) the proceeds of any
and all of the foregoing. The foregoing sale does not constitute and is not
intended to result in any assumption by the Purchaser of any obligation of the
undersigned to the Obligors, insurers or any other person in connection with
the Receivables, Receivable Files, any insurance policies or any agreement or
instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be governed by the Purchase Agreement.
<PAGE> 23
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of November ___, 1994.
FORD MOTOR CREDIT COMPANY
By: _______________________
Name:
Title:
2
<PAGE> 24
EXHIBIT B
Schedule of Receivables
DELIVERED TO PURCHASER
AT CLOSING
<PAGE> 25
Schedule A
Location of Receivable Files
Indianapolis
5875 Castle Creek Pkwy. North Drive
Suite 240
Indianapolis, IN 46250-4308
Detroit-North
580 Kirts Boulevard
Suite 300
Troy, MI 48084
Chicago-North
9700 Higgins Road
Suite 720
Rosemont, IL 60018
Ohio South
9797 Springboro Pike
Suite 302
Miamisburg, OH 45343
Detroit/West
One ParkLane Blvd.
Suite 405E
Dearborn, MI 48126
Chicago South
900 Frontage Road (South)
Suite 310
Woodridge, IL 60517
Grand Rapids
3001 Fuller Ave. N.E.
Grand Rapids, MI 49505
Chicago - East
One River Place, Suite A
Lansing, IL 60438
Akron
3560 W. Market St.
Suite 105
Fairlawn, OH 44333-2600
<PAGE> 26
Louisville
502 Executive Park
Louisville, KY 40207
Milwaukee
10850 W. Park Place
Suite 110
Milwaukee, WI 53224
Chicago West
2500 W. Higgins Rd.
Suite 280
Hoffman Estates, IL 60195-2008
Saginaw
4901 Towne Centre Rd.
Suite 200
Saginaw, MI 48605
Findlay
3500 North Main Street
Findlay, OH 45840-1447
Cleveland
5700 Lombardo Centre
Suite 101
Seven Hills, OH 44131-2581
Philadelphia
Bay Colony Executive Park
575 E. Swedesford
Suite 100
Wayne, PA 19406
New Jersey South
5000 Dearborn Circle
Suite 200
Mt. Laurel, NJ 08054
Baltimore-West
1829 Reistertown Road
Baltimore, MD 21208-8861
<PAGE> 27
Long Island
972 Brush Hollow Road
5th Floor
Westbury, NY 11590
Washington, D.C.
2440 Research Blvd.
Suite 150
Rockville, MD 20850-3293
New Haven
116 Washington Ave.
Floor #4
North Haven, CT 06473
Norfolk
Greenbrier Pointe
1401 Greenbrier Pkwy.
Suite 350
Chesapeake, VA 23320
New Jersey North
103 Eisenhower Parkway
Roseland, NJ 07068-1069
Pittsburgh
1910 Cochran Rd.
Manor Oak Two
Suite 285
Pittsburgh, PA 15220
Richmond
10710 Midlothian Turnpike
Suite 306
Richmond, VA 23235
Syracuse
5788 Widewaters Pkwy.
DeWitt, NY 13214
Westchester
660 White Plains Road
Tarrytown, NY 10591-0010
<PAGE> 28
Mobile
1201 Montlimar Dr.
Suite 700
Mobile, AL 36609
Birmingham
3535 Grandview Parkway
Suite 340
Birmingham, AL 35243
Orlando
2600 Lake Lucien Drive
Suite 306, The Forum Bldg.
Maitland, FL 32751
Memphis
6555 Quince Road
Suite 300
Memphis, TN 38119
Atlanta - North
North Park Town Center
1000 Abernathy Rd. N.E.
Bldg. 400, Suite 180
Atlanta, GA 30328
Greensboro
1500 Pinecroft Rd.
Suite 220
Greensboro, NC 27407
Charlotte
5832 Farm Pond Lane
Suite 200
Charlotte, NC 28212
Jacksonville
9485 Regency Square Boulevard
Jacksonville, FL 32225
Jackson
Highland Village Center
4500 I-55 North
Suite 292
Jackson, MS 39211
<PAGE> 29
Columbia
250 Berryhill Road
Suite 201
Columbia, SC 29210
Miami
6303 Blue Lagoon Drive
Suite 200
Miami, FL 33126
Dothan
3160 West Main Street
Suite 1
Dothan, AL 36301-1180
Nashville
565 Marriott Drive
Suite 190, Highland Ridge
Nashville, TN 37210
Raleigh
3651 Trust Drive
Raleigh, NC 27604
Tampa
2502 Rocky Point Dr.
Suite 150, Lincoln Pointe
Tampa, FL 33607
Odessa
Ashford Park Office Center
Suite 201A
2626 John Ben Sheppard Parkway
Odessa, TX 79762
Lubbock
Suite 200
4010 82nd Street
Lubbock, TX 79424
Dallas
801 E. Campbell Road
Suite 600, Campbell Forum
Richardson, TX 75081
<PAGE> 30
Austin
1701 Directors Blvd.
Suite 320
Austin, TX 78744
Fort Worth
2350 W. Airport Hwy.
Suite 400, Center Park Tower
Bedford, TX 76022
Beaumont
2615 Calder
Suite 715
Beaumont, TX 77702
Houston-West
820 Gessner
Suite 700
Houston, TX 77024
Harlingen
1916 East Harrison
Harlingen, TX 78550
Corpus Christi
5350 South Staples
Suite 225
Corpus Christi, TX 78411
Little Rock
1701 Centerview Dr.
Suite 201
Little Rock, AR 72211
Amarillo
1616 S. Kentucky
Suite 130 Bldg. D
Amarillo, TX 79102
El Paso
1200 Golden Key Circle
Suite 104
El Paso, TX 79925
<PAGE> 31
Albuquerque
6100 Uptown Blvd., NE
Suite 300
Albuquerque, NM 87110
Houston-North
363 N. Sam Houston Pkwy. E.
Suite 700
Houston, TX 77760
San Antonio
1600 N.E. Loop 410
Suite 200
San Antonio, TX 78209
Tulsa
9820 East 41st St.
Suite 300
Tulsa, OK 74145
Minneapolis
11095 Viking Drive
Suite 308, One Southwest Crossing
Eden Prairie, MN 55344-7290
Wichita
7570 West 21st Street
Wichita, KS 67212
St. Louis
4227 Earth City Exp.
Suite 100
Earth City, MO 63045
Jefferson City
210 Prodo Drive
Jefferson City, MO 65109
Kansas City
8001 College Blvd.
Suite 110
Overland Park, MO 66210-1800
<PAGE> 32
Des Moines
4200 Corporate Dr.
Suite 107
West Des Moines, IA 50266
Omaha
10810 Farnam Drive
Suite 113
Omaha, NE 68154
Davenport
2535 Tech Dr.
Suite 300, Commerce Exch. Bldg.
Bettendorf, IA 52722
Denver
6300 S. Syracuse Way
Suite 195
Englewood, CO 80111
Fargo
3100 13th Ave. South
Suite 304
Fargo, ND 58103
Springfield
2155 East Sunshine
Suite 101
Springfield, MO 65804-1816
Waterloo
211 E. San Marnan Dr.
Waterloo, IA 50702
San Bernadino
1615 Orange Tree Lane
Suite 215
Redlands, CA 92374
Salt Lake City
310 E. 4500 South
Suite 340
Murray, UT 84121-0501
<PAGE> 33
- -Honolulu
1585 Kapiolani Blvd.
Suite 922, Ala Moano Pacific Center
Honolulu, HI 96814
Spokane
North 901 Monroe
Suite 350
Spokane, WA 99210-2148
Grand Junction
744 Horizon Ct.
Suite 330
Grand Junction, CO 81506
San Francisco
4301 Hacienda Dr.
Suite 400
Pleasanton, CA 94588
Portland
10220 S.W. Greenburg Rd.
Suite 415
Portland, OR 97223-5506
Sacramento
2720 Gateway Oaks Dr.
Suite 200
Sacramento, CA 95833
San Diego
3111 Camino Del Rio N.
Suite 1333
San Diego, CA 92108
Phoenix
4742 24th Street
Suite 215
Phoenix, AZ 85016
San Jose
1900 McCarthy Blvd.
Suite 400
Milpitas, CA 95035
<PAGE> 34
Seattle
13555 S.E. 36th Street
Suite 350
Bellevue, WA 98006
Orange
765 The City Drive
Suite 200
Orange, CA 92668
Anchorage
4300 B. Street
Suite 206
Anglo Building
Anchorage, AK 99503
Appleton
54 Park Place
Appleton, WI 54915
South Bend
4215 Edison Lakes Parkway
Suite 140
Mishawaka, IN 46545
Columbus
655 Metro Place South
Suite 470, Metro V
Dublin, OH 43017-0792
Henderson
618 North Green Street
Henderson, KY 42420
Lansing
2205 Jolly Rd.
Suite D
Okemos, MI 48864
Marshall
1408 North Michigan
Marshall, IL 62441
New Jersey-Central
101 Interchange Plaza
Cranbury, NJ 08512
<PAGE> 35
Huntington
3425 U.S. Route 60 East
Barboursville, WV 25504
Buffalo
95 John Muir Drive
Amherst, NY 14228
Manchester
4 Bedford Farms
Bedford, NH 03110
Harrisburg
3045 Market Street
Plaza 55 Complex
Camp Hill, PA 17011
Boston South
Southboro Place - 2nd Floor
352 Turnpike Rd.
Southboro, MA 01772
Boston North
100 Ames Pond Drive
Tewksbury, MA 01876
Portland
2401 Congress Street
Portland, ME 04102
Albany
5 Pine West Plaza
Albany, NY 12212
Roanoke
5238 Valley Pointe Pkwy.
Roanoke, VA 24019
Falls Church
1650 Tysons Blvd
Suite 500
Mclean, VA 22101-9550
<PAGE> 36
Bristol
1241 Volunteer Parkway
Suite 200
Bristol, TN 37625
Chattanooga
6025 Lee Highway
Suite 443
Chattanooga, TN 37421
Decatur
401 Lee Street
Suite 500
Decatur, AL 35602
Fayetteville
4317 Ramsey Street
Suite 300
Fayetteville, NC 28311
Athens
3708 Atlanta Highway
Athens, GA 30604
Knoxville
5500 Lonas Drive
Suite 260
Knoxville, TN 37909
Macon
5400 Riverside Drive
Suite 201
Macon, GA 31210
Pensacola
25 W. Cedar Street
Suite 316
Pensacola, Fl 32501
Savannah
6600 Abercorn Street
Suite 206
Savannah, GA 31405
<PAGE> 37
Tyler
821 East SE Loop 323
Suite 300
Tyler, TX 75701
Oklahoma City
4101 Perimeter Ctr Dr.
Suite 300, Perimeter Center
Oklahoma City, OK 73112-2304
Baltimore-East
Campbell Corporate Center One
4940 Campell Blvd., Suite 140
Whitemarsh Business Community
Baltimore, MD 21236
Billings
1643 Lewis Avenue
Suite 201
Billings, MT 59102
Cheyenne
6234 Yellowstone
Cheyenne, WY 82009
Cape Girardeau
2851 Independence
Cape Girardeau, MO 63701
Atlanta -South
1691 Phoenix Blvd.
Suite 300
Atlanta, GA 30349
Pasadena
800 East Colorado Blvd.
Suite 400
Pasadena, CA 91109
Colorado Springs
5575 Tech Center Dr.
Suite 220
Colorado Springs, CO 80919
<PAGE> 38
South Bay
301 E. Ocean Boulevard
Suite 1900
Long Beach, CA 90802
Ventura
260 Maple court
Suite 210
Ventura, CA 93003
Las Vegas
3900 Paradise Road
Suite 239
Las Vegas, NV 89109
Eugene
1600 Valley River Drive
Suite 190
Eugene, OR 97401
Tupelo
1 Mississippi Plaza
Tupelo, MS 38801
Charleston
4975 Lacross Road
Suite 150, Rivergate Center
North Charleston, SC 29418-6518
Fort Lauderdale
4410 N. State Rd #7
Suite 200, Headway Office Park
Ft Lauderdale, FL 33319
Western Carolina
215 Thompson Street
Hendersonville, NC 28739-2828
Ford Motor Credit Company
Central Collections
3200 Greenfield
Suite 280
Dearborn, MI 48120
<PAGE> 39
New Orleans
3330 W. Esplanade Avenue
Suite 200
Metairie, LA 70002
Lafayette
Saloom Office Park
Suite 350
100 Asma Boulevard
Lafayette, LA 70508
Shreveport
South Pointe Centre
3007 Knight Street
Suite 200
Shreveport, LA 71105
Commercial Lending
Suite 300
745 McClintock
Burr Ridge, IL 60521
<PAGE> 1
EXHIBIT 24
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 8th day of November,
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, H. 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 8th day of November, 1994.
/s/ Terrence F. Marrs
_________________________
(Terrence F. Marrs)
