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REGISTRATION NO. 33-57827
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1*
AMENDMENT NO. 4
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FORD CREDIT AUTO LEASE TRUST 1995-1
(Issuer of the Notes)
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RCL TRUST 1995-1
(Originator of the Trust described herein)
(Exact name of registrant as specified in its charter)
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FORD MOTOR CREDIT A Delaware Trust FORD CREDIT LEASING
COMPANY Primary Standard Industrial COMPANY, INC.
(Originator of the Registrant; Classification (Originator of the Registrant)
issuer of a corporate Limited RV Code Number 6733
Guaranty) IRS Employer No.
38-6648374
A Delaware Corporation The American Road A Delaware Corporation
Primary Standard Industrial Dearborn, Michigan 48121 Primary Standard Industrial
Classification (313) 594-9876 Classification
Code Number 6153 Code Number 6159
IRS Employer No. 38-1612444 IRS Employer No.
38-3156318
The American Road --------------- The American Road
Dearborn, Michigan 48121 Dearborn, Michigan 48121
(313) 322-3000 (313) 845-4072
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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
for each of the above named entities)
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
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE AMOUNT OF
BEING REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE(3)
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Class A-1 Asset Backed Notes....... $113,000,000.00 100% $113,000,000.00 $ 38,793.11
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Class A-2 Asset Backed Notes....... $500,521,000.00 100% $500,521,000.00 $172,421.04
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Limited RV Guaranty................ (2) (2) (2) (2)
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TOTAL.............................. $613,521,000.00 $613,521,000.00 $211,214.15
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Not applicable.
(3) Net of $344.83 which was previously paid.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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* This Registration Statement constitutes a filing on Form S-1 in respect of the
Asset Backed Notes and a filing on Form S-3 in respect of the Limited RV
Guaranty.
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CROSS REFERENCE SHEET
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ITEMS AND CAPTION IN FORM S-1 CAPTION IN PROSPECTUS
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1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus............................ Forepart of Registration Statement; Outside
Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus......................... Inside Front Cover Page of Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges.... Summary; Special Considerations; Management's
Discussion and Analysis of Financial
Condition and Results of Operations
4. Use of Proceeds.......................... Use of Proceeds
5. Determination of Offering Price.......... *
6. Dilution................................. *
7. Selling Security Holders................. *
8. Plan of Distribution..................... Underwriting
9. Description of Securities to be
Registered............................ Outside Front Cover Page of Prospectus;
Inside Front Cover Page of Prospectus;
Summary; The Issuer; Property of the Issuer;
The Leases and Leased Vehicles; Maturity,
Prepayment and Yield Considerations; Pool
Factors and Trading Information; Description
of the Notes; Description of the
Administrative Agency Agreement; Additional
Document Provisions; Ratings of the Notes
10. Interest of Named Experts and Counsel.... Experts
11. Information with Respect to the
Registrant............................ Outside Front Cover Page of Prospectus;
Inside Front Cover Page of Prospectus;
Summary; Ford Credit; The Issuer; Property of
the Issuer; The Transferor; The Series 1995-1
Certificates; The Leases and Leased Vehicles;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Additional Document Provisions
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................... See Part II
13. Other Expenses of Issuance and
Distribution.......................... See Part II
14. Indemnification of Directors and
Officers.............................. See Part II
15. Recent Sales of Unregistered
Securities............................ *
16. Exhibits and Financial Statements........ See Part II
17. Undertakings............................. See Part II
</TABLE>
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* Answer negative or Item inapplicable
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The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
PROSPECTUS Subject to Completion, dated May 8, 1995
$613,521,000
(LOGO)
Ford Credit Auto Lease Trust 1995-1
Issuer
$113,000,000 Class A-1 % Asset Backed Notes
$500,521,000 Class A-2 % Asset Backed Notes
RCL Trust 1995-1
Transferor
Ford Motor Credit Company
Administrative Agent
Ford Credit Auto Lease Trust 1995-1 (the "Issuer") will be formed pursuant to a
Lease Trust Agreement to be dated as of May , 1995 between The Chase Manhattan
Bank (USA) (the "RCL Trustee") in its capacity as trustee of the RCL Trust
1995-1 (the "Transferor") and PNC Bank, Delaware (the "Lease Trustee") in its
capacity as trustee of the Issuer. Pursuant to an Indenture to be dated as of
May , 1995 between the Lease Trustee, on behalf of the Issuer, and Chemical
Bank, as Indenture Trustee, the Issuer will issue notes secured by interests in
certain retail automotive leases and leased vehicles, including $113,000,000
initial principal balance of % Class A-1 Asset Backed Notes (the "Class A-1
Notes") and $500,521,000 initial principal balance of % Class A-2 Asset Backed
Notes (the "Class A-2 Notes" and, together with the Class A-1 Notes, the
"Notes"). The Issuer also will issue $23,320,978.41 initial principal balance of
% Asset Backed Lease Trust Certificates (the "Lease Trust Certificates").
The Lease Trust Certificates are not being offered hereby.
(cover continued on following page)
EXCEPT TO THE EXTENT OF THE LIMITED RV GUARANTY OF FORD MOTOR CREDIT COMPANY, AS
DESCRIBED HEREIN, THE NOTES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT INTERESTS IN, RECOURSE TO OR OBLIGATIONS OF THE TRANSFEROR, FORD MOTOR
CREDIT COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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INITIAL PROCEEDS TO
PRINCIPAL PRICE TO UNDERWRITING THE ISSUER
BALANCE PUBLIC (1) DISCOUNT (1)(2)
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Class A-1 Notes $113,000,000 % % %
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Class A-2 Notes $500,521,000 % % %
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Total $613,521,000 $ $ $
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</TABLE>
(1) Plus accrued interest, if any, calculated from May , 1995.
(2) Before deducting expenses payable by the Issuer estimated at $650,000.
The Notes are offered by the Underwriters when, as, and if issued by the Issuer
and accepted by the Underwriters and subject to their right to reject orders in
whole or in part. The Underwriters reserve the right to withdraw, cancel or
modify such offer. It is expected that the Notes will be delivered in book-entry
form through the facilities of The Depository Trust Company on or about May ,
1995 against payment therefor in immediately available funds.
J.P. MORGAN SECURITIES INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
May , 1995
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As more fully described herein, the assets of the Issuer will include
certificates (the "Series 1995-1 Certificates") transferred to the Issuer by the
Transferor representing a 100% undivided beneficial interest in specified retail
automobile and light-duty truck leases originated in the states of California,
New York and Pennsylvania (the "Series 1995-1 Leases"), all payments from
lessees (the "Obligors") thereunder, the related leased vehicles (the "Series
1995-1 Leased Vehicles") and all proceeds from the sale of Series 1995-1 Leased
Vehicles upon termination of the related Series 1995-1 Leases. Subject to the
security interest granted to the Indenture Trustee pursuant to the Indenture to
secure the Notes, the Issuer will enter into the Program Operating Lease with
the Transferor pursuant to which the Transferor will be entitled to the benefits
of the Series 1995-1 Certificates during the term of the underlying Series
1995-1 Leases in exchange for the payment by the Transferor of certain amounts
paid under the underlying Series 1995-1 Leases and paid from the sale of Series
1995-1 Leased Vehicles. These payments will be applied by the Issuer, together
with other amounts payable on the Series 1995-1 Certificates, to pay interest on
and principal of the Notes and Lease Trust Certificates. See "Series 1995-1
Certificates -- Lease of the Series 1995-1 Certificates to the Transferor." The
Issuer will have the benefit of the Reserve Account established by the
Transferor to secure certain of its payments under the Program Operating Lease
and the benefit of the Limited RV Guaranty issued by Ford Credit to cover
shortfalls, if any, between the Residual Value (subject to certain adjustments
as described herein) of Series 1995-1 Leased Vehicles which are sold on or after
expiration of the related Series 1995-1 Leases and the amounts actually received
from the sale of such vehicles. In addition, the aggregate initial principal
balance of the Notes and Lease Trust Certificates will be overcollateralized to
the extent that the Initial Pool Balance exceeds such aggregate initial
principal balance. As outlined above and as more fully described herein, the
sources of payments on the Notes will be limited to the Series 1995-1
Certificates (including the payments by the Transferor under the Program
Operating Lease and the overcollateralization provided by the excess of the
Initial Pool Balance over the aggregate initial principal balance of the Notes
and the Lease Trust Certificates) and the benefits provided by the Reserve
Account and the Limited RV Guaranty.
Interest on the Notes will accrue at the respective fixed per annum
interest rates specified above and generally will be payable quarterly on August
15, November 15, February 15 and May 15 of each year, commencing August 15, 1995
or, if any such day is not a business day, on the next succeeding business day
(each, a "Payment Date"). Principal of the Notes will be payable on each Payment
Date to the extent described herein. No principal payments will be made on the
Class A-2 Notes until the Class A-1 Notes have been paid in full; provided that
if an Event of Default under the Indenture has occurred and the maturity of the
Notes has been accelerated, principal payments will be made on the Notes on a
pro rata basis based on their respective principal balances, without any
distinction between Classes. No principal will be payable on the Lease Trust
Certificates until the Notes have been paid in full.
The Stated Maturity of the Class A-1 Notes will be the May 15, 1996 Payment
Date. The Stated Maturity of the Class A-2 Notes will be the October 15, 1998
Payment Date. However, payment in full of either Class of Notes could occur
earlier than such date as described herein.
Prospective investors should consider the factors set forth under "Special
Considerations" for a discussion of the material risks in connection with the
purchase of the Notes.
There is currently no secondary market for the Notes offered hereby. The
Underwriters expect, but will not be obligated, to make a market in the Notes.
There can be no assurance that a secondary market for any of the Notes will
develop or, if one does develop, that it will provide the Noteholders with
liquidity of investment or that it will continue for the life of the Notes
offered hereby.
AVAILABLE INFORMATION
The Transferor, as originator of the Issuer, has filed a Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act"),
with the Securities and Exchange Commission (the "Commission") on behalf of the
Issuer with respect to the Notes offered pursuant to this Prospectus. For
further information, reference is made to the Registration Statement and
amendments thereof and to the exhibits thereto, which are available for
inspection without charge at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade
Center, 13th Floor, New York, New York 10048; and Northwest Atrium Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of the Registration
Statement and amendments thereof and exhibits thereto may be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Transferor, the Issuer, the Administrative Agent
or the Underwriters. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus, nor
any sale made hereunder, shall, under any circumstances, create any implication
that the information herein is correct as of any time subsequent to the date
hereof.
Until August , 1995 (90 days after the date of this Prospectus), all
dealers effecting transactions in the Notes, whether or not participating in
this distribution, may be required to deliver a Prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver a Prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions. Upon receipt of a request by an investor or his or her
representative within the period during which there is a Prospectus delivery
obligation, the Issuer or the Underwriters will transmit or cause to be
transmitted promptly, without charge, and in addition to any such delivery
requirements, a paper copy of a Prospectus, or a Prospectus encoded in an
electronic format.
TABLE OF CONTENTS
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PAGE
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Summary......................................... 5
Special Considerations.......................... 17
Ford Credit..................................... 24
The Issuer...................................... 25
Property of the Issuer.......................... 25
Use of Proceeds................................. 26
FCTT............................................ 26
The Transferor.................................. 28
Series 1995-1 Certificates...................... 29
The Leases and Leased Vehicles.................. 32
Maturity, Prepayment and Yield Considerations... 40
Pool Factors and Trading Information............ 42
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 42
Description of the Notes........................ 42
Description of the Administrative Agency
Agreement..................................... 57
Additional Document Provisions.................. 64
Ratings of the Notes............................ 70
Certain Legal Aspects of FCTT and the Series
1995-1 Certificates........................... 70
Certain Legal Aspects of the Leases and Leased
Vehicles...................................... 74
Certain Federal Income Tax Consequences......... 77
Certain State Tax Consequences.................. 80
ERISA Considerations............................ 81
Underwriting.................................... 82
Legal Matters................................... 83
Experts......................................... 83
Glossary of Terms............................... 84
</TABLE>
INCORPORATION BY REFERENCE
Ford Motor Credit Company ("Ford Credit") is subject to the reporting
requirements under the Securities Exchange Act of 1934, as amended. Ford
Credit's Annual Report on Form 10-K for the year ended December 31, 1994 and
Ford Credit's Current Reports on Form 8-K dated January 17, 1995, February 10,
1995, February 17, 1995, February 21, 1995 and March 24, 1995 are incorporated
in this Prospectus by reference. All documents filed by Ford Credit pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of this Prospectus and prior to the termination of the offering of the
Notes shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing of such documents. Such reports
include, and such documents may include, information concerning Ford Motor
Company, as well as Ford Credit.
Ford Credit undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, on the written or oral request of
any such person, a copy of any or all of the documents referred to above which
have been or may be incorporated by reference in this Prospectus other than
exhibits to such documents. Written or telephonic requests for such documents
should be directed to Ford Motor Credit Company, The American Road, Dearborn,
Michigan 48121, Attention: Public Affairs Department (Telephone: 313-584-1096).
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes are issued, quarterly unaudited reports
containing information concerning the Issuer will be prepared by the
Administrative Agent and sent by the Indenture Trustee on behalf of the Issuer
only to Cede & Co. ("Cede"), as nominee of The Depository Trust Company ("DTC")
and registered holder of the Notes. See "Description of the Notes -- Book-Entry
Registration." Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. See "Pool Factors and
Trading Information" for additional information concerning periodic reports to
Noteholders.
3
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OVERVIEW -- TRANSFER OF SERIES 1995-1 CERTIFICATES
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98% Beneficial Interest in FCTT 2% Beneficial Interest in FCTT
- - Exchangeable Beneficial Certificate - Exchangeable Beneficial Certificate
- - Series 1995-1 Certificate - Series 1995-1 Certificate
Ford Credit Ford Credit
Leasing
Series 1995-1 Series 1995-1
Certificate Certificate
Exchangeable Exchangeable
Beneficial Beneficial
Certificate Certificate
Series 1995-1
Assets
Contribution of FCTT Contribution of
Series 1995-1 Series 1995-1
Certificate Certificate
RCL Trust
1995-1
(Transferor)
Transfer and Program
Operating Lease of Program Operating
Series 1995-1 Certificates Lease Payments
Ford Credit
Auto Lease Indenture
Trust 1995-1 Trustee
(Issuer) Pledge of Lease
Trust Estate
Lease Trust Certificates Notes
Lease Trust
Certificateholders Noteholders
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4
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SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain capitalized
terms used herein are defined in the "Glossary of Terms" or elsewhere in this
Prospectus.
OVERVIEW...................... As more fully described herein, Dealers located
in California, New York and Pennsylvania have
originated certain retail lease contracts for
automobiles and light-duty trucks on or after
December 1, 1994 and have assigned and will
assign such lease contracts and the related
vehicles to the Ford Credit Titling Trust
("FCTT"), a trust established by Ford Credit
and Ford Credit Leasing, a special purpose
wholly-owned subsidiary of Ford Credit. Ford
Credit and Ford Credit Leasing are the initial
beneficiaries of FCTT and have instructed the
Administrative Agent to select, in accordance
with certain eligibility criteria, Leases and
Leased Vehicles held by FCTT to be designated
as Series 1995-1 Assets. On the Closing Date,
the Series 1995-1 Certificates representing the
beneficial interest in the Series 1995-1 Assets
will be issued to Ford Credit and Ford Credit
Leasing. Immediately thereafter, Ford Credit
and Ford Credit Leasing will contribute their
Series 1995-1 Certificates to the Transferor
which in turn will transfer the Series 1995-1
Certificates to the Issuer. The Issuer will
issue the Notes pursuant to the Indenture and
will pledge the Series 1995-1 Certificates to
the Indenture Trustee as security for the
Notes.
Pursuant to the Program Operating Lease the
Issuer will lease the Series 1995-1
Certificates, subject to the lien securing the
Notes, back to the Transferor in exchange for
the obligation of the Transferor to make
certain payments during the period that each
underlying Series 1995-1 Leased Vehicle is
subject to the Program Operating Lease. Such
payments (the "Program Operating Lease
Payments") generally will be equal to the
Monthly Payments scheduled to be made by
Obligors under the Series 1995-1 Leases, any
amounts scheduled to be paid in respect of
Excess Wear and Tear and Excess Mileage by
Obligors under the Series 1995-1 Leases and an
amount equal to the Adjusted Balance Subject to
Lease Charges of Series 1995-1 Leased Vehicles
which are sold before their Scheduled Lease End
Dates. The Issuer will apply such Program
Operating Lease Payments, together with certain
proceeds (as described in "-- Transferor Leased
Vehicle Purchase Option") from Series 1995-1
Leased Vehicles which are sold on or after
their Scheduled Lease End Dates, to pay
interest on and principal of the Notes and the
Lease Trust Certificates in accordance with
their respective terms. On the Closing Date,
the Transferor will fund the Reserve Account
and Ford Credit will issue the Limited RV
Guaranty for the benefit of the Issuer. The
Reserve Account will secure the Transferor's
obligation to make Program Operating Lease
Payments on a quarterly basis in an amount
equal to (x) interest due on the Notes
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and Lease Trust Certificates, (y) a specified
portion of principal received on the Series
1995-1 Leases and (z) the Uncollected Excess
Wear and Tear and Excess Mileage on the Series
1995-1 Leases. The Limited RV Guaranty will
provide limited coverage of shortfalls between
the amounts realized from the sale of Series
1995-1 Leased Vehicles following scheduled
terminations of the related Series 1995-1
Leases (including amounts collected in respect
of Excess Wear and Tear and Excess Mileage and
reduced by amounts required to be remitted to
the Obligor under applicable law) and the
Residual Values (as such Residual Values are
decreased by Uncollected Excess Wear and Tear
and Excess Mileage) of such Series 1995-1
Leased Vehicles. Amounts payable to the Issuer
with respect to the Series 1995-1 Certificates
and the Program Operating Lease (including
amounts drawn from the Reserve Account and the
Limited RV Guaranty) will be applied to pay
interest on and principal of the Notes and the
Lease Trust Certificates and certain other
amounts as more fully described herein. The
Issuer has pledged amounts payable to it to the
Indenture Trustee to secure payment of the
Notes. Ford Credit and Ford Credit Leasing
intend that the securitization described in
this prospectus will result in a sale of the
Series 1995-1 Assets for accounting purposes
and a financing of the Series 1995-1 Leases and
Series 1995-1 Leased Vehicles for tax purposes.
THE ISSUER.................... Ford Credit Auto Lease Trust 1995-1,
established pursuant to the Lease Trust
Agreement.
THE LEASE TRUSTEE............. PNC Bank, Delaware, as Lease Trustee under the
Lease Trust Agreement.
THE INDENTURE TRUSTEE......... Chemical Bank, as Indenture Trustee under the
Indenture.
THE ADMINISTRATIVE AGENT AND
LIMITED GUARANTOR............. Ford Credit, a wholly owned subsidiary of Ford
Motor Company, is the Administrative Agent and
the provider of the Limited RV Guaranty. See
"Description of the Administrative Agency
Agreement" and "Description of the Notes --
Limited RV Guaranty."
FORD CREDIT LEASING........... Ford Credit Leasing Company, Inc., a
wholly-owned special purpose subsidiary of Ford
Credit.
THE TRANSFEROR................ The Transferor will be formed by Ford Credit
and Ford Credit Leasing as a Delaware business
trust pursuant to the RCL Trust Agreement. The
RCL Trustee is The Chase Manhattan Bank (USA),
a Delaware banking corporation. See "The
Transferor."
THE NOTES..................... On the Closing Date the Issuer will issue,
pursuant to the Indenture, Class A-1 Notes in
an initial principal balance of $113,000,000
and Class A-2 Notes in an initial principal
balance of $500,521,000. Concurrently with the
issuance of the Notes, the Issuer will issue
Lease Trust Certificates in an
6
<PAGE> 9
initial principal balance of $23,320,978.41.
The Lease Trust Certificates are not being
offered hereby.
INTEREST...................... The Class A-1 Notes will bear interest at the
rate of % per annum and the Class A-2 Notes
will bear interest at the rate of % per
annum. Interest on the principal balance of the
Notes will accrue at the applicable interest
rate either from and including the Closing Date
(in the case of the first Payment Date) or from
and including the fifteenth day of the third
calendar month preceding the calendar month in
which such Payment Date occurs, to but
excluding the fifteenth day of the calendar
month in which such Payment Date occurs.
Interest will be payable on each Payment Date
to Noteholders of record on the Record Date.
Interest accrued but not paid as of any Payment
Date will be due on the next Payment Date
together with interest on such amount (to the
extent lawful) at a rate per annum equal to the
interest rate for the applicable Class plus
2.00%. Interest will be calculated based on a
360-day year of twelve 30-day months. See
"Description of the Notes -- Interest."
PRINCIPAL..................... The aggregate amount of principal of the Notes
paid on each Payment Date will equal the Total
Available Funds remaining after giving effect
on such Payment Date to (i) the payment of the
Administrative Agent Fee, (ii) the payment of
interest on each Class of Notes outstanding and
on the Lease Trust Certificates, (iii) the
payment of the Limited RV Guaranty Fee and (iv)
the deposit to the Reserve Account of the
Reserve Account Deposit Amount, if any.
Principal of the Notes will be paid to holders
of each Class of Notes sequentially. No
principal payments will be made on the Class
A-2 Notes until the principal balance of the
Class A-1 Notes has been reduced to zero and on
the Lease Trust Certificates until the
principal balance of the Class A-2 Notes has
been reduced to zero; provided that if an Event
of Default under the Indenture has occurred and
the maturity of the Notes has been accelerated,
principal payments will be made on a pro rata
basis to holders of the Class A-1 Notes and the
Class A-2 Notes based on their respective
principal balances without any distinction
between Classes. See "Description of the Notes
-- Indenture" for a discussion of the Events of
Default under the Indenture and the remedies
available to the Indenture Trustee and the
Noteholders.
As described in "Description of the Notes --
The Indenture Cash Flows," the "Total Available
Funds" available to make payments on any
Payment Date will be equal to the sum of the
Available Funds, the Reserve Account Draw
Amount, the Reserve Account Release Amount and
the RV Guaranty Draw Amount, and the "Available
Funds" on deposit in the Collection Account
with respect to any Payment Date will be equal
to the Collections deposited therein on each of
the two preceding Distribution Dates (including
investment earnings) and Collections deposited
therein on the business day
7
<PAGE> 10
preceding the Distribution Date occurring on
such Payment Date (or on each business day
during the related Accrual Period if any
Monthly Remittance Condition has not been
satisfied) plus the Aggregate Net Sale Proceeds
Advances and Aggregate Net Monthly Payment
Advances deposited on the business day
preceding such Payment Date. See "Description
of the Notes -- Reserve Account Withdrawals and
Deposits" for a description of how the Reserve
Account Draw Amount and the Reserve Account
Release Amount are calculated and "Description
of the Notes -- Limited RV Guaranty" for a
description of how the RV Guaranty Draw Amount
is calculated.
The rate of payment and the yield to maturity
on each Class of Notes generally will be
directly related to the rate at which payments
are made on the Series 1995-1 Leases and in
respect of the Series 1995-1 Leased Vehicles.
The rate of prepayments on the Series 1995-1
Leases may be influenced by a variety of
economic, social and other factors including
competing consumer finance products and the
conditions in the used car market. If there are
prepayments in full of the Series 1995-1
Leases, Noteholders will bear the risk of being
able to reinvest principal payments of the
Notes at yields at least equal to the yield on
their respective Class of Notes. For further
discussion of the factors which may affect the
amount and timing of payments of principal of
the Notes, see "Maturity, Prepayment and Yield
Considerations." See also "Description of the
Notes -- Principal" and "-- The Indenture Cash
Flows."
OPTIONAL REDEMPTION OF
THE NOTES..................... The Administrative Agent may, at its option,
purchase the Series 1995-1 Certificates on any
Payment Date on which the Pool Balance has
declined to less than 10% of the Initial Pool
Balance. Because the Initial Pool Balance will
exceed the initial aggregate principal balance
of the Notes by 14.5%, the Issuer does not
anticipate, although no assurances can be
given, that the Pool Balance will decline to a
level permitting the Administrative Agent to
purchase the Series 1995-1 Certificates while
the Notes are outstanding. If, however, such a
decline occurs and the Administrative Agent
exercises such option, the Notes will be
redeemed in whole, but not in part, on the
Payment Date of such exercise. See "Description
of the Notes -- Optional Redemption."
FCTT.......................... FCTT is a trust formed pursuant to the FCTT
Agreement. The FCTT Trustee is Comerica Bank, a
Michigan banking corporation. FCTT was formed
for the purpose of holding title to vehicles
subject to leases in order to enable Ford
Credit to obtain the benefits of financing such
vehicles and leases without retitling. Vehicles
which would otherwise be sold by Dealers to
Ford Credit are instead sold to FCTT. The FCTT
Trustee will hold the assets of FCTT in trust
for the benefit of the beneficiaries of FCTT.
As of the date of this Prospectus, the
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<PAGE> 11
primary assets of FCTT are Leases and Leased
Vehicles assigned to it by Dealers located in
California, New York and Pennsylvania and all
amounts payable in connection therewith. See
"FCTT -- Creation of FCTT by Ford Credit and
Ford Credit Leasing." Until Series 1995-1
Assets are designated and Series 1995-1
Certificates are issued in connection with the
securitization described in this Prospectus,
Ford Credit and Ford Credit Leasing will be the
only beneficiaries of FCTT. Ford Credit will
hold an Exchangeable Beneficial Certificate (an
"EBC") representing a 98% beneficial interest
in FCTT and the FCTT Assets and Ford Credit
Leasing will hold an EBC representing a 2%
beneficial interest in FCTT and the FCTT
Assets. After the issuance of the Series 1995-1
Certificates on the Closing Date, the EBCs will
represent the beneficial interest in the FCTT
Assets other than the Series 1995-1 Assets and
any other Series Specified Assets which are
designated from time to time. See "FCTT --
Exchangeable Beneficial Certificates and
Specified Beneficial Certificates."
Payments by or on behalf of Obligors made on or
in respect of FCTT Assets other than the Series
1995-1 Assets will not be available to make
payments on the Notes or the Lease Trust
Certificates. Neither Ford Credit nor Ford
Credit Leasing, as holders of the EBCs, nor
holders of any Specified Beneficial
Certificates ("SBCs") which may be issued from
time to time (whether in connection with a
future securitization or for any other purpose)
will have any interest in the Series 1995-1
Assets.
THE SERIES 1995-1 ASSETS...... The Series 1995-1 Leases will consist of a pool
of retail closed-end lease contracts originated
by Dealers and assigned to FCTT. Each Series
1995-1 Lease is an operating lease for
accounting purposes and a "true lease" for tax
purposes and will be purchased by FCTT,
together with the related Series 1995-1 Leased
Vehicle, from the Dealer for an amount equal to
the Balance Subject to Lease Charges. The
Obligor under each Series 1995-1 Lease is
obligated to make a fixed total monthly payment
(a "Total Monthly Payment") to the
Administrative Agent, acting on behalf of FCTT
and the holders of the Series 1995-1
Certificates, equal to the sum of (i) the
Monthly Payment, (ii) the Use and Lease Tax
Amount (payable to tax authorities) and (iii)
the Vehicle Insurance and Maintenance Amount
(payable to Dealers). Only the Monthly Payment
portion of each Total Monthly Payment is
available to holders of the Series 1995-1
Certificates. See "Description of the
Administrative Agency Agreement -- Remittance
of Payments; Allocation of Funds."
The Monthly Payments remitted by Obligors will
be used to make Program Operating Lease
Payments to the Issuer and are included in the
Total Available Funds used to pay interest on
and principal of the Notes and Lease Trust
Certificates. See "Description of the Notes --
The Indenture Cash Flows."
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<PAGE> 12
The Series 1995-1 Leases consist of 37,719
individual Leases. The aggregate Balance
Subject to Lease Charges of the Series 1995-1
Leases as of their respective dates of
origination was $744,044,713.69. As of the
Series 1995-1 Cut-Off Date, the Pool Balance
was $717,568,566.51 (the "Initial Pool
Balance") and the aggregate Residual Values of
the Series 1995-1 Leased Vehicles were
$537,987,931.43. The Series 1995-1 Leases and
Series 1995-1 Leased Vehicles were selected by
the Administrative Agent at the direction of
Ford Credit and Ford Credit Leasing as holders
of the EBCs from FCTT's portfolio of Leases and
Leased Vehicles, based upon the General
Eligibility Criteria and the Specific
Eligibility Criteria described herein. See "The
Leases and Leased Vehicles," "FCTT --
Exchangeable Beneficial Certificates and
Specified Beneficial Certificates" and
"Additional Document Provisions --
Representations, Warranties and Covenants."
THE SERIES 1995-1
CERTIFICATES.................. The Series 1995-1 Certificates will represent
in the aggregate a 100% beneficial interest in
the Series 1995-1 Assets and will entitle the
holders thereof to all proceeds of and payments
in connection with the Series 1995-1 Assets.
The Series 1995-1 Certificates will not
evidence legal title to or direct ownership of
the Series 1995-1 Assets nor will they
represent a beneficial interest in any FCTT
Assets other than the Series 1995-1 Assets. See
"FCTT -- Exchangeable Beneficial Certificates
and Specified Beneficial Certificates." The
Indenture Trustee as assignee of the Issuer
will have a perfected security interest in the
underlying Series 1995-1 Leases but will not
have a security interest in the underlying
Series 1995-1 Leased Vehicles. For a discussion
of the security interests in the Series 1995-1
Certificates, the Series 1995-1 Leases and the
Series 1995-1 Leased Vehicles, see "Certain
Legal Aspects of the Leases and Leased
Vehicles."
CONTRIBUTION, TRANSFER, AND
LEASE OF SERIES 1995-1
CERTIFICATES.................. On the Closing Date, Ford Credit and Ford
Credit Leasing each will contribute their
respective Series 1995-1 Certificates to the
Transferor pursuant to the Asset Contribution
Agreement. The Transferor will transfer the
Series 1995-1 Certificates to the Issuer
pursuant to the Transfer Agreement. Subject to
the pledge by the Issuer of its interest in
such Series 1995-1 Certificates to the
Indenture Trustee to secure payment of the
Notes, the Issuer will lease the Series 1995-1
Certificates back to the Transferor pursuant to
the Program Operating Lease. The Transferor
will assign 1% of all of its assets and
obligations, including its rights and
obligations under the Program Operating Lease,
to Ford Credit Leasing. For convenience, these
rights and obligations of the Transferor and
its assignee, Ford Credit Leasing, generally
are referred to herein as rights and
obligations of the Transferor. In connection
with such assignment, Ford Credit Leasing will
hold a Transferor Lease Trust Certificate
representing 1% of the aggregate Transferor
Lease Trust
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<PAGE> 13
Certificates. See "The Transferor -- Creation
by Ford Credit and Ford Credit Leasing;
Assignment to Ford Credit Leasing."
Under the Program Operating Lease, the
Transferor will be entitled to receive all
payments and proceeds with respect to the
Series 1995-1 Certificates during the term of
the Program Operating Lease and will be
required to use such proceeds to make payments
to the Issuer under the Program Operating
Lease. Because the Program Operating Lease
expires with respect to the portion of the
Series 1995-1 Certificates representing the
beneficial interest in a Series 1995-1 Leased
Vehicle at the end of the related Series 1995-1
Lease (and before such Series 1995-1 Leased
Vehicle is sold or a Sale Proceeds Advance is
made in respect thereof), the Issuer will
receive directly the proceeds from the sale of
Series 1995-1 Leased Vehicles following
scheduled termination of the related Series
1995-1 Leases. Except for certain amounts
allocated for payment to the Transferor in the
event that a Series 1995-1 Leased Vehicle is
sold for more than its Residual Value (as
reduced by Uncollected Excess Wear and Tear and
Excess Mileage) at the end of the related
Series 1995-1 Lease, during the term of the
Program Operating Lease all payments and
proceeds with respect to Series 1995-1 Assets
will be paid through to the Issuer either as
holder of the Series 1995-1 Certificates or as
lessor under the Program Operating Lease. See
"Series 1995-1 Certificates."
PROPERTY OF THE ISSUER; PLEDGE
TO THE INDENTURE TRUSTEE...... Pursuant to the Indenture and prior to entering
into the Program Operating Lease, the Issuer
will pledge its interest in the Lease Trust
Estate to secure its obligation to pay interest
on and principal of the Notes. The "Lease Trust
Estate" consists of (i) the rights of the
Issuer under the Series 1995-1 Certificates,
(ii) the rights under the Program Operating
Lease, (iii) the rights of the Issuer to funds
on deposit from time to time in the Collection
Account, the Payahead Account and the Payment
Account (including investment income on amounts
on deposit in the Collection Account) and
proceeds thereof, (iv) the rights of the
Transferor under the Asset Contribution
Agreement, (v) the rights as beneficiary of the
Limited RV Guaranty, (vi) the rights as holder
of the Series 1995-1 Certificates under the
Administrative Agency Agreement and the Series
1995-1 Supplement, (vii) the interest of the
Issuer in the Reserve Account and the right to
make withdrawals therefrom and (viii) all
proceeds of the foregoing. See "Property of the
Issuer" and "Series 1995-1 Certificates --
Pledge of the Series 1995-1 Certificates to the
Indenture Trustee."
TRANSFEROR LEASED VEHICLE
PURCHASE OPTION............... Under the Program Operating Lease, the
Transferor may, at its option, purchase the
Issuer's beneficial interest in any Series
1995-1 Leased Vehicle which is sold at auction
following the Scheduled Lease End Date of the
related
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<PAGE> 14
Series 1995-1 Lease. The Transferor may
exercise such option by paying to the Issuer an
amount equal to the Residual Value of such
Series 1995-1 Leased Vehicle minus any amounts
due from the related Obligor for Uncollected
Excess Wear and Tear and Excess Mileage (such
amount, the "Transferor Purchase Option
Price"). The Transferor will only exercise such
option if neither the Obligor nor the Dealer
exercises its option to purchase the Series
1995-1 Leased Vehicle, and the Sale Proceeds of
such Series 1995-1 Leased Vehicle exceed the
Transferor Purchase Option Price. Because the
Transferor intends to exercise this option when
available, Sale Proceeds received by the Issuer
with respect to any Series 1995-1 Leased
Vehicle the related Series 1995-1 Lease of
which terminated on or after its Scheduled
Lease End Date will never exceed the Transferor
Purchase Option Price. The Transferor will
retain any excess of the Sale Proceeds of such
Series 1995-1 Leased Vehicle over the related
Transferor Purchase Option Price, and such
amounts will not be available to pay interest
on or principal of the Notes. See "Series
1995-1 Certificates -- Lease of the Series
1995-1 Certificates to the Transferor" for
further discussion of the purchase option of
the Transferor and "Description of the
Administrative Agency Agreement -- Sale of
Leased Vehicles" for a discussion of the
process by which the Administrative Agent sells
Series 1995-1 Leased Vehicles after their
respective Scheduled Lease End Dates.
Noteholders will not be subject to delay in
receipt of principal resulting from a delay in
the sale of Series 1995-1 Leased Vehicles after
their respective Scheduled Lease End Dates to
the extent that the Administrative Agent makes
Sale Proceeds Advances of the Residual Values
of Series 1995-1 Leased Vehicles as described
in "-- Sale Proceeds Advances" and "Description
of the Administrative Agency Agreement --
Advances of Sale Proceeds."
RESERVE ACCOUNT............... Amounts on deposit in the Reserve Account from
time to time (the "Reserve Account Amount")
secure the Transferor's obligations under the
Program Operating Lease, and on each Payment
Date are available to cover shortfalls in the
Basic Payment portion of Program Operating
Lease Payments. The "Basic Payment," as of any
Payment Date, is the sum of (i) the Required
Interest Payment, (ii) the portion of the Pool
Balance Decline resulting from the termination
of Series 1995-1 Leases before their respective
Scheduled Lease End Dates, (iii) the portion of
the aggregate scheduled Monthly Payments
allocated to a decline in the aggregate
Adjusted Balance Subject to Lease Charges of
the Series 1995-1 Leases and (iv) the
Uncollected Excess Wear and Tear and Excess
Mileage with respect to Series 1995-1 Leases
for the related Accrual Period. The amount
deposited in the Reserve Account on the Closing
Date (the "Initial Reserve Account Deposit")
will be $25,114,899.83. On each Payment Date on
which the Reserve Account Amount is less
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<PAGE> 15
than the Required Reserve Account Amount for
such Payment Date, after giving effect to any
withdrawal of a Reserve Account Draw Amount on
such Payment Date, the Indenture Trustee will
deposit, from Total Available Funds, the
Reserve Account Deposit Amount, if any, in the
Reserve Account. The "Required Reserve Account
Amount" as of any Payment Date will be the
lesser of (i) 3.50% of the Pool Balance as of
the last day of the related Accrual Period and
(ii) the sum of the aggregate principal balance
of the Notes and the Lease Trust Certificates
as of such Payment Date, before giving effect
to any payments made on such Payment Date;
provided that the Required Reserve Account
Amount will not in any event be less than
$23,320,978.41. On each Payment Date, the
Indenture Trustee will, if necessary, withdraw
the Reserve Account Draw Amount from the
Reserve Account and use such amount to pay the
Program Operating Lease Payments. To the extent
that on any Payment Date the Reserve Account
Amount is greater than the Required Reserve
Account Amount, after giving effect to any
withdrawal of a Reserve Account Draw Amount on
such Payment Date, the Indenture Trustee will
release the Reserve Account Release Amount from
the Reserve Account. The Reserve Account
Release Amount, if any, and the Reserve Account
Draw Amount, if any, will be included in the
Total Available Funds available for
distribution to Noteholders and Lease Trust
Certificateholders. See "Description of the
Notes -- Reserve Account Withdrawals and
Deposits" and "-- The Indenture Cash Flows."
LIMITED RV GUARANTY........... The Limited RV Guaranty, issued by Ford Credit
in favor of the Issuer, will cover the
shortfall, if any, between (x) the Residual
Value (as decreased by Uncollected Excess Wear
and Tear and Excess Mileage) of a Series 1995-1
Leased Vehicle the related Series 1995-1 Lease
of which terminated on or after its Scheduled
Lease End Date and (y) proceeds from the sale
thereof (including amounts collected in respect
of Excess Wear and Tear and Excess Mileage and
reduced by amounts required to be remitted to
the Obligor under applicable law). If the
Transferor exercises its option to purchase a
Series 1995-1 Leased Vehicle, the proceeds from
the sale available to the Issuer will be
limited to the Transferor Purchase Option
Price.
The aggregate amount of the Limited RV Guaranty
initially available for all Series 1995-1
Leased Vehicles will equal $43,054,113.99 (the
"Initial RV Guaranty Amount"). No reinstatement
will be made for amounts drawn under the
Limited RV Guaranty. See "Description of the
Notes -- Limited RV Guaranty." The Limited RV
Guaranty will not cover shortfalls, if any, in
proceeds from the sale of Series 1995-1 Leased
Vehicles as a result of early terminations
(voluntary or liquidations) or shortfalls in
Monthly Payments from or amounts owed in
respect of Excess Wear and Tear and Excess
Mileage by Obligors (which shortfalls are
considered to be Series 1995-1
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<PAGE> 16
Credit Losses and not Series 1995-1 Residual
Losses because the Obligors are contractually
committed to pay such amounts). Any such
shortfalls will be covered, to the extent
necessary for the Transferor to make the Basic
Payment under the Program Operating Lease and
to the extent funds are available therefor, by
amounts on deposit in the Reserve Account.
As compensation for providing the Limited RV
Guaranty, Ford Credit will be entitled to
receive the Limited RV Guaranty Fee on each
Payment Date in the amount of 1.00% (per annum)
of the Initial RV Guaranty Amount. See
"Description of the Notes -- Limited RV
Guaranty" and "-- The Indenture Cash Flows."
OVERCOLLATERALIZATION......... On the Closing Date, the Issuer will acquire
the Series 1995-1 Certificates representing the
entire beneficial interest in Series 1995-1
Assets with an Initial Pool Balance of
$717,568,566.51. Because the initial principal
balance of the Notes and Lease Trust
Certificates constitutes 88.75% of the Initial
Pool Balance as of the Closing Date, a portion
of the Initial Pool Balance provides
overcollateralization for the benefit of the
Notes and the Lease Trust Certificates. When
the principal balance of the Notes and the
Lease Trust Certificates have each been reduced
to zero, the remaining assets, including the
Series 1995-1 Certificates, will be distributed
to the holders of the Transferor Lease Trust
Certificates. See "The Issuer -- Capitalization
of the Issuer."
THE ADMINISTRATIVE AGENT...... The Administrative Agent will act as servicer
with respect to all Leases and Leased Vehicles
owned by FCTT (including the Series 1995-1
Leases and Series 1995-1 Leased Vehicles) and
will be the custodian of the related Lease
Files. The Administrative Agent will receive
the Administrative Agent Fee and the
Supplemental Administrative Agent Fee as
compensation for servicing the Series 1995-1
Assets (including disposing of Series 1995-1
Leased Vehicles) and administering the
distribution of funds in respect thereof. The
Administrative Agent Fee as of any Payment Date
will equal the sum, for each of the three
Collection Periods preceding such Payment Date,
of the product of 1/12 of 1.00% and the Pool
Balance as of the beginning of each such
Collection Period. See "Description of the
Administrative Agency Agreement."
ADMINISTRATIVE PURCHASES...... Ford Credit and Ford Credit Leasing, as holders
of the EBCs, will be required to purchase the
beneficial interest in any Series 1995-1 Lease
and Series 1995-1 Leased Vehicle as to which
(i) all of the Specific Eligibility Criteria
and General Eligibility Criteria were not
satisfied on the Series 1995-1 Cut-Off Date,
(ii) a breach of certain covenants has occurred
and has not been cured, (iii) the
Administrative Agent has granted a Term
Extension or any Payment Extension over three
months (in the aggregate) or (iv) the Series
1995-1 Leased Vehicle is relocated to a
jurisdiction in which FCTT is not authorized to
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<PAGE> 17
hold the related certificate of title. Any such
purchase shall be effected by the deposit of
the Administrative Purchase Amount in the
Collection Account on the business day
preceding the Payment Date relating to the
Accrual Period in which any of the events
specified above occurred or were discovered, as
applicable. See "Description of the
Administrative Agency Agreement --
Administrative Purchases."
MONTHLY PAYMENT ADVANCES...... The Administrative Agent will be obligated to
make a Monthly Payment Advance in an amount
equal to any unpaid portion of the Monthly
Payments due under a Series 1995-1 Lease during
an Accrual Period, but only if the
Administrative Agent determines, in its sole
discretion, that such Monthly Payment Advance
will be recoverable from subsequent Collections
on such Series 1995-1 Lease (excluding Sale
Proceeds). See "Description of the Notes --
Advances" and "Description of the
Administrative Agency Agreement -- Monthly
Payment Advances."
SALE PROCEEDS ADVANCES........ The Administrative Agent will be obligated to
make a Sale Proceeds Advance in an amount equal
to the Residual Value of any Series 1995-1
Leased Vehicle which has not been sold by the
last business day of the Accrual Period in
which the Scheduled Lease End Date of the
related Series 1995-1 Lease occurred, but only
if the Administrative Agent determines, in its
sole discretion, that such Sale Proceeds
Advance will be recoverable from the Sale
Proceeds of such Series 1995-1 Leased Vehicle.
See "Description of the Notes -- Advances" and
"Description of the Administrative Agency
Agreement -- Advances of Sale Proceeds."
TAX STATUS.................... Special Tax Counsel will render its opinion,
subject to the matters discussed under "Certain
Federal Income Tax Consequences," that for
federal income tax purposes (i) the Notes will
be treated as debt, (ii) the Lease Trust
Certificates (other than the Transferor Lease
Trust Certificates) should be treated as debt
and (iii) none of FCTT, the Transferor or the
Issuer will be classified as an association (or
publicly traded partnership) taxable as a
corporation.
The Notes may be issued with original issue
discount. See "Certain Federal Income Tax
Consequences" for additional information
concerning the application of federal income
tax laws.
In the opinion of Michigan Tax Counsel,
assuming that the Notes and the Lease Trust
Certificates (other than the Transferor Lease
Trust Certificates) will be treated as debt for
federal income tax purposes, (i) the Notes and
the Lease Trust Certificates (other than the
Transferor Lease Trust Certificates) will be
treated as debt for Michigan income and single
business tax purposes and (ii) Note Owners not
otherwise subject to taxation in Michigan would
not become subject to taxation in Michigan
solely because of a Note Owner's ownership of a
Note. Assuming further that none of
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<PAGE> 18
FCTT, the Transferor or the Issuer will be
subject to federal income tax at the entity
level, none of FCTT, the Transferor or the
Issuer should be subject to Michigan income and
single business tax at the entity level. See
"Certain State Tax Consequences" for additional
information concerning the application of state
tax laws.
ERISA CONSIDERATIONS.......... Subject to the considerations discussed under
"ERISA Considerations," the Notes are eligible
for purchase by employee benefit plans.
RATINGS OF THE NOTES.......... It is a condition to the issuance of the Notes
that they be rated in the highest investment
rating category by at least one Rating Agency.
There can be no assurance that such ratings
will not be lowered or withdrawn by a Rating
Agency if circumstances so warrant. See
"Ratings of the Notes" and "Special
Considerations -- ERISA Liabilities; Effect on
Ratings."
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<PAGE> 19
SPECIAL CONSIDERATIONS
LIMITED LIQUIDITY
There is currently no secondary market for the Notes offered hereby. The
Underwriters expect, but will not be obligated, to make a market in the Notes.
There can be no assurance that a secondary market for any of the Notes will
develop or, if one does develop, that it will provide the Noteholders with
liquidity of investment or that it will continue for the life of the Notes
offered hereby.
LIMITED ASSETS
The assets of the Issuer, which have been pledged to the Indenture Trustee
to secure the payment of interest on and principal of the Notes, are limited to
the Lease Trust Estate, including the interest in the Series 1995-1 Certificates
held by the Issuer under the Program Operating Lease, the right to receive
payments from the Transferor under the Program Operating Lease, a security
interest in the amounts credited to the Reserve Account to secure certain of the
payments required under the Program Operating Lease and the rights as
beneficiary of the Limited RV Guaranty. The Issuer will not have, nor is it
permitted or expected to have, any other significant assets or other sources of
funds. The Notes represent obligations of the Issuer, and are not insured or
guaranteed by the Transferor, Ford Credit, Ford Credit Leasing, the RCL Trustee,
the Lease Trustee, the Indenture Trustee or any other person or entity.
Moreover, although payment of interest on and principal of the Notes is
ultimately dependent on the payments made under the Series 1995-1 Leases by
Obligors and proceeds from the disposition of the Series 1995-1 Leased Vehicles,
neither the Issuer nor the Transferor has a direct ownership interest in any
Series 1995-1 Lease or a direct ownership interest or perfected security
interest in any Series 1995-1 Leased Vehicle. Because the interest of the
Indenture Trustee, as pledgee of the Issuer, is in the Series 1995-1
Certificates and other assets described above and not directly in the Series
1995-1 Assets, upon the occurrence of an Event of Default, the Indenture Trustee
would have no rights with respect to either the Series 1995-1 Leases or the
Series 1995-1 Leased Vehicles, but instead would be limited to exercising its
rights with respect to the Series 1995-1 Certificates and the other assets
described above. See "Property of the Issuer."
LIMITED OBLIGATIONS OF THE ISSUER, THE TRANSFEROR, FORD CREDIT AND FORD CREDIT
LEASING
The Notes are solely obligations of the Issuer, and neither the Transferor,
Ford Credit nor Ford Credit Leasing is obligated to pay interest on or principal
of the Notes (except indirectly to the extent of payments required under the
Program Operating Lease and the Limited RV Guaranty). The Transferor's
obligation to the Issuer, and Ford Credit Leasing's obligation to the Issuer, is
limited to making Program Operating Lease Payments as required under the Program
Operating Lease. If, after application of amounts on deposit in the Reserve
Account, the Transferor does not have sufficient funds to pay to the Issuer the
Program Operating Lease Payments on any Payment Date, the Noteholders could
incur a loss on their investment.
Ford Credit's obligation to the Issuer to make up shortfalls in the
proceeds received in connection with the disposition of any Series 1995-1 Leased
Vehicle after the scheduled expiration of the related Series 1995-1 Lease is
limited to the Initial RV Guaranty Amount. Because the Limited RV Guaranty is
not reinstated, the Initial RV Guaranty Amount will be reduced by the amount, if
any, paid under the Limited RV Guaranty on any Payment Date. If the Available RV
Guaranty Amount is reduced to zero, the Noteholders could incur a loss on their
investment. The Limited RV Guaranty will be available only to cover shortfalls
in the amounts received for Series 1995-1 Vehicles after expiration of the
related Series 1995-1 Lease on or after its Scheduled Lease End Date. The amount
available to the Issuer from the sale of a Series 1995-1 Leased Vehicle on or
after its Scheduled Lease End Date will be reduced by the Uncollected Excess
Wear and Tear and Excess Mileage, if any, with respect to such vehicle. In
addition, the amount of Sale Proceeds received by the Issuer in the event the
Transferor exercises its option to purchase such vehicle is limited to its
Transferor
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<PAGE> 20
Purchase Option Price (the Residual Value of such Series 1995-1 Leased Vehicle
minus Uncollected Excess Wear and Tear and Excess Mileage, if any). Uncollected
Excess Wear and Tear and Excess Mileage will be a component of the Series 1995-1
Credit Loss with respect to a Collection Period and, to the extent necessary for
the Transferor to make the Basic Payment under the Program Operating Lease with
respect to any Payment Date and to the extent funds are available therefor, will
be covered by amounts on deposit in the Reserve Account. See "Description of the
Notes -- Limited RV Guaranty."
RESIDUAL VALUE RISK
The Residual Value of each Leased Vehicle, including each Series 1995-1
Leased Vehicle, is stated in the related Lease, including the Series 1995-1
Leases, and is determined by Ford Credit as Administrative Agent for FCTT. Ford
Credit sets the Residual Value for a particular model of Leased Vehicle by
reference to its estimate of the wholesale market value of such model at the end
of the Lease Term. However, in connection with sales incentive programs for
particular models, Ford Credit may increase the Residual Values set forth in
Leases to levels above its estimate of the wholesale market values of such
Leased Vehicles at the end of their respective Lease Terms, in order to
stimulate sales of particular models by reducing the amount of the Total Monthly
Payments which would be owed by Obligors. See "The Leases and the Leased
Vehicles -- Delinquency, Repossession, Residual Value and Loss Data."
At the end of each Lease, each Leased Vehicle is either purchased by the
Obligor or the Dealer for a price greater than or equal to its Residual Value or
is returned to the Administrative Agent. For Series 1995-1 Leased Vehicles which
are purchased by the Obligor or Dealer, the full Residual Value of such vehicles
is applied to make distributions on the Series 1995-1 Certificates. To the
extent that a Series 1995-1 Leased Vehicle is not purchased by the related
Obligor or Dealer, the Administrative Agent will sell such Series 1995-1 Leased
Vehicle at auction and proceeds of the sale will be applied to make
distributions on the Series 1995-1 Certificates. Any shortfalls between (x)
proceeds realized from the sale of Series 1995-1 Leased Vehicles (including
amounts collected in respect of Excess Wear and Tear and Excess Mileage and
reduced by amounts required to be remitted to the Obligor under applicable law)
after their respective Scheduled Lease End Dates and (y) their respective
Residual Values (as such Residual Values are decreased by Uncollected Excess
Wear and Tear and Excess Mileage) will reduce the amounts available for
distribution on the Series 1995-1 Certificates, and, to the extent the Available
RV Guaranty Amount is exhausted, the Noteholders could suffer a loss on their
investment. Any Sale Proceeds of a Series 1995-1 Leased Vehicle which are in
excess of its Residual Value minus Uncollected Excess Wear and Tear and Excess
Mileage will be paid to the Transferor and therefore will not be available for
distribution on the Series 1995-1 Certificates. See "The Series 1995-1
Certificates -- Lease of the Series 1995-1 Certificates to the Transferor." As
described in "Description of the Notes -- Limited RV Guaranty," Uncollected
Excess Wear and Tear and Excess Mileage is considered a Series 1995-1 Credit
Loss (and not a Series 1995-1 Residual Loss) and is included in the calculation
of the Reserve Account Draw Amount (and not in the calculation of the RV
Guaranty Draw Amount). There can be no assurance that the historical realization
of the Residual Values through purchases by the Obligor or a Dealer or from sale
at auction will be indicative of future realizations on the Series 1995-1 Leased
Vehicles. In addition, any shortfalls between Liquidation Proceeds and the
Adjusted Balance Subject to Lease Charges of the related Series 1995-1 Leased
Vehicle as of the date the related Series 1995-1 Lease became a Liquidated Lease
will also reduce the amounts available for distribution on the Series 1995-1
Certificates and, to the extent that the Reserve Account Amount is exhausted,
the Noteholders could suffer a loss on their investment.
Because on the business day preceding each Payment Date the Administrative
Agent generally will make a Sale Proceeds Advance of the Residual Value of each
Series 1995-1 Leased Vehicle for which as of the end of the related Accrual
Period the Scheduled Lease End Date has occurred but the related Sale Proceeds
have not been received, Noteholders will not be subject to delays in the
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<PAGE> 21
receipt of principal payments due to delays in the sale of Series 1995-1 Leased
Vehicles. The Administrative Agent is obligated to make a Sale Proceeds Advance
with respect to a Series 1995-1 Leased Vehicle only to the extent that it
believes such advances are recoverable from the Sale Proceeds of such Series
1995-1 Leased Vehicle; if the Administrative Agent determined that Sale Proceeds
Advances were not recoverable from Sale Proceeds on the Series 1995-1 Leased
Vehicles which had not been sold, or if it otherwise failed to honor its
contractual obligation to make Sale Proceeds Advances, Noteholders could be
subject to delays in the receipt of principal payments to the extent that there
is a delay in the receipt of proceeds from the sale of Series 1995-1 Leased
Vehicles. See "Description of the Administrative Agency Agreement -- Sale of
Leased Vehicles" and "-- Advances of Sale Proceeds."
GEOGRAPHIC, ECONOMIC AND OTHER FACTORS
The Dealers which originated the Series 1995-1 Leases are located, and the
Obligors generally are located, in California, New York or Pennsylvania. Due to
the geographic concentration in these three states adverse economic conditions
in one or more of these states may have a significant impact on the performance
of the Series 1995-1 Assets. Economic factors such as unemployment, interest
rates, the rate of inflation and consumer perceptions of the economy may affect
the rate of prepayment and defaults on the Series 1995-1 Leases. In addition,
natural disasters in one or more of the states may affect the rate of prepayment
and defaults on the Series 1995-1 Leases and the ability to realize the Residual
Values of Series 1995-1 Leased Vehicles upon sale. These economic factors, as
well as other factors such as consumer perceptions of used vehicle values (and
Ford vehicles in particular), may also affect the ability to realize the
Residual Value of a Series 1995-1 Leased Vehicle upon sale.
STRUCTURAL CONSIDERATIONS
Beneficial Interests
The Issuer does not directly own the Leases or the Leased Vehicles which
constitute the Series 1995-1 Assets nor does it have a perfected security
interest in the Series 1995-1 Leased Vehicles. Because ownership and, generally,
the perfection of a security interest in a vehicle is governed by the
certificate of title statute of the state in which a vehicle is located, and
because obtaining a perfected security interest or an ownership interest in a
vehicle would result in the administrative burden and expense of retitling
vehicles, title to the Series 1995-1 Assets is held by the FCTT Trustee on
behalf of FCTT which will issue the Series 1995-1 Certificates representing
beneficial interests in the Series 1995-1 Assets. Before the designation of
certain specified Leases and Leased Vehicles as the Series 1995-1 Assets and the
issuance of the Series 1995-1 Certificates, the EBCs, held by Ford Credit and
Ford Credit Leasing, will represent the beneficial interest in all of the FCTT
Assets. After the issuance of the Series 1995-1 Certificates, the FCTT Trustee
and the Administrative Agent are required to account separately for the proceeds
relating to the Series 1995-1 Assets and to the other FCTT Assets. Neither the
holders of the EBCs nor the holders of any other Series will have any rights to
the Series 1995-1 Assets, payments relating thereto or the proceeds thereof.
After the contribution of the Series 1995-1 Certificates by Ford Credit and Ford
Credit Leasing to the Transferor and the subsequent transfer of such Series
1995-1 Certificates to the Issuer, the beneficial interest in the Series 1995-1
Assets will be held by the Issuer, subject to the pledge of the Series 1995-1
Certificates to the Indenture Trustee and the rights of the Transferor under the
Program Operating Lease.
Allocation of FCTT Liabilities
The FCTT Agreement provides that the holders of the Series 1995-1
Certificates (which for this purpose includes both the Transferor and the
Issuer) are responsible for liabilities to third parties or to the FCTT Trustee
incurred in connection with any Series 1995-1 Assets. The holders of the
Transferor Lease Trust Certificates will indemnify the Issuer against any such
liabilities. The FCTT
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<PAGE> 22
Agreement further provides that the holders of the Series 1995-1 Certificates
will not be responsible for liabilities incurred in connection with the other
assets of FCTT. Holders of the EBCs will be responsible for any liabilities to
third parties or liabilities of FCTT incurred in connection with any
Non-Specified Assets, and the holders from time to time of any other Series will
be responsible for any liabilities to third parties and liabilities of FCTT
incurred in connection with the related Series Specified Assets. Such
allocations are not binding on third parties, and to the extent that liabilities
arising with respect to the assets of FCTT or imposed upon the FCTT Trustee are
not satisfied in accordance with the allocations described above, the Series
1995-1 Assets could be used to satisfy such liabilities. To protect against such
liabilities, Ford Credit maintains self-insurance for the benefit of itself and
FCTT and maintains excess liability insurance policies naming Ford Credit and
FCTT as insured parties. In addition, each of Ford Credit and Ford Credit
Leasing will be liable for claims against FCTT as if FCTT were a partnership and
each were a general partner. If the Contingent and Excess Liability Insurance is
insufficient and Ford Credit and Ford Credit Leasing fail to perform their
obligations to indemnify the Issuer against such liabilities and amounts
otherwise distributable to Ford Credit and Ford Credit Leasing as holders of the
EBCs are insufficient to satisfy such liabilities, the Series 1995-1 Assets,
together with the other assets of FCTT, could be used to satisfy the liabilities
to third parties and to the FCTT Trustee, and the Noteholders could incur a loss
on their investment. See "Certain Legal Aspects of FCTT and the Series 1995-1
Certificates -- Insurance."
The Issuer does not own the Series 1995-1 Assets but instead has an
indirect beneficial interest therein. Therefore, a third-party creditor or
claimant who has a perfected security interest in or otherwise obtains a lien on
any Series 1995-1 Asset will have priority over the interest of the FCTT
Trustee. If such creditor or claimant has a claim on any Series 1995-1 Asset,
the effect is the same as if such creditor or claimant had a claim on the Issuer
and the Issuer owned such Series 1995-1 Asset (that is, the Issuer's interest in
the Series 1995-1 Asset would be subject to the prior perfected claim). However,
because other assets in addition to the Series 1995-1 Assets are held by FCTT,
and third-party creditors of FCTT are not bound by the allocation of liabilities
described above, a general creditor of FCTT may obtain a lien either on all or
any one of the Series 1995-1 Assets with respect to a claim unrelated to such
Series 1995-1 Assets or on all of the FCTT Assets, including the Series 1995-1
Assets, regardless of whether such claim would have been allocated to such
Series 1995-1 Assets under the terms of the FCTT Agreement.
Such liens could include judgment liens arising from either successful
claims under federal and state consumer protection laws with respect to Leases
and Leased Vehicles or from successful claims against FCTT arising from
operation of Leased Vehicles constituting assets of FCTT. Other general liens
which could arise include tax liens arising against the Transferor or the
Issuer, liens arising under various federal and state criminal statutes and
certain liens in favor of the Pension Benefit Guaranty Corporation (the "PBGC").
See "-- Consumer Protection Laws," "-- ERISA Liabilities; Effect on Ratings" and
"-- Vicarious Tort Liability." Ford Credit and Ford Credit Leasing have each
represented that as of the Series 1995-1 Cut-Off Date, there were no creditors
or claimants with respect to the Series 1995-1 Assets or FCTT.
The FCTT Assets are located in several states, the tax laws of which vary.
In addition, FCTT may in the future purchase Leases and Leased Vehicles from
Dealers located in states other than California, New York and Pennsylvania, the
states in which the Series 1995-1 Leased Vehicles are located. In the event that
any state imposes a tax on FCTT at the entity level, Ford Credit and Ford Credit
Leasing have agreed to indemnify the holders of the SBCs for the full amount of
such taxes. If Ford Credit and Ford Credit Leasing should fail to fulfill their
respective indemnification obligations, amounts otherwise distributable to them
as holders of the EBCs will be used to satisfy such indemnification obligations.
However, it is possible that the Noteholders could incur a loss on their
investment because Ford Credit and Ford Credit Leasing did not have sufficient
assets available (including distributions on the EBCs) to satisfy such state tax
liabilities.
The FCTT Agreement provides for Ford Credit and Ford Credit Leasing to be
liable as if FCTT were a partnership and each were a general partner to the
extent necessary after giving effect to the
20
<PAGE> 23
allocation of liabilities severally to the holders of certificates representing
their respective beneficial interest in assets of FCTT. However, it is possible
that the Noteholders could incur a loss on their investment to the extent that
any such claim was allocable to the Issuer as holder of the Series 1995-1
Certificates either because a lien arose in connection with the Series 1995-1
Assets or in the event Ford Credit and Ford Credit Leasing did not have
sufficient assets available (including distributions on the EBCs) to satisfy
such claimant or creditor in full.
TERMINATION OF FCTT IN CERTAIN CIRCUMSTANCES
If a bankruptcy or insolvency occurs with respect to Ford Credit Leasing,
the FCTT Agreement provides that FCTT will be terminated. If the Transferor is
terminated upon the bankruptcy or insolvency of Ford Credit Leasing, or if the
Transferor or the Issuer becomes bankrupt or insolvent or is terminated as a
result of the bankruptcy, insolvency or termination of the Transferor or Ford
Credit Leasing, the FCTT Agreement provides that FCTT will be terminated with
respect to holding the Series 1995-1 Assets. In each case the FCTT Trustee is
required to distribute the Series 1995-1 Assets to the holder of the Series
1995-1 Certificates. Because the Issuer has pledged its rights to the Series
1995-1 Certificates to the Indenture Trustee, such distribution would be made to
the Indenture Trustee who would be responsible for retitling the Series 1995-1
Leased Vehicles. The cost of such retitling would reduce the amounts payable
from the Series 1995-1 Assets which are available for payments of interest on
and principal of the Notes, and in such event the Noteholders could suffer a
loss on their investment.
INSOLVENCY OF FORD CREDIT -- SUBSTANTIVE CONSOLIDATION WITH FORD CREDIT; TRUE
SALE
As described under "Certain Legal Aspects of FCTT and the Series 1995-1
Certificates -- Insolvency Related Matters," the transactions described herein
have been structured and the parties to the Basic Documents described herein
have undertaken to act in a manner such that the voluntary or involuntary
commencement of an insolvency-related case or proceeding under the Bankruptcy
Code or similar state laws by or against Ford Credit should not result in any of
Ford Credit Leasing, FCTT or the Transferor becoming subject to a similar case
or proceeding, and should not result in the substantive consolidation of the
assets and liabilities of Ford Credit Leasing, FCTT or the Transferor with those
of Ford Credit for purposes of such case or proceeding. Each of Ford Credit and
Ford Credit Leasing intends that its transfer of its Series 1995-1 Certificate
to the Transferor be an absolute transfer (a "true sale") of all its interest in
such Series 1995-1 Certificate, and each will so treat and report such transfer
for all relevant purposes. A legal opinion will be delivered to the effect that
(i) the assets and liabilities of each of Ford Credit Leasing, FCTT and the
Transferor would not be substantively consolidated with those of Ford Credit if
Ford Credit were to become the subject of a case under the Bankruptcy Code, and
(ii) the transfer of the Series 1995-1 Certificates by each of Ford Credit and
Ford Credit Leasing would constitute an absolute transfer of all interest in
such Series 1995-1 Certificates and, therefore, such Series 1995-1 Certificates
(including payments thereon and the proceeds thereof) would not be property of
either Ford Credit or Ford Credit Leasing, as the case may be, if either were to
become the subject of a case under the Bankruptcy Code. Such conclusions are
reasoned conclusions, based upon various assumptions regarding factual matters
and future events, as to which there necessarily can be no assurance, and such
legal opinion should not be regarded as a guaranty of the result a court would
reach in an actual case before it. If Ford Credit Leasing, FCTT or the
Transferor were to become the subject of an insolvency-related case or
proceeding, or if a bankruptcy trustee, Ford Credit as debtor in possession, a
creditor or other party having standing were to assert that Ford Credit Leasing,
FCTT or the Transferor should be substantively consolidated with Ford Credit, or
that the transfer of the Series 1995-1 Certificates from Ford Credit (or, if
applicable, Ford Credit Leasing) should be recharacterized as a pledge of such
Series 1995-1 Certificates to secure a borrowing, then delays in payments on the
Series 1995-1 Certificates or (in the event of such an insolvency-related case
or proceeding or should the court rule in favor of such assertion) reductions in
such payments could occur, resulting in delays (or reductions) in payments on
the Notes and a potential loss to Noteholders on their investment.
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<PAGE> 24
INSOLVENCY OF FORD CREDIT -- PREFERENCE RISK
If Ford Credit were to become the subject of a case under the Bankruptcy
Code, Administrative Purchase Amounts paid by Ford Credit pursuant to the
Administrative Agency Agreement and payments made by Ford Credit under the
Limited RV Guaranty might be recoverable as preferential transfers from Ford
Credit to the extent made within a year of the commencement of such case. Such a
case (or a similar case or proceeding under applicable state law) with respect
to Ford Credit also would be an event of default under the Administrative Agency
Agreement, which could result in the removal of Ford Credit as Administrative
Agent. Either of such occurrences could adversely affect timely payment to
Noteholders and, if payments previously made by Ford Credit were to be
recovered, losses to Noteholders could result.
REQUIRED SALE OF ASSETS IN CERTAIN CIRCUMSTANCES
If a bankruptcy or insolvency occurs with respect to the Transferor (which
is intended to be a limited purpose business trust) or Ford Credit Leasing,
(which is intended to be a special purpose corporation) or the Transferor is
terminated (which could occur upon the bankruptcy or insolvency of Ford Credit
Leasing), the Lease Trust Agreement provides that the Issuer will be dissolved
(and the Program Operating Lease will terminate) and the Indenture Trustee will
be required to sell the assets of the Issuer, which consist primarily of the
Series 1995-1 Certificates, in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from the sale of the assets of the
Issuer plus amounts on deposit in the Reserve Account will be distributed to
Noteholders and holders of Lease Trust Certificates in the priority set forth in
the Indenture, and if such proceeds and amounts are not sufficient to pay the
Notes in full, the amount of principal returned to Noteholders would be reduced,
and the Noteholders would incur a loss on their investment. See "Additional
Document Provisions -- The Lease Trust Agreement -- Termination."
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
The rate of payment of principal and the yield to maturity on each Class of
Notes generally will be directly related to the rate at which payments on the
Series 1995-1 Leases and in respect of the Series 1995-1 Leased Vehicles are
received. To the extent that Obligors make Total Monthly Payments when due (or
the Administrative Agent makes Monthly Payment Advances) and the Residual Values
of Series 1995-1 Leased Vehicles are not realized until their respective
Scheduled Lease End Dates, the minimum principal payable quarterly to
Noteholders can be determined with certainty. Partial prepayments by Obligors
will be treated as Payaheads and will not increase the rate of payment of
principal of the Notes because such payments will be held and paid out to
Noteholders as principal only when required to meet a shortfall in a subsequent
payment from the related Obligor. However, because the Residual Values of Series
1995-1 Leased Vehicles account for a large portion of the Pool Balance, the rate
of payment of principal of the Notes increases substantially in February 1997 as
a result of Series 1995-1 Leases beginning to reach their Scheduled Lease End
Dates in the related Accrual Period. See "The Leases and Leased Vehicles."
Further, prepayment of the entire Adjusted Balance Subject to Lease Charges of a
Series 1995-1 Lease, whether in the form of Voluntary Early Termination
Proceeds, Liquidation Proceeds or Administrative Purchase Amounts, will have the
effect of increasing the rate of payment of principal on the Notes. In addition,
no principal will be paid on the Class A-2 Notes until the Class A-1 Notes have
been paid in full, unless an Event of Default under the Indenture has occurred
and the maturity of the Notes has been accelerated, in which case principal will
be paid on a pro rata basis to the holders of the Class A-1 Notes and the Class
A-2 Notes based on their respective principal balances without any distinction
between Classes. The rate of payment of principal of the Notes also will be
increased by the application to the payment of principal (after payment of
interest) on the Notes of the portion of the Total Available Funds, if any, not
applied to reduce the Pool Balance or to pay certain fees. To the extent Series
1995-1 Leases which have higher Retail Operating Lease Factors are prepaid
faster than others, the amount of such additional portion of the Total Available
Funds
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<PAGE> 25
available to pay principal of the Notes will be reduced. See "Maturity,
Prepayment and Yield Considerations."
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and regulations,
including the federal Consumer Leasing Act of 1976 and Regulation M promulgated
by the Board of Governors of the Federal Reserve System, impose requirements on
retail lease contracts such as the Series 1995-1 Leases. These laws apply to
FCTT as the assignee of each Series 1995-1 Lease and may also apply to the
Issuer as holder of the Series 1995-1 Certificates which represent a beneficial
interest in the Series 1995-1 Leases, among other things. The failure of the
Dealer, FCTT, or the Administrative Agent acting on behalf of FCTT, to comply
with such laws and regulations may give rise to liabilities on the part of FCTT,
and claims by FCTT or the Administrative Agent acting on behalf of FCTT with
respect to Obligors may be subject to set-off as a result of such
non-compliance.
Each of California, New York and Pennsylvania has adopted a "Lemon Law"
that provides users of vehicles, including lessees, certain rights with respect
to vehicles which are substandard. Such Lemon Laws apply with respect to the
Series 1995-1 Leased Vehicles. A successful claim under a Lemon Law could result
in, among other things, the termination of the related Series 1995-1 Lease
and/or the refunding to the related Obligor of some portion of Total Monthly
Payments paid by such Obligor. Any such refund would reduce the amounts
distributed with respect to the Series 1995-1 Certificates, which could, in
certain circumstances, reduce the payments to Noteholders. See "Certain Legal
Aspects of the Leases and Leased Vehicles -- Consumer Protection Laws."
ERISA LIABILITIES; EFFECT ON RATINGS
It is possible that the PBGC could assert that the assets of FCTT,
including the Series 1995-1 Assets, should be subject to liens in favor of the
PBGC to satisfy any unpaid ERISA obligations of any member of an "affiliated
group" that includes Ford Credit, Ford and their respective affiliates. Because
such "affiliated group" has historically substantially fully funded their ERISA
obligations (none of which arise under multiple employer plans), the Transferor
believes that the likelihood of any such liability arising and the PBGC
attempting to assert such a lien (including a lien against the Series 1995-1
Assets) is remote. However, if an unfunded ERISA liability of the affiliated
group arises, there can be no assurance that the PBGC will not attempt to assert
a lien. The ratings of the Notes may be downgraded in the event of any unfunded
ERISA liability of any member of the affiliated group. There are currently no
unfunded ERISA liabilities in the Ford affiliated group, although there can be
no assurance that the current level of funding will continue in the future. See
"Ratings of the Notes."
VICARIOUS TORT LIABILITY
Although FCTT will hold title to the Series 1995-1 Leased Vehicles and the
Issuer, as holder of the Series 1995-1 Certificates (subject to the pledge to
the Indenture Trustee and the rights of the Transferor under the Program
Operating Lease), will have a beneficial interest therein, the Series 1995-1
Leased Vehicles will be operated by the related Obligors and their respective
invitees. State laws differ as to whether anyone suffering injury to person or
property involving a leased vehicle may bring an action against the owner of the
vehicle merely by virtue of its ownership of the vehicle. To the extent that
applicable state law permits such an action, FCTT and the FCTT Assets, including
the Series 1995-1 Assets, may be subject to liability to such an injured party.
FCTT is named as an insured party under the Contingent and Excess Liability
Insurance. In the event that vicarious liability was imposed on FCTT as owner of
a Series 1995-1 Leased Vehicle (or, in certain circumstances a Leased Vehicle
that is not a Series 1995-1 Leased Vehicle) and the coverage provided by the
Contingent and Excess Liability Insurance was insufficient to cover the full
amount of such loss, and Ford Credit and Ford Credit Leasing failed to perform
their obligations to indemnify the Issuer, the Noteholders could incur a loss on
their investment. See "-- Structural Considerations," "Certain Legal Aspects of
FCTT and
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<PAGE> 26
the Series 1995-1 Certificates" and "Certain Legal Aspects of the Leases and
Leased Vehicles -- Vicarious Liability."
ADMINISTRATIVE AGENT DEFAULT
Ford Credit is the Administrative Agent with respect to the Leases and
Leased Vehicles, including the Series 1995-1 Leases and Series 1995-1 Leased
Vehicles. Administrative Agent Events of Default may occur with respect to all
beneficiaries of FCTT, including the Issuer, or only with respect to one or more
Series. Upon the occurrence of an Administrative Agent Event of Default with
respect to all beneficiaries of FCTT, the FCTT Trustee, if so directed by 100%
of the beneficiaries of FCTT (which, so long as any Notes are outstanding, will
include the Indenture Trustee and any other holder of a Series, but exclude Ford
Credit and Ford Credit Leasing), may terminate all of the rights and obligations
of Ford Credit under the Administrative Agency Agreement. Upon the occurrence of
an Administrative Agent Event of Default with respect to Series 1995-1, the
Indenture Trustee may terminate all of the rights and obligations of Ford Credit
with respect to Series 1995-1 only, and the FCTT Trustee will become the
successor Administrative Agent until such time as a successor Administrative
Agent is appointed pursuant to the terms of the Administrative Agency Agreement.
Any replacement of Ford Credit as Administrative Agent in servicing the Leases
and disposing of the Leased Vehicles could have an adverse effect on the timely
receipt of interest and principal by the Noteholders. See "Description of the
Administrative Agency Agreement -- Administrative Agent Events of Default."
BOOK-ENTRY REGISTRATION
Each Class of the Notes will be initially represented by one or more
physical notes registered in the name of Cede or any successor nominee for DTC
and will not be registered in the names of the beneficial owners of Notes or
their nominees. Accordingly, unless and until Definitive Notes are issued,
holders of beneficial interests in Notes will not be recognized by the Indenture
Trustee as Noteholders and will only be able to exercise the rights of
Noteholders indirectly through DTC and its participants. See "Description of the
Notes -- Book-Entry Registration."
FORD CREDIT
Ford Credit was incorporated in Delaware in 1959 and is a wholly owned
subsidiary of Ford.
Ford Credit provides wholesale financing and capital loans to franchised
Ford 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 United States 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. 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.
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<PAGE> 27
THE ISSUER
FORMATION OF THE ISSUER
The Issuer is a trust formed under the laws of the State of Delaware
pursuant to the Lease Trust Agreement solely for the purposes of the
transactions described in this Prospectus. After its formation, the Issuer will
not engage in any activity other than (i) issuing the Notes and Lease Trust
Certificates, (ii) using the proceeds from the sale of the Notes and Lease Trust
Certificates to acquire the Series 1995-1 Certificates and the other property of
the Lease Trust Estate, (iii) making payments on the Notes and Lease Trust
Certificates, (iv) assigning and pledging the Lease Trust Estate to the
Indenture Trustee, (v) entering into and performing its obligations under the
Basic Documents to which it is a party and (vi) engaging in other transactions,
including entering into agreements, that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith.
CAPITALIZATION OF THE ISSUER
On the Closing Date, the Issuer will be capitalized with $613,521,000.00 of
Notes and $23,320,978.41 of Lease Trust Certificates. The Issuer will sell
Transferor Lease Trust Certificates with an aggregate initial principal balance
of $233,978.41 to the Transferor and will sell the remaining Lease Trust
Certificates to third party investors that are expected to be unaffiliated with
the Transferor, the Administrative Agent, their respective affiliates or the
Issuer. In exchange for the transfer of the Series 1995-1 Certificates, the
Issuer will pay the proceeds from the sale of the Notes and Lease Trust
Certificates to the Transferor and will issue to the Transferor the Transferor
Lease Trust Certificates. The Transferor Lease Trust Certificates, in addition
to evidencing the rights of a Lease Trust Certificateholder, also entitle the
holders thereof to any remaining payments or proceeds from the Series 1995-1
Certificates after the aggregate principal balance of the Notes and the Lease
Trust Certificates each have been reduced to zero (the "Deferred Amount").
The following table illustrates the capitalization of the Issuer as of the
Closing Date, as if the issuance and sale of the Notes and Lease Trust
Certificates and the incurrence of the obligation to pay the Deferred Amount had
taken place on such date:
<TABLE>
<S> <C>
Class A-1 Notes............................................. $113,000,000.00
Class A-2 Notes............................................. 500,521,000.00
Lease Trust Certificates.................................... 23,320,978.41
Deferred Amount............................................. 80,726,588.10
---------------
Total.................................................. $717,568,566.51
===============
</TABLE>
THE LEASE TRUSTEE
PNC Bank, Delaware, a Delaware banking corporation, is the Lease Trustee
under the Lease Trust Agreement. The principal offices of the Lease Trustee are
located at 222 Delaware Avenue, Wilmington, Delaware 19801. The Transferor, Ford
Credit and their affiliates may maintain normal commercial banking relationships
with the Lease Trustee and its affiliates. The fees and expenses of the Lease
Trustee will be paid by the Administrative Agent.
PROPERTY OF THE ISSUER
On the Closing Date, the Series 1995-1 Certificates will be transferred to
the Issuer pursuant to the Transfer Agreement. The Issuer will then pledge its
interest in the Series 1995-1 Certificates to the Indenture Trustee under the
Indenture and then, subject to such pledge, will lease the Series 1995-1
Certificates back to the Transferor pursuant to the Program Operating Lease. The
Program Operating Lease with respect to the beneficial interest in each Series
1995-1 Leased
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<PAGE> 28
Vehicle expires with respect to such Series 1995-1 Leased Vehicle immediately
preceding the earlier to occur of (i) the sale of such Series 1995-1 Leased
Vehicle, but only if such sale occurs on or after the related Scheduled Lease
End Date and (ii) the making of a Sale Proceeds Advance in respect thereof. See
"Series 1995-1 Certificates." After giving effect to the transactions described
herein and effected by the Basic Documents, the property of the Issuer (the
"Lease Trust Estate") will consist of (i) the rights of the Issuer under the
Series 1995-1 Certificates, (ii) the rights under the Program Operating Lease,
(iii) the rights of the Issuer to funds on deposit from time to time in the
Collection Account, the Payahead Account and the Payment Account (including
investment income of amounts on deposit in the Collection Account) and proceeds
thereof, (iv) the rights of the Transferor under the Asset Contribution
Agreement, (v) the rights as beneficiary of the Limited RV Guaranty, (vi) the
rights as holder of the Series 1995-1 Certificates under the Administrative
Agency Agreement and the Series 1995-1 Supplement, (vii) the interest of the
Issuer in the Reserve Account and the right to make withdrawals therefrom and
(viii) all proceeds of the foregoing. All of the Lease Trust Estate is pledged
to the Indenture Trustee pursuant to the terms of the Indenture.
Because the Series 1995-1 Certificates represent the beneficial interest in
the Series 1995-1 Assets, Noteholders are dependent on payments made on the
Series 1995-1 Leases and proceeds received in connection with the disposition of
Series 1995-1 Leased Vehicles for payment of interest on and principal of the
Notes. The Issuer will not have a direct ownership interest in the Series 1995-1
Leases, or a direct ownership interest or perfected security interest in the
Series 1995-1 Leased Vehicles (which will be titled in the name of FCTT), and it
is therefore possible that a claim or lien with respect to the Series 1995-1
Leased Vehicles or on FCTT could limit the amounts paid to the holders of the
Series 1995-1 Certificates to less than the amount due from the related Obligors
or realized from the sale of Series 1995-1 Leased Vehicles. To the extent that a
claim or lien delays disposition of Series 1995-1 Leased Vehicles or reduces the
amount paid to the holders of the Series 1995-1 Certificates as holders of the
beneficial interest in the Series 1995-1 Assets, Noteholders could be subject to
delays in payment or losses on their investment. See "Special Considerations --
Structural Considerations," "Description of the Notes -- Reserve Account
Withdrawals and Deposits," "Description of the Notes -- Limited RV Guaranty,"
"Series 1995-1 Certificates" and "Certain Legal Aspects of FCTT and the Series
1995-1 Certificates."
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be applied, together with
the proceeds from the sale of the Lease Trust Certificates, to acquire the
Series 1995-1 Certificates from the Transferor pursuant to the Transfer
Agreement.
FCTT
CREATION OF FCTT BY FORD CREDIT AND FORD CREDIT LEASING
Ford Credit Titling Trust ("FCTT") was formed by Ford Credit and Ford
Credit Leasing, a special-purpose, wholly-owned subsidiary of Ford Credit,
pursuant to the terms of the FCTT Agreement. The primary purpose of FCTT is to
acquire from Dealers located in specified jurisdictions the Leases and Leased
Vehicles originated by such Dealers and to conserve and hold such Leases and
Leased Vehicles on behalf of the beneficiaries from time to time of FCTT. As of
the date hereof, Ford Credit has directed that each lease under the Red Carpet
Lease Plan which is originated by Dealers in California, New York and
Pennsylvania, and the related leased vehicle, be assigned by Dealers to FCTT,
except that if the obligor under the lease is located in a state other than
California, New York and Pennsylvania, such lease and the related leased vehicle
is assigned to Ford Credit instead of FCTT. All the Series 1995-1 Leases and
Series 1995-1 Leased Vehicles were originated in California, New York or
Pennsylvania with Obligors located in such states. The Administrative Agent has
advised the Issuer that it anticipates that after the date hereof, additional
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states will be added to the list of states in which Dealers will assign Leases
and Leased Vehicles to FCTT. Leases and Leased Vehicles originated in such
additional states will constitute FCTT Assets but will not constitute Series
1995-1 Assets. See "-- Lease Origination from Dealers and Assignment to FCTT."
THE FCTT TRUSTEE
Comerica Bank, a Michigan banking corporation, is the FCTT Trustee. The
principal offices of Comerica Bank are located in Detroit, Michigan. The
Transferor, Ford Credit and their affiliates may maintain normal commercial
banking relationships with Comerica Bank and its affiliates.
LEASE ORIGINATION FROM DEALERS AND ASSIGNMENT TO FCTT
Dealers originate Leases on a form providing for the assignment thereof to
FCTT. Each Leased Vehicle which is assigned to FCTT previously has been sold to
the Dealer by Ford or, in certain limited circumstances, by another manufacturer
of motor vehicles. The Dealer has negotiated the terms of the Lease with the
Obligor, including an option to purchase the related Leased Vehicle on the
Scheduled Lease End Date for an amount greater than or equal to the Residual
Value of the Leased Vehicle. Upon entering into a Lease with an Obligor and
approval of such Lease by the Administrative Agent, Dealers assign the Lease,
the related Leased Vehicle, the first Total Monthly Payment received from the
Obligor and rights to any security deposit or reconditioning reserve to FCTT
against payment of the related Balance Subject to Lease Charges. As of the date
of the assignment, FCTT holds the title to and is the record owner of the Lease
and Leased Vehicle. Until such date as the Lease and Leased Vehicle are
designated as Series Specified Assets in connection with the issuance of any
Series, the beneficial interest in such Lease and Leased Vehicle is held by Ford
Credit and Ford Credit Leasing as holders of the Exchangeable Beneficial
Certificates. See "-- Exchangeable Beneficial Certificates and Specified
Beneficial Certificates." Pursuant to agreements between Ford Credit and the
Dealers, each Dealer is obligated, after originating and assigning Leases and
Leased Vehicles to FCTT, to repurchase such Leases and Leased Vehicles which do
not meet certain representations and warranties made by such Dealer. The
Administrative Agent or the Dealer has paid or will pay applicable sales, use
and similar taxes to the appropriate authorities from amounts collected from
Obligors or otherwise.
TITLING OF LEASED VEHICLES
The Administrative Agent, on behalf of FCTT, purchases the Leases and
related Leased Vehicles, including the Series 1995-1 Leases and the related
Series 1995-1 Leased Vehicles, from the originating Dealers and causes the
certificate of title for each Leased Vehicle to be issued in the name "Ford
Credit Titling Trust," or "Ford Credit Titling Trust, Comerica Bank, Trustee" or
in a substantially similar name acceptable to the relevant governmental
departments or agencies. No lien will be placed on the certificate of title to
indicate the interests of the beneficiaries of FCTT, and new certificates of
title will not be issued in connection with the transfer of any beneficial
interests in FCTT. Therefore, there will be no indication on the certificates of
title for the Series 1995-1 Leased Vehicles that the Issuer or any other person
has an interest in such Series 1995-1 Leased Vehicles. In certain circumstances,
however, certificates of title to the Leased Vehicles will reflect a lien
recorded in favor of the Administrative Agent, including therein the address of
an office of the Administrative Agent at which Leases and the certificates of
title to Leased Vehicles are to be delivered. This lien exists only to assure
delivery of the certificates of title to the correct location; the
Administrative Agent will not have an interest in the Leased Vehicles, although
for administrative convenience, it (or a third-party contractor hired by it)
will hold the certificates of title as custodian on behalf of the FCTT Trustee.
See "Special Considerations -- Structural Considerations" and "Certain Legal
Aspects of FCTT and the Series 1995-1 Certificates."
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EXCHANGEABLE BENEFICIAL CERTIFICATES AND SPECIFIED BENEFICIAL CERTIFICATES
Prior to the issuance of the Series 1995-1 Certificates and the
securitization described herein, the FCTT Trustee issued to Ford Credit and Ford
Credit Leasing, as the beneficiaries of FCTT, Exchangeable Beneficial
Certificates (each, an "EBC") representing the entire beneficial interest in the
FCTT Assets (representing a 98% beneficial interest in the FCTT Assets in the
case of Ford Credit, and a 2% beneficial interest in the case of Ford Credit
Leasing). Neither Ford Credit nor Ford Credit Leasing may transfer or assign
their respective EBCs. As described below, in addition to the EBCs, the FCTT
Trustee may issue from time to time Specified Beneficial Certificates ("SBCs")
representing beneficial interests in certain designated FCTT Assets. The Series
1995-1 Certificates are the first series of SBCs issued by FCTT. After the
issuance of the Series 1995-1 Certificates and until any other SBCs are issued,
the EBCs will represent the beneficial interest in all of the FCTT Assets other
than those FCTT Assets which are designated as Series 1995-1 Assets (such other
FCTT Assets, the "Non-Specified Assets"). The beneficial interest in FCTT and
the FCTT Assets as of any date is represented by the EBCs and each outstanding
SBC.
Pursuant to the FCTT Agreement, the Administrative Agent, acting at the
unanimous direction of the holders of the EBCs, may at any time deliver to the
FCTT Trustee a Series Specification Notice identifying certain FCTT Assets to be
designated as Series Specified Assets and the date (the "Series Issue Date")
upon which an SBC representing the beneficial interest in such Series Specified
Assets will be issued to each holder of an EBC. On the Series Issue Date, the
FCTT Trustee will deliver an SBC to each holder of an EBC. No Series may be
issued unless an Opinion of Counsel is delivered that such issuance shall not
cause FCTT to be taxable as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes. Upon delivery of the
SBC, such holder's beneficial interest in the FCTT Assets will be represented by
the EBC (with respect to the Non-Specified Assets) and each SBC (with respect to
Series Specified Assets). As described in "Series 1995-1 Certificates --
Issuance of Series 1995-1 Certificates to Ford Credit and Ford Credit Leasing,"
the Series 1995-1 Certificate to be issued to Ford Credit will be an SBC
representing a 98% beneficial interest in the Series 1995-1 Assets and the
Series 1995-1 Certificate to be issued to Ford Credit Leasing will be an SBC
representing a 2% beneficial interest in the Series 1995-1 Assets. While Series
1995-1 is the first Series to be issued by FCTT, Ford Credit and Ford Credit
Leasing expect from time to time to designate other FCTT Assets as Series
Specified Assets and to cause FCTT to issue additional Series representing
beneficial interests in such Series Specified Assets.
As set forth in the FCTT Agreement and the Administrative Agency Agreement,
the holders from time to time of any SBC will have a beneficial interest in the
related Series Specified Assets, will be entitled to receive such percentage
interest of the proceeds of the related Series Specified Assets set forth in
such SBC and, acting together with each other holder of an SBC representing a
beneficial interest in such Series Specified Assets, will be entitled to direct
the FCTT Trustee to take actions or refrain from taking actions with respect to
such Series Specified Assets. The holders from time to time of any SBCs will not
be entitled to receive proceeds from Non-Specified Assets or from any other
Series Specified Assets which may exist from time to time. However, it is
possible in certain circumstances that notwithstanding the allocations of
liabilities and the indemnities set forth in the FCTT Agreement, certain Series
Specified Assets could be attached or proceeds of such Series Specified Assets
could be used to satisfy a claim with respect to Non-Specified Assets or other
Series Specified Assets or a claim assessed on FCTT generally. See "Special
Considerations -- Structural Considerations."
THE TRANSFEROR
DELAWARE BUSINESS TRUST
The Transferor is a business trust formed under the laws of the State of
Delaware pursuant to the RCL Trust Agreement for purposes of the transactions
described herein. The beneficiaries of the Transferor are Ford Credit and Ford
Credit Leasing. The activities of the Transferor are limited to (i) acquiring
and transferring the Series 1995-1 Certificates and entering into and performing
its
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obligations under the Program Operating Lease; (ii) acting as depositor to the
Issuer and entering into the Lease Trust Agreement and acquiring and holding
certain Lease Trust Certificates issued thereunder; and (iii) making
distributions and executing agreements as are necessary, suitable or convenient
to accomplish the foregoing. In addition, after entering into the Program
Operating Lease the Transferor will assign a 1% interest in all of its assets
and obligations to Ford Credit Leasing. See "-- Creation by Ford Credit and Ford
Credit Leasing; Assignment to Ford Credit Leasing" and "Series 1995-1
Certificates -- Lease of the Series 1995-1 Certificates to the Transferor."
RCL TRUSTEE
The RCL Trustee is The Chase Manhattan Bank (USA), a Delaware banking
corporation, with offices located at 802 Delaware Avenue, Wilmington, Delaware
19801. The fees and expenses of the RCL Trustee will be paid by Ford Credit and
Ford Credit Leasing, the beneficiaries of the Transferor.
CREATION BY FORD CREDIT AND FORD CREDIT LEASING; ASSIGNMENT TO FORD CREDIT
LEASING
Prior to the issuance of the Series 1995-1 Certificates and the
securitization described herein, Ford Credit held a 98% beneficial interest in
the Transferor and Ford Credit Leasing held a 2% beneficial interest in the
Transferor. Because the Transferor will assign a 1% interest in its assets and
obligations to Ford Credit Leasing on the Closing Date, the beneficial interest
in the Transferor held by Ford Credit and Ford Credit Leasing will be changed by
the amount so assigned. After giving effect to the assignment on the Closing
Date, Ford Credit Leasing, in addition to a direct right to 1% of all assets of
the Transferor (and an obligation to pay 1% of all liabilities of the
Transferor), will retain a 1/99 beneficial interest in the Transferor. After
giving effect to the assignment to Ford Credit Leasing, Ford Credit as a
beneficiary of the Transferor will retain a 98/99 beneficial interest in the
Transferor. As described in "Series 1995-1 Certificates -- Lease of the Series
1995-1 Certificates to the Transferor," the primary obligation of the Transferor
after the Closing Date is to make Program Operating Lease Payments and its
primary assets after the Closing Date are the interest it has as lessee of the
Series 1995-1 Certificates pursuant to the Program Operating Lease, its interest
in the Reserve Account, and its Transferor Lease Trust Certificate.
SERIES 1995-1 CERTIFICATES
ISSUANCE OF SERIES 1995-1 CERTIFICATES TO FORD CREDIT AND FORD CREDIT LEASING
The Series 1995-1 Certificates will be the first SBCs issued by FCTT. See
"FCTT -- Exchangeable Beneficial Certificates and Specified Beneficial
Certificates." On the Closing Date, the FCTT Trustee will (i) issue a Series
1995-1 Certificate to Ford Credit, as holder of an EBC, representing Ford
Credit's 98% beneficial interest in the FCTT Assets which were designated as
Series 1995-1 Assets pursuant to the Series Specification Notice relating to
Series 1995-1 and (ii) issue a Series 1995-1 Certificate to Ford Credit Leasing,
as holder of an EBC, representing Ford Credit Leasing's 2% beneficial interest
in the FCTT Assets which were designated as Series 1995-1 Assets pursuant to the
Series Specification Notice relating to Series 1995-1.
CONTRIBUTION OF SERIES 1995-1 CERTIFICATES TO THE TRANSFEROR
On the Closing Date, Ford Credit and Ford Credit Leasing each will convey
the Series 1995-1 Certificate issued to it to the Transferor pursuant to the
terms of the Asset Contribution Agreement. Ford Credit and Ford Credit Leasing
each will covenant to treat the conveyance of the Series 1995-1 Certificates to
the Transferor as an absolute transfer for all purposes. Upon the conveyance of
the Series 1995-1 Certificates, the value of the beneficial interests of Ford
Credit and Ford Credit Leasing in the Transferor will be increased by the value
of the Series 1995-1 Certificates. See "The Transferor -- Creation by Ford
Credit and Ford Credit Leasing; Assignment to Ford Credit Leasing."
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In addition to the conveyance of the Series 1995-1 Certificates, Ford
Credit and Ford Credit Leasing also will convey to the Transferor their rights
under the Series 1995-1 Supplement and the Administrative Agency Agreement with
respect to Series 1995-1.
The Administrative Agent in the Series 1995-1 Supplement and Ford Credit
and Ford Credit Leasing in the Asset Contribution Agreement will make certain
representations, warranties and covenants with respect to the Series 1995-1
Assets. See "The Leases and Leased Vehicles -- Eligibility Criteria" and
"Additional Document Provisions -- Representations, Warranties and Covenants."
In the event all of the Specific Eligibility Criteria and General Eligibility
Criteria were not satisfied on the Series 1995-1 Cut-Off Date or certain
covenants are breached, Ford Credit and Ford Credit Leasing, as holders of the
EBCs, will be required to purchase the beneficial interest in the Series 1995-1
Asset to which such breach relates. Any such purchase will be effected by the
deposit of the Administrative Purchase Amount in the Collection Account on the
business day preceding the Payment Date relating to the Accrual Period in which
the breach was discovered or occurred, as applicable. See "Description of the
Administrative Agency Agreement -- Administrative Purchases."
TRANSFER OF THE SERIES 1995-1 CERTIFICATES TO THE ISSUER
On the Closing Date, immediately following the conveyance of the Series
1995-1 Certificates to the Transferor pursuant to the Asset Contribution
Agreement as described in "-- Contribution of Series 1995-1 Certificates to the
Transferor," the Transferor, pursuant to the terms of the Transfer Agreement,
will transfer the Series 1995-1 Certificates to the Issuer. The Transferor also
will assign to the Issuer the rights under the Administrative Agency Agreement
and the Series 1995-1 Supplement conveyed to it by Ford Credit and Ford Credit
Leasing pursuant to the Asset Contribution Agreement. In exchange for such
transfer and assignment, the Issuer will pay the proceeds from the sale of the
Notes and Lease Trust Certificates to the Transferor and will issue to the
Transferor the Transferor Lease Trust Certificates. The Transferor Lease Trust
Certificates, in addition to evidencing the rights of a Lease Trust
Certificateholder, also entitle the holders thereof to any remaining payments or
proceeds from the Series 1995-1 Certificates after the aggregate principal
balance of the Notes and the Lease Trust Certificates each have been reduced to
zero.
PLEDGE OF THE SERIES 1995-1 CERTIFICATES TO THE INDENTURE TRUSTEE
Immediately following the transfer of the Series 1995-1 Certificates to the
Issuer as described in "-- Transfer of the Series 1995-1 Certificates to the
Issuer," the Issuer will pledge its interest in the Series 1995-1 Certificates
as part of the Lease Trust Estate pledged to the Indenture Trustee as security
for the repayment of the Notes. See "Property of the Issuer."
LEASE OF THE SERIES 1995-1 CERTIFICATES TO THE TRANSFEROR
Immediately following the transfer of the Series 1995-1 Certificates to the
Issuer and the pledge to the Indenture Trustee of the Issuer's interest therein
as described in "-- Transfer of the Series 1995-1 Certificates to the Issuer"
and "-- Pledge of the Series 1995-1 Certificates to the Indenture Trustee," the
Issuer and the Transferor will enter into the Program Operating Lease pursuant
to which the Transferor will lease the Series 1995-1 Certificates during the
term of the Program Operating Lease. As lessee, the Transferor will be entitled
to receive all proceeds from the Series 1995-1 Certificates during the term of
the Program Operating Lease and will be required to make Program Operating Lease
Payments to the Issuer, subject to the assignment by the Transferor of 1% of its
assets and obligations to Ford Credit Leasing. See "The Transferor -- Creation
by Ford Credit and Ford Credit Leasing; Assignment to Ford Credit Leasing."
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Because the Program Operating Lease expires with respect to the portion of
the Series 1995-1 Certificates representing the beneficial interest in a Series
1995-1 Leased Vehicle immediately preceding the sale of such Series 1995-1
Leased Vehicle, if such sale occurs on or after such Series 1995-1 Leased
Vehicle's Scheduled Lease End Date or the date on which a Sale Proceeds Advance
is made relating to such Series 1995-1 Leased Vehicle, whichever is earlier, the
Transferor will receive all Monthly Payments with respect to Series 1995-1
Leases, and all Sale Proceeds of those Series 1995-1 Leased Vehicles the related
Series 1995-1 Leases of which terminate before their Scheduled Lease End Date.
These amounts are included in the Program Operating Lease Payments payable by
the Transferor, as lessee under the Program Operating Lease. In addition, the
Program Operating Lease Payments include all amounts of Excess Wear and Tear and
Excess Mileage. The Transferor is obligated to make Program Operating Lease
Payments to the Issuer for so long as the Notes and Lease Trust Certificates are
outstanding. Such Program Operating Lease Payments will be deemed made to the
extent that Collections comprised of Monthly Payments (or Monthly Payment
Advances), Voluntary Early Termination Proceeds and Liquidation Proceeds in an
amount equal to such Monthly Payments, Uncollected Excess Wear and Tear and
Excess Mileage and Adjusted Balance Subject to Lease Charges of all Leases which
terminate before their Scheduled Lease End Dates are deposited by the
Administrative Agent in the Collection Account. The Transferor will not receive
the Sale Proceeds of those Series 1995-1 Leased Vehicles whose Series 1995-1
Leases terminate on or after their respective Scheduled Lease End Dates. The
right to such Sale Proceeds (as limited by the Transferor Purchase Option Price)
is property of the Issuer pledged pursuant to the Indenture.
To the extent that the Transferor does not make the Basic Payment portion
of the Program Operating Lease Payment due on any Payment Date, the Indenture
Trustee will draw on the Reserve Account. The "Basic Payment," as of any Payment
Date, is the sum of (i) the Required Interest Payment, (ii) the portion of the
Pool Balance Decline resulting from termination of Series 1995-1 Leases before
their respective Scheduled Lease End Dates, (iii) the portion of the aggregate
scheduled Monthly Payments allocated to a decline in the aggregate Adjusted
Balance Subject to Lease Charges of the Series 1995-1 Leases and (iv)
Uncollected Excess Wear and Tear and Excess Mileage with respect to Series
1995-1 Leases for such Accrual Period. See "Description of the Notes -- Reserve
Account Deposits and Withdrawals."
Defaults under the Program Operating Lease include, among other things,
failure by the Transferor to pay the Required Interest Payment portion of the
Basic Payment to the Issuer, breach of a representation and warranty, the
failure to observe or perform certain covenants or the occurrence of an Event of
Default under the Indenture. Upon the occurrence of an event of default under
the Program Operating Lease, (i) the Indenture Trustee as assignee of the rights
of the Issuer in the Program Operating Lease pursuant to the pledge of the Lease
Trust Estate would be entitled to terminate the Program Operating Lease and
obtain the Series 1995-1 Certificates and (ii) an Event of Default would occur
under the Indenture which would permit the Noteholders to accelerate the
maturity of the Notes and in certain circumstances cause the sale of the Lease
Trust Estate. See "Description of the Notes -- Indenture."
Transferor Leased Vehicle Purchase Option. Under the Program Operating
Lease, the Transferor may, at its option, purchase the Issuer's beneficial
interest in any Series 1995-1 Leased Vehicle not purchased by the related Dealer
or Obligor following the Scheduled Lease End Date of the related Series 1995-1
Lease by paying to the Issuer an amount equal to the Residual Value of such
Series 1995-1 Leased Vehicle minus any amounts due from the related Obligor for
Uncollected Excess Wear and Tear and Excess Mileage (the "Transferor Purchase
Option Price"). The Transferor will exercise such option only if neither the
Obligor nor the Dealer exercises its option to purchase the Series 1995-1 Leased
Vehicle and the related Sale Proceeds exceeds the Transferor Purchase Option
Price. Because the Transferor intends to exercise this option when available,
the amounts received by the Issuer with respect to the sale of any Series 1995-1
Leased Vehicle the related Series 1995-1 Lease of which was terminated on or
after its Scheduled Lease End Date will
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never exceed the Transferor Purchase Option Price. The Transferor will retain
any excess of the Sale Proceeds of such Series 1995-1 Leased Vehicle over the
related Transferor Purchase Option Price, and such amounts will not be available
to pay interest on or principal of the Notes.
THE LEASES AND LEASED VEHICLES
ORIGINATION PROCEDURES
The Ford Credit Red Carpet Lease Plan (the "Red Carpet Lease Plan") is one
of a number of financing programs offered by Dealers to assist their customers
in the acquisition of new automobiles and light-duty trucks. Under the Red
Carpet Lease Plan, an Obligor enters into a Lease that requires the Obligor to
make Total Monthly Payments for a predetermined number of months ("Lease Term")
in return for the use of the related Leased Vehicle. At the end of the Lease
Term, the Obligor has the option to purchase the Leased Vehicle or return it to
the Dealer. Dealers negotiate the terms of the Lease with prospective lessees in
accordance with guidelines set by Ford Credit.
A credit application completed by a prospective lessee is evaluated by Ford
Credit with consideration given to, among other things, the prospective lessee's
credit history, current income, and years at present address. Ford Credit uses a
proprietary credit scoring model that measures the probability of payment for
each potential obligor given information concerning the prospective lessee, the
price of the Leased Vehicle and terms of the Lease. Credit analysts at the
applicable Ford Credit branch office evaluate credit applications based on the
information set forth therein and the results of the proprietary credit scoring
model or in some cases based on additional information obtained from the
relevant Dealer and make a judgment to accept or reject such applications.
Credit analysts may also propose changes to the terms of the Lease to increase
the probability of payment such as a larger down payment or a less expensive
vehicle.
If the credit application is approved and the prospective lessee agrees to
the terms of the Lease, the Dealer completes the transaction documentation and
submits it to Ford Credit. Prior to the Obligor taking possession of the Leased
Vehicle, the Dealer must: (i) collect the first Total Monthly Payment, including
a refundable security deposit (which in certain instances may be waived), (ii)
obtain written evidence that the Obligor has purchased adequate insurance
coverage, and (iii) ensure that all required license fees, registration fees and
up-front taxes are paid. Certain fees and taxes may be financed by the Dealer
and included in the Obligor's Total Monthly Payment (such fees and taxes, the
"Use and Lease Tax Amounts"). The Dealer is responsible for registering and
titling the Leased Vehicle; it is registered in the name of the Obligor, the
Obligor and FCTT or FCTT only and titled in the name of Ford Credit or FCTT as
the case may be. Titles are mailed directly to the appropriate Ford Credit
branch office or to a central office of an independent contractor hired by Ford
Credit.
SERVICING PROCEDURES
The Leases, including the Series 1995-1 Leases, are serviced through Ford
Credit branch offices. Approximately 19 days before a Total Monthly Payment is
due, Ford Credit sends the Obligor an invoice. The Obligor is instructed to send
the Total Monthly Payment to one of several regional lockboxes dedicated to the
collection of payments for Leases and retail installment contracts. If an
Obligor does not make the payment within 10 days of its due date, a late fee is
assessed. At that time, Ford Credit initiates collection procedures by mailing a
past due notice to the Obligor. In cases such as chronic delinquency, payment
default, multiple returned checks or bankruptcy, a Lease generally is assigned
to a Ford Credit customer service representative after it has become 15 days
delinquent. In other cases, collection assignments are issued when a Lease
becomes 22 days delinquent. The Obligor will be contacted to determine the cause
of the delinquency and to help the Obligor develop plans to resolve it. If the
Obligor cannot make the past due payment, Ford Credit will either grant a
Payment Extension or repossess the Leased Vehicle. If
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a Payment Extension is granted, the Obligor is assessed a fee and the Lease Term
is extended (although the Obligor is not permitted to drive the Leased Vehicle
more than the originally agreed upon number of miles without incurring excess
mileage fees). If repossession is necessary, the Obligor may agree to return the
Leased Vehicle or the Leased Vehicle will be repossessed by a contractor hired
by Ford Credit.
Any Obligor not in default is permitted to terminate its Lease before the
Scheduled Lease End Date (a "Voluntary Early Termination") if the Obligor: (i)
returns the Leased Vehicle to the Dealer, (ii) pays the difference, if any,
between (a) the sum of the Adjusted Balance Subject to Lease Charges and any
past due amounts and (b) the fair market wholesale value of the Leased Vehicle
as agreed to by the Obligor and the Dealer (or if the Obligor and Dealer fail to
agree, the amount received at auction), and (iii) pays a fee of $200. The Dealer
is required to pay an amount equal to such agreed fair market wholesale value
(or the amount received at auction) to Ford Credit or FCTT, as the case may be.
As described in "Description of the Notes -- Indenture Cash Flows," Voluntary
Early Termination Proceeds are included in the Collections deposited in the
Series 1995-1 Collection Account and used to pay interest on and principal of
the Notes. See "Maturity, Prepayment and Yield Considerations" for a discussion
of the effect of prepayments of the Series 1995-1 Leases on the payment of
principal of the Notes.
At the Scheduled Lease End Date, the Obligor may (i) purchase the Leased
Vehicle for an amount greater than or equal to its Residual Value or (ii) return
the Vehicle to the Dealer. At this time, the Dealer may purchase the Leased
Vehicle for an amount equal to its Residual Value or return it to Ford Credit to
be sold at auction. If the Dealer does not purchase the Vehicle, the Dealer will
inspect the Leased Vehicle, complete a Vehicle Conditioning Report ("VCR") and
submit the VCR to Ford Credit. The Dealer will assess any additional charges for
excess wear and tear or excess mileage on the basis of the VCR. See "Description
of the Notes -- Indenture Cash Flows" and "Series 1995-1 Certificates -- Lease
of the Series 1995-1 Certificates to the Transferor -- Transferor Leased Vehicle
Purchase Option" for a description of how amounts collected from the sale of
Series 1995-1 Leased Vehicles are distributed as Collections (and therefore are
paid through to Noteholders) and, in certain circumstances, to the Transferor
(and are therefore not paid through to Noteholders).
All Leased Vehicles that are returned to Ford Credit will be inspected to
ensure that the VCR properly reflects the condition of the Leased Vehicle and
that the Dealer has billed the Obligor for all excess wear and tear and excess
mileage charges due. If the VCR does not properly reflect the condition of the
Leased Vehicle, Ford Credit may seek reimbursement for any discrepancies from
the returning Dealer. The Leased Vehicle is then shipped to one of several Ford
Credit regional auction locations. In an attempt to maximize proceeds from the
auction of Leased Vehicles, Ford Credit has established an "Extra Step" program
to refurbish and recondition vehicles returned at the end of 24-month leases.
The results of each auction are monitored and Leased Vehicles will generally be
transported to the regional auction where Ford Credit believes the highest
auction proceeds will be realized.
DELINQUENCY, REPOSSESSION, RESIDUAL VALUE AND LOSS DATA
The following tables set forth Ford Credit's average Red Carpet Lease asset
balance and loss experience for each of the periods shown with respect to the
leases and leased vehicles under the Red Carpet Lease Plan (the "Red Carpet
Lease Portfolio") in California, New York and Pennsylvania. There can be no
assurance that the loss experience for the Red Carpet Lease Portfolio or Series
1995-1 Leases in the future will be similar to the historical experience set
forth below.
Because Ford Credit has not historically maintained separate records based
on the term of leases, the data set forth in the following tables includes data
for finance leases (classified by Ford Credit as leases which have a term of
more than 36 months) and operating leases (classified by Ford Credit as leases
which have a term of 36 months or less). However, management believes that
33
<PAGE> 36
to the extent that there are any material differences between the historical
delinquency and loss statistics for finance leases and operating leases, the
delinquencies and losses would be higher on a mixed pool of finance leases and
operating leases (such as that reflected in the tables) than in a pool
consisting solely of operating leases (such as the Series 1995-1 Leases). This
is because, in the opinion of management based on its experience servicing both
finance leases and operating leases, there is a positive correlation between
increased credit risk and the duration of the lease. In addition, management
believes that the statistics provided in such tables closely reflect the
performance of the Red Carpet Lease Portfolio because the proportion of
originations of operating leases to finance leases in the Red Carpet Lease
Portfolio increased: in 1990, the proportion of originations which were
operating leases was approximately 78.5%, while in 1994 the proportion of
originations which were operating leases was approximately 98.8%. During this
four year period the number of originations grew from approximately 140,000 to
596,000 leases per year.
34
<PAGE> 37
RED CARPET LEASE PORTFOLIO
(CALIFORNIA, NEW YORK AND PENNSYLVANIA(1))
HISTORICAL LOSS EXPERIENCE(2)
<TABLE>
<CAPTION>
THREE MONTHS
CALENDAR YEAR ENDED MARCH 31,
---------------------------------------------- ----------------
1990 1991 1992 1993 1994 1994 1995
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Average Contracts Outstanding (000)
California........................... 41 47 52 73 118 93 151
New York............................. 33 38 46 60 78 70 89
Pennsylvania......................... 14 16 15 18 26 22 32
------ ------ ------ ------ ------ ------ ------
Total -- Three State............. 88 101 113 151 222 185 272
====== ====== ====== ====== ====== ====== ======
Average Net RCL Assets (Millions)
California........................... $ 517 $ 637 $ 727 $1,094 $1,849 $1,438 $2,377
New York............................. 395 513 635 923 1,241 1,084 1,457
Pennsylvania......................... 154 198 200 264 403 350 522
------ ------ ------ ------ ------ ------ ------
Total -- Three State............. $1,066 $1,348 $1,562 $2,281 $3,493 $2,872 $4,356
====== ====== ====== ====== ====== ====== ======
Net Credit Losses (Millions)(3)
California........................... $ 8.2 $ 12.8 $ 9.7 $ 8.9 $ 11.4 $ 2.7 $ 4.9
New York............................. 3.9 3.4 3.0 2.4 2.7 0.5 1.6
Pennsylvania......................... 1.0 0.8 0.5 0.5 0.4 0.0 0.5
------ ------ ------ ------ ------ ------ ------
Total -- Three State............. $ 13.1 $ 17.0 $ 13.2 $ 11.8 $ 14.5 $ 3.2 $ 7.0
====== ====== ====== ====== ====== ====== ======
Net Credit Losses as a Percentage of
Average RCL Assets(3)
California........................... 1.59% 2.01% 1.33% 0.81% 0.62% 0.75% 0.83%
New York............................. 0.99 0.66 0.47 0.26 0.22 0.20 0.43
Pennsylvania......................... 0.66 0.44 0.25 0.21 0.09 (0.01) 0.40
Weighted Average -- Three State.. 1.23% 1.26% 0.84% 0.52% 0.41% 0.45% 0.65%(4)
Repossessions -- Units (000)
California........................... 2.1 3.0 3.0 3.4 4.7 0.9 1.7
New York............................. 0.9 0.9 1.0 1.0 1.3 0.3 0.4
Pennsylvania......................... 0.4 0.3 0.3 0.2 0.4 0.1 0.2
------ ------ ------ ------ ------ ------ ------
Total -- Three State............. 3.4 4.2 4.3 4.6 6.4 1.3 2.3
====== ====== ====== ====== ====== ====== ======
% of Avg. Contracts -- Three State... 3.86% 4.17% 3.80% 3.04% 2.86% 2.87% 3.33%(4)
Average Gross Loss per
Repossession....................... $3,795 $3,374 $2,401 $3,474 $3,137 $3,430 $3,780
Average Delinquency Ratios -- Three
State
31-60 Days Past Due.................. 2.81% 2.39% 2.11% 1.74% 1.63% 1.50% 1.58%
61-90 Days Past Due.................. 0.41 0.32 0.25 0.16 0.17 0.16 0.17
Over 90 Days Past Due................ 0.16 0.13 0.08 0.05 0.04 0.04 0.04
------ ------ ------ ------ ------ ------ ------
Total.................................. 3.38% 2.84% 2.44% 1.95% 1.84% 1.70% 1.79%
====== ====== ====== ====== ====== ====== ======
Average Daily Units Over 60 Days Past
Due (000)............................ 0.5 0.5 0.4 0.3 0.5 0.4 0.6
</TABLE>
(Totals may not equal the sum of the respective columns due to rounding.)
- -------------------------
(1) Regional data is based on results from branch offices located in California,
New York and Pennsylvania and may include a small number of Leases
associated with Obligors living outside of those states.
(2) Includes operating (original terms less than or equal to 36 months) and
finance (original terms greater than 36 months) leases on new and used
vehicles. Only operating leases are part of this securitization structure.
(3) "Net Credit Losses" means with respect to the period (i) the aggregate
adjusted balance subject to lease charges of all lease contracts and related
leased vehicles which are determined to be uncollectible during such period
plus the aggregate amount of uncollected charges for excess wear and tear
and excess mileage relating to lease contracts which terminated during the
period with respect to which proceeds from the sale of the related leased
vehicle were received in the period plus any uncollected scheduled monthly
payments in the period with respect to leased vehicles sold during the
period minus (ii) all amounts received in the period with respect to lease
contracts and related leased vehicles which were determined to be
uncollectible during the period and recoveries received in the period on
lease contracts and related leased vehicles charged-off in the period or any
previous period.
(4) Annualized rate.
35
<PAGE> 38
The reduction in "Net Credit Losses as a Percentage of Average RCL Assets"
(as set forth in the table above entitled Red Carpet Lease Portfolio) during the
period 1991 to 1994 is a result of fewer leased vehicles being repossessed (as a
percentage of the number of leases outstanding) and an increase in the amount
recovered for each vehicle which has been repossessed. Management of Ford Credit
believes that this trend is a result of actions taken to improve procedures
relating to credit quality and collection procedures. In particular, efforts
have been made to reduce the proportion of longer term (and therefor higher
risk) leases as a percentage of the total number of leases, introduce improved
risk rating guides, increase the number of collection personnel and improve
their training, and contact lessees promptly on delinquent accounts. In
addition, the general improvement in the economy, combined with a reduction in
market interest rates, have had a positive effect on Net Credit Losses. Net
Credit Losses increased in the first quarter of 1995 as a result of higher
repossessions and higher severity of loss per repossession.
The following tables provide residual value and residual loss information
for each of the periods shown with respect to the Red Carpet Lease Portfolio in
California, New York and Pennsylvania exclusively.
RED CARPET LEASE PORTFOLIO(1)
(CALIFORNIA, NEW YORK AND PENNSYLVANIA ONLY(2))
RESIDUAL VALUE ANALYSIS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
CALENDAR YEAR MARCH 31,
---------------------------------------------- -----------------
1990 1991 1992 1993 1994 1994 1995
------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Residual value of all vehicles
the related lease of which
terminated in the period
($000)(3).................... 27,878 100,810 248,922 339,094 576,191 100,367 230,326
Residual value as a percentage
of MSRP of all vehicles the
related lease of which
terminated in the
period(4).................... 44.0% 43.0% 42.5% 42.1% 47.5% 44.6% 50.7%
Aggregate Residual Losses(5)
($000)....................... 1,175 5,831 6,777 4,128 6,889 1,148 6,448
Aggregate Residual Losses as a
percentage of residual value
of all vehicles the related
lease of which terminated in
the period................... 4.2% 5.8% 2.7% 1.2% 1.2% 1.1% 2.8%
Vehicles returned with a
Residual Loss as a percentage
of all vehicles the related
lease of which terminated in
the period................... 19.2% 29.2% 15.3% 7.3% 7.6% 8.3% 15.1%
</TABLE>
- -------------------------
(1) Includes only leases on new and used vehicles with original terms of 36
months or less (including the Advance Payment Plan).
(2) Based on results on leases for which the last billing address of the related
obligor is in California, New York, or Pennsylvania.
(3) Terminations include voluntary early terminations, terminations due to
defaults and scheduled terminations.
(4) "MSRP" means the Manufacturer's Suggested Retail Price, which will generally
exceed the balance subject to lease charges at inception of a lease.
(5) "Residual Loss" means the amount by which the residual value of a leased
vehicle the related lease of which terminated on or after the end of its
lease term exceeds the sum of (i) sale proceeds of such leased vehicle
(including collected excess wear and tear and excess mileage) and (ii)
uncollected excess wear and tear and excess mileage.
36
<PAGE> 39
During the period 1990 to 1994, a total of 17.6% of all leased vehicles
subject to 24- and 36-month leases were not purchased either by the dealer or
the lessee and were returned to Ford Credit as of their respective scheduled
lease end dates. Of the leased vehicles returned on or after their scheduled
lease end dates and subsequently sold by Ford Credit at auction, 64.2% were sold
for a loss versus 35.8% which were sold for a gain. (Due to obligor and dealer
purchase options, the opportunity to realize a gain on a vehicle is given first
to the obligor, then to the related dealer, and finally to Ford Credit.)
For the period 1990 to 1994, 132,202 leased vehicles with a residual
exposure (the sum of the residual values of vehicles under leases which
terminated in such period) of $1.3 billion experienced aggregate residual losses
of $24.8 million. For all leased vehicles with 24- and 36-month leases which
terminated between 1990 and 1994, annual aggregate Residual Losses as a percent
of residual exposure ranged from 1.2% to 5.8%, with a cumulative average of
1.9%. In 1994, aggregate Residual Losses as a percent of residual exposure were
less than 1.2%. However, aggregate Residual Losses as a percentage of residual
exposure increased in the first quarter of 1995 as a result of a higher number
of leased vehicles returned and a higher residual loss per vehicle.
ELIGIBILITY CRITERIA
The Series 1995-1 Leases and related Series 1995-1 Leased Vehicles were
purchased by Ford Credit as Administrative Agent on behalf of FCTT, in the
ordinary course of business in accordance with the origination procedures set
forth above. The Series 1995-1 Leases were selected from the Leases in FCTT's
portfolio by several criteria (the "Specific Eligibility Criteria"), including
the following: each related Series 1995-1 Leased Vehicle was an automobile or
light-duty truck which prior to the inception of the related Series 1995-1 Lease
had never been titled, and each Series 1995-1 Lease (a) was entered into by a
Dealer located in and an Obligor with a billing address in California, New York
or Pennsylvania; (b) provides for Constant Yield Payments that fully amortize
the Balance Subject to Lease Charges of such Series 1995-1 Lease to a final
payment equal to the Residual Value of the related Series 1995-1 Leased Vehicle
over the term of such Series 1995-1 Lease; (c) was not more than 30 days past
due as of the Series 1995-1 Cut-Off Date and has never been extended; (d) was
originated on or after December 1, 1994; (e) has a Scheduled Lease End Date not
later than 36 months from the date it was entered into; (f) has a Retail
Operating Lease Factor equal to or greater than 3.0%; (g) was not originated
under the Advance Payment Plan; (h) is not subject to a holdback of Excess
Deferred Gross; and (i) does not provide for recourse to the related Dealer.
(Series 1995-1 Supplement, Section 3.1; Asset Contribution Agreement, Section
3.2). The Series 1995-1 Leases were selected from FCTT's portfolio of Leases
that were Non-Specified Assets, in each case meeting the Specific Eligibility
Criteria set forth herein and the General Eligibility Criteria set forth in
"Additional Document Provisions -- Representations, Warranties and Covenants."
No selection procedures believed to be adverse to the Noteholders were utilized
in selecting the Series 1995-1 Leases from qualifying Leases.
CHARACTERISTICS OF THE SERIES 1995-1 ASSETS
The following table provides data with respect to the composition of the
Series 1995-1 Assets.
COMPOSITION OF THE SERIES 1995-1 ASSETS
<TABLE>
<S> <C>
Initial Pool Balance........................................................... $717,568,566.51
Number of Series 1995-1 Leases................................................. 37,719
Average Adjusted Balance Subject to Lease Charges.............................. $19,024.06
Average Balance Subject to Lease Charges....................................... $19,725.99
Weighted Average Original Lease Term(1)........................................ 24.87 months
Weighted Average Remaining Lease Term(1)....................................... 23.15 months
Average Retail Operating Lease Factor(2)....................................... 8.55%
Aggregate Residual Value as a Percent of Aggregate MSRP........................ 62.42%
Residual Value as a Percent of the Initial Pool Balance........................ 74.97%
</TABLE>
- -------------------------
(1) Weighted by Adjusted Balance Subject to Lease Charges as of the Series
1995-1 Cut-Off Date.
(2) Excluding a fixed additional fee (the "Additional Fee") included in the
determination of the amount of the Monthly Payment (generally 0.11% of the
Balance Subject to Lease Charges per month). Including such fee would have
the effect of increasing the yield of Series 1995-1 Assets.
37
<PAGE> 40
The following tables set forth the distribution of the Series 1995-1 Assets
by location, Retail Operating Lease Factor, Lease Term and vehicle type.
Percentages may not total 100% due to rounding.
DISTRIBUTION OF THE SERIES 1995-1 ASSETS BY LOCATION
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE ADJUSTED BALANCE INITIAL
LEASES SUBJECT TO LEASE CHARGES POOL BALANCE
--------- -------------------------- -------------
<S> <C> <C> <C>
California.................................. 22,390 $ 414,194,223.08 57.72%
New York.................................... 11,066 222,061,134.69 30.95
Pennsylvania................................ 4,263 81,313,208.74 11.33
-------- --------------------- ----------
Total................................ 37,719 $ 717,568,566.51 100.00%
======== ===================== ==========
</TABLE>
DISTRIBUTION OF THE SERIES 1995-1 ASSETS BY RETAIL OPERATING LEASE FACTOR
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE ADJUSTED BALANCE INITIAL
LEASES SUBJECT TO LEASE CHARGES POOL BALANCE
--------- -------------------------- -------------
<S> <C> <C> <C>
3.00% to 3.50%............................ 2,360 $43,534,525.93 6.07%
3.51 to 4.00............................. 360 9,596,880.18 1.34
4.01 to 4.50............................. 429 11,514,786.99 1.60
4.51 to 5.00............................. 722 22,361,079.21 3.12
5.01 to 5.50............................. 651 10,678,134.14 1.49
5.51 to 6.00............................. 116 1,571,759.12 0.22
6.01 to 6.50............................. 1,372 34,319,528.09 4.78
6.51 to 7.00............................. 1,842 28,887,571.17 4.03
7.01 to 7.50............................. 3,443 59,936,289.29 8.35
7.51 to 8.00............................. 1,200 22,914,434.97 3.19
8.01 to 8.50............................. 1,736 34,518,937.11 4.81
8.51 to 9.00............................. 1,005 18,639,575.83 2.60
9.01 to 9.50............................. 5,602 101,608,600.14 14.16
9.51 to 10.00............................. 10,407 197,068,213.27 27.46
10.01 to 10.50............................. 4,655 87,029,625.85 12.13
10.51 to 11.00............................. 1,028 19,185,961.14 2.67
11.01 to 11.50............................. 314 5,633,112.26 0.79
11.51 to 12.00............................. 289 5,208,195.81 0.73
12.01 to 12.50............................. 152 2,690,117.41 0.37
12.51 to 13.00............................. 35 662,311.68 0.09
13.01 to 13.50............................. 1 8,926.92 0.00
-------- --------------------- ----------
Total................................ 37,719 $717,568,566.51 100.00%
======== ===================== ==========
</TABLE>
DISTRIBUTION OF THE SERIES 1995-1 ASSETS BY LEASE TERM
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE ADJUSTED BALANCE INITIAL
LEASES SUBJECT TO LEASE CHARGES POOL BALANCE
--------- -------------------------- -------------
<S> <C> <C> <C>
24 Months................................... 34,892 $ 665,372,728.50 92.73%
36 Months................................... 2,827 52,195,838.01 7.27
-------- --------------------- ----------
Total................................ 37,719 $ 717,568,566.51 100.00%
======== ===================== ==========
</TABLE>
38
<PAGE> 41
DISTRIBUTION OF THE SERIES 1995-1 ASSETS BY VEHICLE TYPE
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE ADJUSTED BALANCE SUBJECT INITIAL
LEASES TO LEASE CHARGES POOL BALANCE
--------- ---------------------------------- -------------
<S> <C> <C> <C>
Ford Automobile....................... 12,382 $ 196,797,864.27 27.43%
Ford Light-Duty Truck................. 17,166 335,932,335.48 46.82
Lincoln-Mercury....................... 7,344 171,406,952.39 23.89
Other................................. 827 13,431,414.37 1.87
------- ---------------- ------
Total............................... 37,719 $ 717,568,566.51 100.00%
====== ================ ======
</TABLE>
The following table depicts the projected cash flows of the Series 1995-1
Certificates assuming no prepayments and no defaults.
SERIES 1995-1 LEASES PROJECTED AMORTIZATION, ASSUMING NO PREPAYMENTS AND NO
DEFAULTS
<TABLE>
<CAPTION>
ADJUSTED BALANCE PRINCIPAL PORTION NON-PRINCIPAL WEIGHTED
SUBJECT TO MONTHLY OF MONTHLY PORTION OF AVERAGE
MONTHS LEASE CHARGES PAYMENTS(1) PAYMENT MONTHLY PAYMENT YIELD
- -------------- ---------------- --------------- ----------------- --------------- --------
<S> <C> <C> <C> <C> <C>
1............ $ 717,568,566.51 $13,585,213.26 $7,646,272.51 $5,938,940.75 9.93%
2............ 709,922,294.00 13,585,213.26 7,699,547.45 5,885,665.81 9.95
3............ 702,222,746.55 13,585,213.26 7,753,219.98 5,831,993.28 9.97
4............ 694,469,526.57 13,585,213.26 7,807,293.18 5,777,920.08 9.98
5............ 686,662,233.39 13,585,213.26 7,861,770.19 5,723,443.07 10.00
6............ 678,800,463.20 13,585,213.26 7,916,654.13 5,668,559.13 10.02
7............ 670,883,809.07 13,585,213.26 7,971,948.18 5,613,265.08 10.04
8............ 662,911,860.89 13,585,213.26 8,027,655.55 5,557,557.71 10.06
9............ 654,884,205.34 13,585,213.26 8,083,779.44 5,501,433.82 10.08
10............ 646,800,425.90 13,585,213.26 8,140,323.10 5,444,890.16 10.10
11............ 638,660,102.80 13,585,213.26 8,197,289.81 5,387,923.45 10.12
12............ 630,462,812.99 13,585,213.26 8,254,682.87 5,330,530.39 10.15
13............ 622,208,130.12 13,585,213.26 8,312,505.60 5,272,707.66 10.17
14............ 613,895,624.52 13,585,213.26 8,370,761.35 5,214,451.91 10.19
15............ 605,524,863.17 13,585,213.26 8,429,453.50 5,155,759.76 10.22
16............ 597,095,409.67 13,585,213.26 8,488,585.46 5,096,627.80 10.24
17............ 588,606,824.21 13,585,213.26 8,548,160.66 5,037,052.60 10.27
18............ 580,058,663.55 13,585,213.26 8,608,182.56 4,977,030.70 10.30
19............ 571,450,480.99 13,618,378.39 8,701,874.62 4,916,503.77 10.32
20............ 562,748,606.37 66,248,679.02 61,477,159.02 4,771,520.00 10.17
21............ 501,271,447.35 78,210,109.84 73,940,512.31 4,269,597.53 10.22
22............ 427,330,935.04 150,885,707.01 147,349,189.82 3,536,517.19 9.93
23............ 279,981,745.22 157,615,782.22 155,332,600.60 2,283,181.62 9.79
24............ 124,649,144.62 90,008,523.66 88,973,303.84 1,035,219.82 9.97
25............ 35,675,840.78 1,126,240.24 763,720.50 362,519.74 12.19
26............ 34,912,120.28 1,126,240.24 770,205.80 356,034.44 12.24
27............ 34,141,914.48 1,126,240.24 776,746.60 349,493.64 12.28
28............ 33,365,167.88 1,126,240.24 783,343.38 342,896.86 12.33
29............ 32,581,824.50 1,126,240.24 789,996.62 336,243.62 12.38
30............ 31,791,827.88 1,126,240.24 796,706.81 329,533.43 12.44
31............ 30,995,121.07 1,126,241.12 803,475.33 322,765.79 12.50
32............ 30,191,645.74 5,957,850.28 5,652,417.09 305,433.19 12.14
33............ 24,539,228.65 6,559,658.28 6,312,098.98 247,559.30 12.11
34............ 18,227,129.67 8,219,260.46 8,039,861.54 179,398.92 11.81
35............ 10,187,268.13 6,795,185.91 6,698,576.19 96,609.72 11.38
36............ 3,488,691.94 3,518,793.10 3,488,691.94 30,101.16 10.35
</TABLE>
- -------------------------
(1) Includes the Additional Fee.
39
<PAGE> 42
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
The rate of payment of principal and the yield to maturity on each Class of
Notes generally will be directly related to the rate at which payments on the
Series 1995-1 Leases and in respect of the Series 1995-1 Leased Vehicles are
received. To the extent that Obligors make Total Monthly Payments when due (or
the Administrative Agent makes Monthly Payment Advances) and the Residual Values
of Series 1995-1 Leased Vehicles are not realized until their respective
Scheduled Lease End Dates, the minimum principal payable quarterly to
Noteholders can be determined with certainty (such minimum principal payment
rate is reflected in the data in the column headed "0% ABS" in the Percentage of
Note Balance Outstanding table shown below). However, the rate of payment of
principal on the Notes will be shifted forward to the prepayment date to the
extent that any Series 1995-1 Lease is prepaid in full, whether due to the
receipt of Voluntary Early Termination Proceeds, Administrative Purchase Amounts
or Liquidation Proceeds. Partial prepayments will be treated as Payaheads and
will not increase the rate of payment of principal of the Notes because such
payments will be held and paid out to Noteholders as principal only when
required to meet a shortfall in a subsequent payment from the related Obligor.
Additionally, an investor's expected yield will be affected by (i) the
price the investor paid for the Notes, (ii) the rate of prepayments of the
Series 1995-1 Leases and (iii) the investor's assumed reinvestment rate. For
example, if prepayments on the Series 1995-1 Leases are slower than anticipated,
the investor's yield will be lower if the interest rates are higher than the
investor anticipated and higher if interest rates are lower than the investor
anticipated. Conversely, if prepayments on the Series 1995-1 Leases are faster
than anticipated, the investor's yield will be higher if interest rates are
higher than the investor anticipated and lower if interest rates are lower than
the investor anticipated.
Because Residual Value is a large component of the Adjusted Balance Subject
to Lease Charges, the timing of the cashflows generated by the Series 1995-1
Assets will be heavily weighted toward the Scheduled Lease End Dates when the
Residual Values of the Series 1995-1 Leased Vehicles are realized. The rate of
payment of principal on the Notes increases substantially in February 1997 as a
result of Series 1995-1 Leases beginning to reach their Scheduled Lease End
Dates in the related Accrual Period. In general, prepayments of Series 1995-1
Leases in full will have the effect of shortening the weighted average life of
the Notes (the average amount of time during which each dollar of the principal
balance of Notes is outstanding). Additionally, holders of the Class A-2 Notes
will not receive any principal payments until the Class A-1 Notes have been paid
in full, unless an Event of Default under the Indenture has occurred and the
maturity of the Notes has been accelerated, in which case principal will be paid
pro rata to the holders of the Class A-1 Notes and Class A-2 Notes without
distinction between Classes. As the rate of payment of principal on each Class
of Notes depends primarily on the rate of payment (including prepayments) of the
Series 1995-1 Leases, final payment on each Class of Notes could occur
significantly earlier than the respective Stated Maturities. If there are
prepayments in full of Series 1995-1 Leases, Noteholders will bear the risk of
being able to reinvest principal payments of the Notes at yields at least equal
to the yield on their respective Class of Notes.
A prepayment of a Series 1995-1 Lease in full may be in the form of
Voluntary Early Termination Proceeds, resulting from a Voluntary Early
Termination of such Series 1995-1 Lease, Liquidation Proceeds, following a
bankruptcy of or default by the Obligor, or Administrative Purchase Amounts,
following the occurrence of certain events set forth in "Description of the
Administrative Agency Agreement -- Administrative Purchases." The rate of
prepayments on the Series 1995-1 Leases may be influenced by a variety of
economic, social and other factors including competing consumer finance products
and the conditions in the used car market. For 24-month leases originated
between 1989 and 1992, Ford Credit believes approximately 33% of the leases
prepaid in full before their respective scheduled lease end dates. For 36-month
leases originated between 1989 and 1992, Ford Credit believes approximately 42%
of the leases prepaid in full before their respective scheduled lease end dates.
40
<PAGE> 43
Additionally, the rate of payment of principal of each Class of Notes will
be increased by the application to pay principal of Notes (after payment of
interest) of the portion, if any, of Total Available Funds not used to reduce
the Pool Balance or to pay certain fees and other amounts in any given month. To
the extent Series 1995-1 Leases which have higher Retail Operating Lease Factors
are prepaid faster than others, the amount of such additional portion of the
Total Available Funds available to pay principal of the Notes will be reduced.
See "Description of the Notes -- The Indenture Cash Flows."
The Percentage of Note Balance Outstanding table shown below was prepared
on the basis of certain assumptions, including that (i) all collections and sale
proceeds are timely received, and that no Series 1995-1 Lease is ever
delinquent, (ii) none of the Series 1995-1 Leases is repurchased by the
Administrative Agent, (iii) there are no Series 1995-1 Credit Losses or Residual
Losses on the Series 1995-1 Leases, (iv) the Administrative Agent does not
exercise its optional redemption of the Series 1995-1 Certificates as described
herein, (v) distribution of principal and interest on the Notes and Lease Trust
Certificates is made on August 15, November 15, February 15 and May 15 of each
year starting on August 15, 1995, (vi) each of the Administrative Agent Fee and
the Limited RV Guaranty Fee is 1.00% per annum, (vii) all prepayments are
prepayments in full and (viii) the Reserve Account is funded in an amount equal
to the Initial Reserve Account Deposit and the Required Reserve Account Amount
decreases in accordance with the formulas described herein.
PERCENTAGE OF NOTE BALANCE OUTSTANDING
<TABLE>
<CAPTION>
PREPAYMENT SPEEDS(1)
---------------------------------------------------------------------------------------
CLASS A-1 NOTES CLASS A-2 NOTES
------------------------------------------ ------------------------------------------
PAYMENT DATE 0.0% 0.3% 0.5% 0.8% 1.0% 0.0% 0.3% 0.5% 0.8% 1.0%
- --------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial..............
Weighted Avg. Life
(years)(2).........
</TABLE>
- -------------------------
(1) Prepayment speeds are expressed in terms of percentages of ABS. As used
herein, "ABS" refers to a prepayment model which assumes a constant
percentage of the original number of leases in a pool prepay each month. ABS
does not purport to be either an historical description of the prepayment
experience of any pool of leases or a prediction of the anticipated rate of
prepayment of any pool of leases, including the Series 1995-1 Leases.
(2) The weighted average life of each Class of Notes is determined by (i)
multiplying the amount of each distribution in reduction of principal
balance by the number of years from the date of the issuance of the Notes to
the related Payment Date, (ii) adding the results and (iii) dividing the sum
by the aggregate distributions in reduction of principal balance referred to
in clause (i).
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<PAGE> 44
POOL FACTORS AND TRADING INFORMATION
The Note Pool Factor for each Class of Notes will be a seven digit decimal
which the Administrative Agent will compute prior to each Payment Date. The
"Note Pool Factor" with respect to either Class of Notes as of any applicable
Payment Date represents the remaining outstanding principal balance of such
Class of Notes as of the applicable Payment Date (after giving effect to
payments made on such Payment Date), expressed as a fraction of the initial
outstanding principal balance of such Class of Notes. Each Note Pool Factor will
initially be 1.0000000 and thereafter will decline to reflect reductions in the
outstanding principal balance of the applicable Class of Notes. A Noteholder's
portion of the principal balance of the related Class of Notes is the product of
(i) the original denomination of such Noteholder's Note and (ii) the applicable
Note Pool Factor.
The Noteholders will receive reports on or about each Payment Date for the
Accrual Period immediately preceding such Payment Date containing information
regarding: (i) payments received on Series 1995-1 Assets, (ii) the Pool Balance,
(iii) the Note Pool Factor of each Class of Notes (as of such Payment Date after
giving effect to payments made on such Payment Date) and (iv) various other
information. See "Description of the Notes -- Statements to Noteholders" for a
description of the additional information provided to Noteholders on each
Payment Date. In addition, Noteholders of record during any calendar year will
be furnished information for tax reporting purposes not later than the latest
date permitted by law.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SOURCES OF CAPITAL AND LIQUIDITY
The Issuer's primary sources of capital will be (i) the net proceeds of the
Lease Trust Certificates and (ii) the net proceeds of the Notes offered hereby.
See "The Issuer -- Capitalization of the Issuer."
The Issuer's primary sources of liquidity will be payments on the Series
1995-1 Certificates received either directly by the Issuer or indirectly
pursuant to payments under the Program Operating Lease (including amounts
available from the Reserve Account) and amounts available under the Limited RV
Guaranty.
RESULTS OF OPERATIONS
The Issuer is newly formed and, accordingly, has no results of operations
as of the date of this Prospectus. Because the Issuer does not have any
operating history, there has not been included in this Prospectus any historical
or pro forma ratio of earnings to fixed charges. The payments received under the
Program Operating Lease and payments on other assets owned by the Issuer and the
interest costs of the Notes and the Lease Trust Certificates will determine the
Issuer's results of operations in the future. The income generated from the
Issuer's assets will be used to pay interest on and principal of the Notes,
related costs and expenses of the Issuer (to the extent not included in items
payable by the Administrative Agent pursuant to the Administrative Agency
Agreement), and distributions to the holders of the Lease Trust Certificates,
and after payment in full of the principal balance of the Notes and Lease Trust
Certificates, the Deferred Amount. The principal periodic expense of the Issuer
is expected to be, but is not limited to, the Administrative Agent Fee.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture. A copy of
the Indenture will be filed with the Commission following the issuance of the
Notes. The following description
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<PAGE> 45
summarizes the material terms of the Notes and the Indenture. The summary does
not purport to be complete and is qualified in its entirety by reference to the
provisions of the Notes and the Indenture.
The Notes will be issued in denominations of $1,000 and integral multiples
thereof in book-entry form through the facilities of DTC. (Indenture, Sections
2.2 and 2.10). Each Class of Notes will initially be represented by one or more
Notes, in each case registered in the name of Cede, the nominee of DTC.
Accordingly, Cede is expected to be the holder of record of the Notes of each
Class. Unless and until Definitive Notes are issued under the limited
circumstances described herein, no beneficial owner of a Note (each, a "Note
Owner") will be entitled to receive a physical certificate representing such
owner's Note, except as set forth in "--Definitive Notes." Unless and until the
Notes are issued in fully registered, certificated form ("Definitive Notes")
under the limited circumstances described in "-- Definitive Notes," all
references herein to distributions, notices, reports and statements to
Noteholders will refer to the same actions made with respect to DTC or Cede, as
the case may be, for the benefit of Note Owners in accordance with DTC
procedures. (Indenture, Sections 2.10 and 2.12).
BOOK-ENTRY REGISTRATION
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the UCC in effect in the State of New York
and a "clearing agency" registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds
securities for its participating members (the "Participants") and facilitates
the clearance and settlement of securities transactions between Participants
through electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers (including the Underwriters), banks, trust
companies and clearing corporations. Indirect access to the DTC system also is
available to banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly (the "Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Note Owners that are not Participants or Indirect Participants but that
desire to purchase, sell or otherwise transfer ownership of or an interest in
the Notes may do so only through Participants or Indirect Participants.
Participants receive a credit for the Notes in DTC's records. The ownership
interest of each Note Owner is in turn recorded on the Participants' and
Indirect Participants' respective records. Note Owners will not receive written
confirmation from DTC of their purchase, but Note Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Participant or Indirect Participant
through which the Note Owner entered into the transaction. Transfers of
ownership interests in the Notes will be accomplished by entries made on the
books of Participants acting on behalf of Note Owners.
To facilitate subsequent transfers, all Notes deposited by Participants
with DTC will be registered in the name of Cede, as nominee of DTC. The deposit
of Notes with DTC and their registration in the name of Cede will effect no
change in beneficial ownership. DTC has no knowledge of the actual Note Owners
and its records reflect only the identity of the Participants to whose accounts
such Notes are credited, which may or may not be the Note Owners. Participants
and Indirect Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Note Owners will be governed by arrangements among them, subject
to any statutory or regulatory requirements as may be in effect from time to
time.
DTC's practice is to credit Participants' accounts on each Payment Date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not
43
<PAGE> 46
receive payment on such Payment Date. Payments by Participants and Indirect
Participants to Note Owners will be governed by standing instructions and
customary practices, as in the case with securities held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such Participant and not of DTC, the Indenture Trustee, the
Lease Trustee, the RCL Trustee, the Administrative Agent, the Transferor or the
Issuer, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal of and interest on the Notes to DTC will
be the responsibility of the Indenture Trustee, disbursement of such payments to
Direct Participants will be the responsibility of DTC and disbursement of such
payments to Note Owners will be the responsibility of Participants and Indirect
Participants. As a result, under the book-entry format, Note Owners may
experience some delay in their receipt of payments.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Note Owner
to pledge Notes to persons or entities that do not participate in the DTC
system, or otherwise take actions with respect to such Notes, may be limited due
to the lack of a physical certificate for such Notes.
Neither DTC nor Cede will consent or vote with respect to the Notes. Under
its usual procedures, DTC mails an "Omnibus Proxy" to the Indenture Trustee as
soon as possible after any applicable record date for such a consent or vote.
The Omnibus Proxy assigns Cede's consenting or voting rights to those
Participants to whose accounts the Notes are credited on that record date
(identified in a listing attached to the Omnibus Proxy).
Neither the Indenture Trustee, the Lease Trustee, the RCL Trustee, the
Administrative Agent, the Transferor or the Issuer will have any liability for
any aspect of the records relating to or payments made on account of beneficial
ownership interests of the Notes held by Cede, as nominee of DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DEFINITIVE NOTES
Definitive Notes will be issued to Note Owners rather than to DTC only if
(i) DTC is no longer willing or able to discharge its responsibilities with
respect to the Notes and the Administrative Agent is not able to locate a
qualified successor, (ii) the Administrative Agent, at its option, elects to
terminate book-entry registration through DTC or (iii) after an Event of
Default, Note Owners representing not less than a majority of the aggregate
principal balance of the Notes advise the Indenture Trustee through DTC or its
successor in writing that the continuation of book-entry registration through
DTC or its successor is no longer in the best interest of Note Owners.
(Indenture, Section 2.12).
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC will notify all Note Owners, through Participants, of
the availability through DTC of Definitive Notes. Upon surrender by DTC of the
notes representing the Notes and the receipt of instructions for
re-registration, the Indenture Trustee will issue Definitive Notes to Note
Owners, who thereupon will become Noteholders for all purposes of the Indenture.
(Indenture, Section 2.12).
Payments on the Notes will thereafter be made by the Indenture Trustee
directly to holders of Notes in accordance with the procedures set forth herein
and in the Indenture. Interest payments and any principal payments on the
Definitive Notes on each Payment Date will be made to holders in whose names the
Definitive Notes were registered at the close of business on the Record Date
with respect to such Payment Date. Payments will be made by check mailed to the
address of such holders as they appear on the Note Register or, under certain
circumstances as provided in the Indenture, by wire transfer to a bank or
depository institution located in the United States and having appropriate
facilities therefor. (Indenture, Section 2.7). The final payment on any Notes
(whether Definitive Notes or global notes registered in the name of Cede
representing the Notes), however,
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<PAGE> 47
will be made only upon presentation and surrender of such Definitive Notes or
global notes at the office or agency specified in the notice of final
distribution to Noteholders. (Indenture, Section 2.7).
Definitive Notes will be transferable and exchangeable at the offices of
the Indenture Trustee or the Note Registrar to be set forth in the Indenture. No
service charge will be imposed for any registration of transfer or exchange, but
the Indenture Trustee may require payment of a sum sufficient to cover any tax
or other governmental charge imposed in connection therewith. (Indenture,
Section 2.4).
INTEREST
Interest on the principal balance of the Class A-1 Notes will accrue at the
rate of % per annum and interest on the principal balance of the Class A-2
Notes will accrue at the rate of % per annum. (Indenture, Section 2.1).
Interest on the Notes will be payable to the Noteholders quarterly on each
Payment Date to Noteholders of record on the Record Date preceding such Payment
Date. Interest on the principal balance of the Notes will accrue at the
applicable interest rate either from and including the Closing Date (in the case
of the first Payment Date) or from and including the fifteenth day of the third
calendar month preceding the calendar month in which such Payment Date occurs,
to but excluding the fifteenth day of the calendar month in which such Payment
Date occurs. Interest accrued but not paid as of any Payment Date will be due on
the next Payment Date together with interest on such overdue amount (to the
extent lawful) at a rate per annum equal to the interest rate for the applicable
Class plus 2.00%. (Indenture, Section 2.7). Interest will be calculated on the
basis of a 360-day year consisting of twelve 30-day months. (Indenture, Section
1.1). Interest payments on the Notes will be made from the Total Available Funds
as described in "-- The Indenture Cash Flows."
Interest payments to all Classes of Noteholders will have the same
priority. If the amount of interest on the principal balance of the Class A-1
Notes and the principal balance of the Class A-2 Notes exceeds the Total
Available Funds with respect to such Payment Date, each Noteholder will receive
its pro rata share (based on the total amount of interest due to all
Noteholders) of the amount available to be distributed in respect of interest on
the outstanding Notes.
PRINCIPAL
Principal payments will be made to the Noteholders sequentially on each
Payment Date in an amount equal to the Total Available Funds with respect to
such Payment Date after giving effect to the payment to the Administrative Agent
of the Administrative Agent Fee with respect to such Payment Date, the payment
of interest to Noteholders, the payment of interest to the Lease Trust
Certificateholders, the payment to Ford Credit of the Limited RV Guaranty Fee
with respect to such Payment Date and the deposit of the Reserve Account Deposit
Amount, if any, with respect to such Payment Date. No principal payments will be
made to the Class A-2 Noteholders until the principal balance of the Class A-1
Notes has been reduced to zero (Indenture, Section 8.4); provided that if an
Event of Default under the Indenture has occurred and the maturity of the Notes
has been accelerated, principal payments will be made to the holders of the
Class A-1 Notes and the Class A-2 Notes on a pro rata basis based on their
respective principal balances without any distinction between Classes
(Indenture, Section 5.4).
Payments of principal with respect to the Lease Trust Certificates will not
be made until the aggregate principal balance of the Notes has been reduced to
zero. The Transferor and Ford Credit Leasing, as holders of the Transferor Lease
Trust Certificates, are entitled to the Deferred Amount and will receive all
amounts from the Series 1995-1 Certificates after the aggregate principal
balance of Lease Trust Certificates has been reduced to zero. See "-- The
Indenture Cash Flows" and "-- The Accounts -- The Reserve Account."
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<PAGE> 48
OPTIONAL REDEMPTION
If the Administrative Agent exercises its option to purchase the Series
1995-1 Certificates on any Payment Date on which the Pool Balance has declined
to less than 10% of the Initial Pool Balance, the Notes will be redeemed on such
date in whole, but not in part, for the Redemption Price. The Administrative
Agent or the Lease Trustee will provide at least 45 days' prior notice of the
redemption of the Notes to the Indenture Trustee (who will provide at least 30
days' notice to the Noteholders). On such Payment Date the aggregate principal
balance of the Notes will be due and payable at the Redemption Price and unless
all the Notes are not redeemed on such Payment Date no interest will accrue on
the Notes after such Payment Date. (Indenture, Section 10.1; Series 1995-1
Supplement, Section 7.1).
Because the Initial Pool Balance is greater than the sum of the initial
principal balance of the Notes and the Lease Trust Certificates (the Notes and
the Lease Trust Certificates constitute less than 90% of the initial
capitalization of the Issuer), absent substantial shortfalls in amounts
available from the Series 1995-1 Certificates to pay Noteholders, it is likely
that the Notes will have been paid in full on or before the Payment Date on
which the Administrative Agent is permitted to exercise its option to purchase
the Series 1995-1 Certificates. See "The Issuer -- Capitalization of the
Issuer."
THE INDENTURE TRUSTEE
Chemical Bank is the Indenture Trustee under the Indenture. The Indenture
Trustee is a New York corporation and its corporate trust offices are located at
450 West 33rd Street, New York, New York 10001. The fees and expenses of the
Indenture Trustee will be paid by the Administrative Agent, acting on behalf of
the Issuer. The Transferor, Ford Credit and their respective affiliates may
maintain normal commercial banking relationships with the Indenture Trustee and
its affiliates.
THE ACCOUNTS
The Collection Account. The Collection Account will be established at an
Eligible Institution by the Administrative Agent in the name of the Indenture
Trustee. Amounts deposited therein will be invested in Permitted Investments,
upon instructions from Ford Credit and Ford Credit Leasing, with a maturity no
later than the business day preceding the next Payment Date. Income (or losses,
if any) on such investments, if any, will be credited (or charged) to the
Collection Account and will be available to make payments on the Notes and Lease
Trust Certificates. (Series 1995-1 Supplement, Section 5.1). The Collection
Account will initially be established with the FCTT Trustee. If the FCTT Trustee
ceases to be an Eligible Institution, the Collection Account will be moved to an
Eligible Institution. (Series 1995-1 Supplement, Section 5.1).
The Payahead Account. The Payahead Account will be established at an
Eligible Institution by the Administrative Agent in the name of the Indenture
Trustee. Payaheads deposited therein will be invested in Permitted Investments,
upon instructions from Ford Credit and Ford Credit Leasing, with a maturity no
later than the business day preceding the next Payment Date. Income (or losses,
if any) on such investments, if any, will be distributed to the beneficiaries of
the Transferor (or, in the case of losses, deducted from distributions to such
beneficiaries). The Payahead Account will be initially established with the FCTT
Trustee. If the FCTT Trustee ceases to be an Eligible Institution, the Payahead
Account will be moved to an Eligible Institution. The Administrative Agent is
required to deposit Payaheads in the Payahead Account only if it has failed to
meet a Monthly Remittance Condition. Payahead Credits will be applied by the
Administrative Agent on each Distribution Date if any Monthly Payment with
respect to a Series 1995-1 Lease has not been paid in the related Collection
Period. (Series 1995-1 Supplement, Section 5.1).
The Payment Account. The Payment Account will be an Eligible Account
established by the Administrative Agent in the name of the Indenture Trustee in
trust for the benefit of the Noteholders and the Lease Trust Certificateholders.
Amounts deposited therein may be invested in Permitted Investments, upon
instructions from the Indenture Trustee, with a maturity no later than the next
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<PAGE> 49
Payment Date. Income (or losses, if any) on such investments, if any, will be
credited (or charged) to the Administrative Agent. (Indenture, Sections 8.1 and
8.5). The Payment Account will initially be established with the Indenture
Trustee. If the Payment Account may no longer be maintained at the Indenture
Trustee as an Eligible Account, the Payment Account will be moved to another
institution and established as an Eligible Account. (Indenture, Section 8.2).
The Reserve Account. The Reserve Account will be an account established at
an Eligible Institution in the name of the Indenture Trustee. Amounts deposited
therein will be invested in Reserve Account Investments. Income (or losses, if
any) on such investments, if any, will be distributed to the beneficiaries of
the Transferor (or, in the case of losses, deducted from distributions to such
beneficiaries), subject to the assignment to Ford Credit Leasing. The Reserve
Account will be initially established with the Indenture Trustee. If the
Indenture Trustee ceases to be an Eligible Institution, the Reserve Account will
be moved to an Eligible Institution. (Program Operating Lease, Section 3.5). The
Reserve Account is established to secure the Basic Payment portion of the
Program Operating Lease Payments required to be made by the Transferor under the
Program Operating Lease. See "-- Reserve Account Withdrawals and Deposits" for a
description of the amounts to be deposited to and withdrawn from the Reserve
Account.
THE INDENTURE CASH FLOWS
Monthly or Daily Deposits to Collection Account. On each Distribution Date
(or on the business day preceding such Distribution Date, if such Distribution
Date is a Payment Date), or on each business day if each Monthly Remittance
Condition has not been satisfied, the Administrative Agent will deposit all
Collections with respect to Series 1995-1 Assets into the Collection Account.
(Series 1995-1 Supplement, Section 5.2).
"Collections" means with respect to Series 1995-1 Assets and any
Collection Period, all of the following amounts received by the
Administrative Agent in such Collection Period: (i) all Monthly Payments
and Payahead Credits; (ii) all Administrative Purchase Amounts; (iii)
all Available Scheduled Termination Sale Proceeds; (iv) all Voluntary
Early Termination Proceeds; (v) all Liquidation Proceeds; and (vi) all
Recoveries.
"Monthly Payment" means with respect to any Lease, the amount payable
monthly by the Obligor equal to the Constant Yield Payment and the
Additional Fee and certain other fees and charges for such month.
"Payahead Credits" means with respect to any Series 1995-1 Lease the
amount of a Payahead with respect to an Obligor either paid by the
Administrative Agent (if each Monthly Remittance Condition is satisfied)
or withdrawn from the Payahead Account, and applied against the Monthly
Payment due in such Collection Period with respect to such Lease.
"Administrative Purchase Amount" means with respect to any Lease as of
the end of a Collection Period as to which a breach of certain
representations, warranties or covenants has occurred (including those
resulting from a Term Extension, Payment Extensions in excess of, in the
aggregate, three months or the relocation of a Leased Vehicle), the
Adjusted Balance Subject to Lease Charges as of such date plus any
overdue Monthly Payments which have not been paid by the Obligor.
"Available Scheduled Termination Sale Proceeds" means with respect to a
Collection Period, all Sale Proceeds received by the Administrative
Agent in such Collection Period for Series 1995-1 Leased Vehicles which
were sold on or after the termination of the related Series 1995-1
Leases at their respective Scheduled Lease End Dates (increased by
amounts collected in connection with Excess Wear and Tear and Excess
Mileage and reduced by amounts required to be remitted to the related
Obligors under applicable law); provided that to the extent the
Transferor exercises its option to purchase a Series 1995-1
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<PAGE> 50
Leased Vehicle, the Available Scheduled Termination Sale Proceeds for
any Series 1995-1 Leased Vehicle will not exceed the Transferor Purchase
Option Price. See "Series 1995-1 Certificates -- Lease of the Series
1995-1 Certificates to the Transferor."
"Voluntary Early Termination Proceeds" means all amounts received in
connection with a Voluntary Early Termination, which amount includes the
Adjusted Balance Subject to Lease Charges at the time of termination
plus all Monthly Payments due but not paid as of the date of
termination.
"Liquidation Proceeds" means all amounts received with respect to a
Liquidated Lease and the related Leased Vehicle in the month in which
such Lease became a Liquidated Lease, net of any amounts remitted to the
Obligor as required by law.
"Recoveries" means, with respect to any Collection Period, (i) all
amounts received during such Collection Period (net of taxes) with
respect to Leases which became Liquidated Leases before such Collection
Period plus (ii) all amounts received with respect to Leases which
expired on their respective Scheduled Lease End Dates before such
Collection Period and with respect to which the proceeds from the sale
of the related Leased Vehicles were received before such Collection
Period, minus any amounts remitted to the Obligor as required by law.
Quarterly Deposits to the Collection Account. On the second business day
preceding each Payment Date, the Administrative Agent acting on behalf of the
Issuer will deliver to the Indenture Trustee instructions setting forth the
information necessary to make all disbursements and payments with respect to
such Payment Date. (Indenture, Section 8.3).
On the business day preceding each Payment Date, the Administrative Agent
will make a deposit or withdrawal from the Collection Account in an amount equal
to the sum of the Aggregate Net Sale Proceeds Advances and Aggregate Net Monthly
Payment Advances to be made by the Administrative Agent for the preceding
Accrual Period. (Series 1995-1 Supplement, Sections 5.2 and 5.4).
"Aggregate Net Sale Proceeds Advances" means, with respect to any
Accrual Period, the aggregate Sale Proceeds Advances made by the
Administrative Agent with respect to such Accrual Period minus the
amount received by the Administrative Agent in such Accrual Period as
repayment of Sale Proceeds Advances which were made with respect to
previous Accrual Periods. See "Description of the Administrative Agency
Agreement -- Advances of Sale Proceeds."
"Aggregate Net Monthly Payment Advances" means, with respect to any
Accrual Period, the aggregate Monthly Payment Advances made by the
Administrative Agent with respect to such Accrual Period minus the
amount received by the Administrative Agent in such Accrual Period as
repayment of Monthly Payment Advances which were made with respect to a
previous Accrual Period. See "Description of the Administrative Agency
Agreement -- Monthly Payment Advances."
On the business day preceding each Payment Date, based on the instructions
of the Administrative Agent, the Indenture Trustee will determine the aggregate
amount of Available Funds on deposit in the Collection Account (after giving
effect to all deposits of Collections on the business day preceding such Payment
Date and the deposit or withdrawal of the Aggregate Net Monthly Payment Advances
and the Aggregate Net Sale Proceeds Advances on such day).
The "Available Funds" on deposit in the Collection Account on the
business day preceding any Payment Date will be equal to the Collections
deposited therein on each of the two preceding Distribution Dates
(including investment earnings) and Collections deposited therein on the
business day preceding the Distribution Date occurring on such Payment
Date (or on each business day during the related Accrual Period if any
Monthly Remittance
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<PAGE> 51
Condition has not been satisfied) plus the total Aggregate Net Sale
Proceeds Advances and Aggregate Net Monthly Payment Advances deposited
on the business day preceding such Payment Date.
On the business day preceding each Payment Date, the Indenture Trustee will
withdraw from the Reserve Account and deposit to the Collection Account the
Reserve Account Draw Amount (if any) and the Reserve Account Release Amount (if
any), and the Indenture Trustee will draw on the Limited RV Guaranty and deposit
to the Collection Account the RV Guaranty Draw Amount (if any). The "Total
Available Funds" on deposit in the Collection Account on the business day
preceding any Payment Date will be equal to the sum of the Available Funds, the
Reserve Account Draw Amount, the Reserve Account Release Amount and the RV
Guaranty Draw Amount. See "-- Reserve Account Withdrawals and Deposits" for a
description of how the Reserve Account Draw Amount and the Reserve Account
Release Amount are calculated and "-- Limited RV Guaranty" for a description of
how the RV Guaranty Draw Amount is calculated. (Indenture, Sections 8.3 and
8.4).
Deposits to the Payment Account. On the business day preceding each Payment
Date the Administrative Agent will deposit to the Payment Account the Total
Available Funds on deposit in the Collection Account. (Indenture, Section 8.4).
Withdrawals from the Payment Account. On each Payment Date, the Indenture
Trustee will apply the Total Available Funds in the following order of priority:
(i) to the Administrative Agent, the Administrative Agent Fee;
(ii) to the Noteholders, pro rata without any priority between
Classes, to pay interest due on the outstanding Notes on such Payment Date
(and, to the extent permitted under applicable law, interest on any overdue
interest at the interest rate for the applicable Class plus 2.00%);
(iii) to an account held by the Lease Trustee for distribution to
Lease Trust Certificateholders, to pay interest due on the Lease Trust
Certificates on such Payment Date (and, to the extent permitted under
applicable law, interest on any overdue interest at the interest rate for
the Lease Trust Certificates plus 2.00%);
(iv) to Ford Credit, to pay the Limited RV Guaranty Fee with respect
to the related Accrual Period;
(v) to the Reserve Account, to pay the Reserve Account Deposit Amount
for such Payment Date, if any; and
(vi) to the Noteholders, to pay principal with respect to each Class
of Notes outstanding, sequentially, until the Notes have been paid in full;
provided that if an Event of Default has occurred under the Indenture and
the maturity of the Notes has been accelerated, principal payments will be
made on a pro rata basis to holders of the Class A-1 Notes and the Class
A-2 Notes based on their respective principal balances, without any
distinction between Classes.
Any Total Available Funds remaining in the Payment Account after the Class
A-2 Notes have been paid in full will be deposited in an account held by the
Lease Trustee for distribution to Lease Trust Certificateholders or otherwise in
accordance with the terms of the Lease Trust Agreement. (Indenture, Section
8.4). See "-- Limited RV Guaranty" and "-- Reserve Account Withdrawals and
Deposits."
LIMITED RV GUARANTY
On the Closing Date, Ford Credit will issue a limited guaranty (the
"Limited RV Guaranty") in favor of the Lease Trustee acting on behalf of the
Issuer, who will assign its rights thereunder to the Indenture Trustee as part
of the Lease Trust Estate pledged pursuant to the Indenture. The "Initial RV
Guaranty Amount" will be $43,054,113.99, and the "Available RV Guaranty Amount"
as of the business day preceding any Payment Date will equal the Initial RV
Guaranty Amount minus the
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aggregate RV Guaranty Draw Amounts made with respect to each prior Payment Date.
No reinstatement will be made for amounts drawn under the Limited RV Guaranty.
The Limited RV Guaranty is available to cover losses with respect to Sale
Proceeds (including amounts collected in respect of Excess Wear and Tear and
Excess Mileage and reduced by amounts required to be remitted to the Obligor
under applicable law) of Series 1995-1 Leased Vehicles which were sold on or
after the Scheduled Lease End Dates of the respective related Series 1995-1
Leases for less than their respective Residual Values (as such Residual Values
are decreased by Uncollected Excess Wear and Tear and Excess Mileage). The
amount available from the Limited RV Guaranty will not include amounts payable
in respect of Uncollected Excess Wear and Tear and Excess Mileage, if any, with
respect to such vehicle. The amount of such Uncollected Excess Wear and Tear and
Excess Mileage is considered a Series 1995-1 Credit Loss because the Obligor is
contractually obligated to pay such amount, and therefore it will not be a
component of the RV Guaranty Draw Amount but will be a component of the Reserve
Account Draw Amount. On the business day preceding any Payment Date, the "RV
Guaranty Draw Amount" will equal the lesser of (i) the amount, if any, by which
the Required Scheduled Termination Sale Proceeds exceeds the Accrual Available
Scheduled Termination Sale Proceeds and (ii) the Available RV Guaranty Amount as
of the business day preceding such Payment Date. The "RV Guaranty Draw
Shortfall" with respect to any Payment Date is the amount, if any, by which (i)
the Required Scheduled Termination Sale Proceeds minus the Accrual Available
Scheduled Termination Sale Proceeds is greater than (ii) the Available RV
Guaranty Amount.
The "Required Scheduled Termination Sale Proceeds" for any Payment Date
is the aggregate Residual Values of all Series 1995-1 Leased Vehicles
the related Series 1995-1 Leases of which reached their Scheduled Lease
End Dates sold in the related Accrual Period minus the aggregate
Uncollected Excess Wear and Tear and Excess Mileage with respect to such
Series 1995-1 Leased Vehicles.
The "Accrual Available Scheduled Termination Sale Proceeds" with respect
to any Payment Date is equal to (i) the Available Scheduled Termination
Sale Proceeds for each of the three preceding Collection Periods, plus
(ii) Administrative Purchase Amounts deposited in connection with Term
Extensions.
As compensation for issuing the Limited RV Guaranty, Ford Credit will on
each Payment Date, to the extent that funds are available after payments of
interest to Noteholders and Lease Trust Certificateholders, receive the Limited
RV Guaranty Fee. The "Limited RV Guaranty Fee" with respect to any Payment Date
is 1.00% (per annum) of the Initial RV Guaranty Amount. See "-- The Indenture
Cash Flows."
RESERVE ACCOUNT WITHDRAWALS AND DEPOSITS
Amounts on deposit in the Reserve Account from time to time (the "Reserve
Account Amount") secure the Transferor's obligations under the Program Operating
Lease, and on each Payment Date are available to cover shortfalls in the Basic
Payment portion of Program Operating Lease Payments. Such shortfalls may arise
(i) if (x) the aggregate Adjusted Balance Subject to Lease Charges of Liquidated
Leases and the related uncollected Monthly Payments from Obligors of such
Liquidated Leases exceeds (y) the aggregate amounts received from Obligors and
from the disposition of the related Series 1995-1 Leased Vehicles and (ii) to
the extent of the sum of the aggregate uncollected Monthly Payments from
Obligors on Series 1995-1 Leases which terminate on or after their respective
Scheduled Lease End Dates and the aggregate Uncollected Excess Wear and Tear and
Excess Mileage for such Series 1995-1 Leases. See "-- Limited RV Guaranty." In
addition, amounts on deposit in the Reserve Account are available to cover all
obligations of the Transferor under the Program Operating Lease upon the
occurrence of an event of default thereunder. The initial amount deposited in
the Reserve Account on the Closing Date will be $25,114,899.83 (the "Initial
Reserve Account Deposit"). The Reserve Account Amount will be
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increased by each Reserve Account Deposit Amount deposited therein and will be
decreased by the amount of each Reserve Account Draw Amount and Reserve Account
Release Amount with respect to each Payment Date. The "Required Reserve Account
Amount" with respect to any Payment Date will be the lesser of (i) 3.50% of the
Pool Balance as of the last day of the related Accrual Period and (ii) the sum
of the aggregate principal balance of the Notes and the Lease Trust Certificates
as of such Payment Date, before giving effect to any payments made on such
Payment Date; provided that the Required Reserve Account Amount will not in any
event be less than $23,320,978.41.
Reserve Account Draw Amount. If, on the business day preceding any
Payment Date, the sum of the Available Funds, the RV Guaranty Draw
Amount and any RV Guaranty Draw Shortfall is less than the sum of the
Required Interest Payment and the Pool Balance Decline, the Indenture
Trustee will withdraw an amount equal to the amount of such shortfall
from the Reserve Account, up to the amount of the Reserve Account Amount
as of the business day preceding such Payment Date (such withdrawal, the
"Reserve Account Draw Amount").
Reserve Account Deposit Amount. On each Payment Date, the Reserve
Account Deposit Amount will be deposited if necessary in the Reserve
Account from the amounts on deposit in the Payment Account after giving
effect to the payment of the Administrative Agent Fee, interest on the
Notes, interest on the Lease Trust Certificates and the Limited RV
Guaranty Fee. The "Reserve Account Deposit Amount," if any, on any
Payment Date is the lesser of (i) the difference between the Required
Reserve Account Amount and the Reserve Account Amount, each as of such
Payment Date after giving effect to any releases or withdrawals from the
Reserve Account on the business day preceding such Payment Date, and
(ii) the amount, if any, by which the sum of Available Funds, the RV
Guaranty Draw Amount and any RV Guaranty Draw Shortfall exceeds the sum
of the Required Interest Payment and the Pool Balance Decline.
Reserve Account Release Amount. On the business day preceding each
Payment Date, the Reserve Account Release Amount will be included in the
Total Available Funds to make payments under the Indenture. The "Reserve
Account Release Amount" with respect to any Payment Date is the amount,
if any, by which the Reserve Account Amount as of the prior Payment Date
exceeds the sum of the Reserve Account Draw Amount and the Required
Reserve Account Amount with respect to such Payment Date.
ADVANCES
The Administrative Agent will make a Monthly Payment Advance on the
business day preceding each Payment Date with respect to Monthly Payments not
received with respect to a Series 1995-1 Lease as of the end of the related
Accrual Period but only if the Administrative Agent determines in its sole
discretion that such Monthly Payment Advance will be recoverable from subsequent
Monthly Payments on such Series 1995-1 Lease. The Administrative Agent will make
Sale Proceeds Advances for Sale Proceeds which have not been received as of the
end of the related Accrual Period with respect to Series 1995-1 Leased Vehicles
which were sold in such Accrual Period on or after their respective Scheduled
Lease End Dates. On the business day preceding each Payment Date, the
Administrative Agent will deposit to, or withdraw from, the Collection Account
the Aggregate Net Sale Proceeds Advances and the Aggregate Net Monthly Payment
Advances (Series 1995-1 Supplement, Section 5.2). See "-- The Indenture Cash
Flows," "Description of the Administrative Agency Agreement -- Advances of Sale
Proceeds" and "Description of the Administrative Agency Agreement -- Monthly
Payment Advances."
MONTHLY REMITTANCE CONDITION
The Administrative Agency Agreement requires the Administrative Agent to
make all deposits of amounts received from Obligors during each Collection
Period on each business day. However, so
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long as each Monthly Remittance Condition is satisfied, the Administrative Agent
may retain such amounts until the related Distribution Date (or until the
business day preceding such Distribution Date, if such Distribution Date is a
Payment Date). Pending deposit into the Collection Account, collections of
amounts received from Obligors may be employed by the Administrative Agent at
its own risk and for its own benefit and will not be segregated from its own
funds. Deposits or withdrawals from the Collection Account with respect to
Monthly Payment Advances and Sale Proceeds Advances will be made on the business
day preceding each Payment Date on a net basis. (Series 1995-1 Supplement,
Section 5.2).
STATEMENTS TO NOTEHOLDERS
On or prior to each Payment Date, the Administrative Agent will prepare and
provide the Indenture Trustee a statement to be included with the report
delivered to Noteholders described in "Pool Factors and Trading Information"
setting forth the following information with respect to such Payment Date: (i)
the amount of the distribution allocable to principal and interest with respect
to each Class of Notes outstanding; (ii) the aggregate amount of Collections
deposited in the Payment Account; (iii) the Aggregate Net Sale Proceeds Advances
and Aggregate Net Monthly Payment Advances deposited in the Payment Account;
(iv) the amount of Available Funds; (v) the Reserve Account Draw Amount and/or
the Reserve Account Release Amount, if any; (vi) the amount of Total Available
Funds; (vii) the RV Guaranty Draw Amount, if any; (viii) the amount deposited in
the Certificate Distribution Account for payment of interest to Lease Trust
Certificateholders; (ix) the Limited RV Guaranty Fee; (x) the Reserve Account
Deposit Amount, if any; (xi) the aggregate outstanding balance of Notes and
Lease Trust Certificates and the Pool Balance; (xii) the Available RV Guaranty
Amount (after giving effect to the RV Guaranty Draw Amount for such Payment
Date, if any); (xiii) the Reserve Account Amount (after giving effect to the
Reserve Account Draw Amount, Reserve Account Release Amount and/or the Reserve
Account Deposit Amount for such Payment Date); (xiv) the aggregate of the Series
1995-1 Credit Losses for each of the three preceding Collection Periods; and
(xv) the aggregate of the Series 1995-1 Residual Losses for each of the three
preceding Collection Periods.
INDENTURE
Events of Default. The "Events of Default" in the Indenture consist of (i)
a default for five days or more in the payment of interest on any Note; (ii) on
any date, the aggregate principal balance of the Notes equals or exceeds the
Pool Balance plus the aggregate Residual Values of all Series 1995-1 Leased
Vehicles in respect of which the Administrative Agent failed to make a Sale
Proceeds Advance; (iii) a default in the payment of principal of any Note at
Stated Maturity or on the Redemption Date; (iv) the occurrence of an event of
default under the Program Operating Lease; (v) a default in the observance or
performance of any material covenant or agreement, or any representation or
warranty made in the Indenture or in any certificate or writing delivered
pursuant thereto proves to have been incorrect in any material respect as of the
time when made, and the continuation of such default for a period of 60 days or
in the case of a materially incorrect representation or warranty, 30 days, after
notice thereof is given to the Lease Trustee by the Indenture Trustee or the
Lease Trustee and the Indenture Trustee by the holders of not less than 25% of
the aggregate principal balance of the Notes or (vi) certain events of
bankruptcy, insolvency, receivership or liquidation of the Issuer. (Indenture,
Section 5.1).
Noteholders holding not less than a majority of the aggregate principal
balance of the Notes may waive any past default or Event of Default prior to the
declaration of the acceleration of the maturity of the Notes, except a default
(i) in payment of principal of or interest on any of the Notes or (ii) in
respect of any covenant or provision in the Indenture which cannot be modified
or amended without unanimous consent of the Noteholders. (Indenture, Section,
5.12). Any such waiver could be treated, for federal income tax purposes, as a
constructive exchange of the Notes by the Noteholders for deemed new Notes upon
which gain or loss would be recognized.
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Remedies. If an Event of Default should occur and be continuing, the
Indenture Trustee or the holders of a majority of the aggregate principal
balance of the Notes may declare the principal of the Notes to be immediately
due and payable. Such declaration may be rescinded by the holders of a majority
of the aggregate principal balance of the Notes before a judgment or decree for
payment of the amount due has been obtained by the Indenture Trustee if (i) the
Issuer has deposited with the Indenture Trustee an amount sufficient to pay (x)
all interest on and principal of the Notes as if the Event of Default giving
rise to such declaration had not occurred and (y) all amounts advanced by the
Indenture Trustee and its costs and expenses and (ii) all Events of Default
(other than the nonpayment of principal of the Notes that has become due solely
by such acceleration) have been cured or waived. (Indenture, Section 5.2). Any
such rescission could be treated, for federal income tax purposes, as a
constructive exchange of the Notes by the Noteholders for deemed new Notes upon
which gain or loss would be recognized.
If the Notes have been declared due and payable following an Event of
Default, the Indenture Trustee may institute proceedings to collect amounts due,
exercise remedies as a secured party including foreclosure or sale of the Lease
Trust Estate, or elect to maintain the Lease Trust Estate and continue to apply
proceeds from the Lease Trust Estate as if there had been no declaration of
acceleration. The Indenture Trustee may not, however, unless it is required to
sell the Lease Trust Estate pursuant to the Lease Trust Agreement as a result of
the bankruptcy, insolvency or termination of the Transferor or the bankruptcy or
insolvency of Ford Credit Leasing, sell the Lease Trust Estate following an
Event of Default (other than the occurrence of an Event of Default described in
clauses (i) or (iii) above) unless (i) 100% of the Noteholders consent thereto,
(ii) the proceeds of such sale are sufficient to pay in full the principal of
and the accrued interest on the then outstanding Notes and Lease Trust
Certificates or (iii) the Indenture Trustee determines that the Lease Trust
Estate would not be sufficient on an ongoing basis to make all payments on the
Notes as such payments would have become due if such obligations had not been
declared due and payable, and the Indenture Trustee obtains the consent of
holders of 66 2/3% of the aggregate principal balance of the Notes. The
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
independent accountant or investment banking firm as to the sufficiency of the
Lease Trust Estate to pay interest and principal on the Notes on an ongoing
basis. (Indenture, Section 5.4).
In the event of a sale of the Lease Trust Estate, either as a result of the
bankruptcy, insolvency or termination of the Transferor or the bankruptcy or
insolvency of Ford Credit Leasing, or following the occurrence of certain Events
of Default pursuant to the direction of the Indenture Trustee or the
Noteholders, the proceeds of such sale will be distributed first to the
Indenture Trustee for amounts due as compensation or indemnity payments pursuant
to the terms of the Indenture; second to the Administrative Agent for
reimbursement of all outstanding Sale Proceeds Advances and Monthly Payment
Advances; third to the Administrative Agent for amounts due in respect of unpaid
Administrative Agent Fees; fourth to the Noteholders to pay interest which is
due and unpaid, ratably, without preference or priority between the Classes; and
fifth to the Noteholders to pay principal which is due and unpaid, ratably,
without any distinction between Classes. Any remaining amounts will be
distributed to the Lease Trust Certificateholders for amounts due and unpaid in
accordance with the terms of the Lease Trust Agreement and then the Deferred
Amount will be paid to the Transferor and Ford Credit Leasing as holders of the
Transferor Lease Trust Certificates. (Indenture, Section 5.4). Any sale of the
Lease Trust Estate is subject to a requirement that an Opinion of Counsel is
delivered to the effect that such sale shall not cause FCTT or the Issuer to be
classified as an "association" (or publicly traded partnership) taxable as a
corporation.
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, in case an Event of Default occurs and is continuing with
respect to the Notes, the Indenture Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the Noteholders, if the Indenture Trustee reasonably
believes it will not be adequately indemnified against the costs, expenses and
liabilities which might be incurred by it in
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complying with such request. Subject to such provisions for indemnification and
certain limitations contained in the Indenture, the holders of not less than a
majority of the aggregate principal balance of the Notes will have the right to
direct the time, method and place of conducting any proceeding or any remedy
available to the Indenture Trustee or exercising any trust power conferred on
the Indenture Trustee, and the holders of not less than a majority of the
aggregate principal balance of the Notes may, in certain cases, waive any
default with respect thereto, except a default in the payment of principal or
interest or a default in respect of a covenant or provision of the Indenture
that cannot be modified without the waiver or consent of all of the holders of
the outstanding Notes. Until such time, if any, as Definitive Notes have been
issued, the Indenture Trustee will act only in accordance with the instructions
of Cede, as nominee for DTC. However, under the rules, regulations and
procedures creating and affecting DTC and its operations, DTC will act only in
accordance with the instructions of the Participants to whom Notes are credited,
which will in turn act in accordance with the instructions of persons holding
beneficial interests in such Notes through such Participants. Accordingly,
although only Cede will be entitled to vote under the Indenture, Note Owners
will be entitled to instruct DTC as to the manner in which to vote. (Indenture,
Sections 5.11 and 5.12).
No Noteholder will have the right to institute any proceeding with respect
to the Indenture, unless (i) such Noteholder previously has given to the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
holders of not less than 25% of the aggregate principal balance of the Notes
have made written request of the Indenture Trustee to institute such proceeding
in its own name as Indenture Trustee, (iii) such Noteholder or Noteholders have
offered the Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee
has for 60 days failed to institute such proceeding and (v) no direction
inconsistent with such written request has been given to the Indenture Trustee
during such 60-day period by the holders of a majority of the aggregate
principal balance of the Notes. (Indenture, Section 5.6).
Neither the Indenture Trustee nor the Lease Trustee in their respective
individual capacities, nor any holder of a Lease Trust Certificate, nor any of
their respective owners, beneficiaries, agents, officers, directors, employees,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of interest on or principal of
the Notes or for the agreements of the Issuer and the Lease Trustee, in its
capacity as trustee, contained in the Indenture.
Certain Covenants. The Issuer will not, among other things, (i) except as
expressly permitted by the Indenture, the Program Operating Lease and the other
Basic Documents, sell, transfer, exchange or otherwise dispose of any of the
assets of the Issuer, (ii) claim any credit on or make any deduction from the
principal and interest payable in respect of the Notes (other than amounts
withheld under the Code or applicable state law) or assert any claim against any
present or former Noteholder because of the payment of taxes levied or assessed
upon the Issuer, (iii) dissolve or liquidate in whole or in part or (iv) permit
(x) the validity or effectiveness of the Indenture to be impaired, (y) any
person to be released from any covenants or obligations with respect to the
Notes under the Indenture except as may be expressly permitted thereby or (z)
any lien, charge, excise, claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon or burden the
assets of the Issuer or any part thereof, or any interest therein or the
proceeds therefrom. (Indenture, Section 3.8).
The Issuer may not engage in any activities other than financing,
acquiring, owning, leasing (subject to the lien of the Indenture), pledging and
managing the Series 1995-1 Certificates as contemplated by the Indenture and the
other Basic Documents. (Indenture, Section 3.12).
The Issuer will not incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the Notes and the Lease Trust Certificates or
otherwise in accordance with the Basic Documents. (Indenture, Section 3.13).
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The Issuer will or will cause the Administrative Agent to deliver to the
Indenture Trustee on the second business day preceding each Payment Date the
disbursement and payment instructions as required pursuant to the Indenture.
(Indenture, Section 8.3).
Replacement of the Indenture Trustee. Noteholders holding not less than a
majority of the aggregate principal balance of the Notes may remove the
Indenture Trustee without cause by so notifying the Indenture Trustee and the
Lease Trustee, and following such removal may appoint a successor Indenture
Trustee.
The Indenture Trustee may resign at any time by so notifying the Lease
Trustee and the Noteholders. The Lease Trustee is required to remove the
Indenture Trustee if the Indenture Trustee (i) ceases to be eligible to continue
as the Indenture Trustee, (ii) is adjudged to be bankrupt or insolvent, or (iii)
or its property comes under the charge of a receiver or other public officer, or
(iv) otherwise becomes incapable of acting. Upon the resignation or required
removal of the Indenture Trustee, or the failure of the Noteholders to appoint a
successor Indenture Trustee following the removal without cause of the Indenture
Trustee, the Lease Trustee will be required promptly to appoint a successor
Indenture Trustee. (Indenture, Section 6.8).
Duties of Indenture Trustee. Except during the continuance of an Event of
Default, the Indenture Trustee will (i) perform such duties and only such duties
as are specifically set forth in the Indenture, (ii) rely, as to the truth of
the statements and the correctness of the opinions expressed in certificates or
opinions furnished to the Indenture Trustee which conform to the requirements of
the Indenture, and (iii) examine any such certificates and opinions which are
specifically required to be furnished to the Indenture Trustee by the Indenture
to determine whether or not they conform to the requirements of the Indenture.
Upon the continuance of an Event of Default, the Indenture Trustee will be
required to exercise the rights and powers vested in it by the Indenture and use
the same degree of care and skill in the exercise thereof as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs. (Indenture, Section 6.1).
Compensation and Indemnity. The Administrative Agent will (i) pay to the
Indenture Trustee from time to time reasonable compensation for its services,
(ii) reimburse the Indenture Trustee for all expenses, advances and
disbursements reasonably incurred and (iii) indemnify the Indenture Trustee for,
and hold it harmless against, any and all losses, liability or expense
(including attorneys' fees) incurred by it in connection with the performance of
its duties. The Indenture Trustee will not be indemnified against any loss,
liability or expense incurred by it through its own willful misconduct,
negligence or bad faith, except that, the Indenture Trustee will not be liable
(i) for any error of judgment made by it in good faith unless it is proved that
the Indenture Trustee was negligent in ascertaining the pertinent facts, (ii)
with respect to any action it takes or omits to take in good faith in accordance
with a direction received by it from Noteholders in accordance with the terms of
the Indenture, and (iii) for interest on any money received by it except as the
Indenture Trustee and the Lease Trustee may agree in writing. The Indenture
Trustee will not be deemed to have knowledge of any event unless an officer of
the Indenture Trustee has actual knowledge thereof or has received written
notice thereof in accordance with the provisions of the Indenture. (Indenture,
Sections 6.1 and 6.7).
Access to Noteholder Lists. If Definitive Notes are issued in the limited
circumstances set forth in "-- Definitive Notes," and the Indenture Trustee is
not the Note Registrar, the Lease Trustee will furnish or cause to be furnished
to the Indenture Trustee a list of the names and addresses of the Noteholders
(i) as of each Record Date, within five days thereafter and (ii) as of not more
than 10 days prior to the time such list is furnished, within 30 days after
receipt by the Lease Trustee of a written request therefor. (Indenture, Section
7.1).
Annual Compliance Statement. The Issuer will be required to file annually
with the Indenture Trustee a written statement as to the fulfillment of its
obligations under the Indenture. (Indenture, Section 3.9).
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Satisfaction and Discharge of Indenture. The Indenture will be discharged
with respect to the collateral securing the Notes upon the delivery to the
Indenture Trustee for cancellation of all the Notes or, with certain
limitations, including receipt of certain opinions with respect to tax matters,
upon deposit with the Indenture Trustee of funds sufficient for the payment in
full of all of the Notes (including interest and any fees due and payable to the
Lease Trustee or the Indenture Trustee). (Indenture, Section 4.1).
Modification of Indenture. Without the consent of the Noteholders, the
Lease Trustee, on behalf of the Issuer, and the Indenture Trustee, upon request
by the Issuer, may execute a supplemental indenture for the purpose of adding to
the covenants of the Issuer, curing any ambiguity, correcting or supplementing
any provision which may be inconsistent with any other provision or making any
other provision with respect to matters or questions arising under the Indenture
which shall not be inconsistent with other provisions of the Indenture.
(Indenture, Section 9.1).
Without the consent of the holder of each outstanding Note affected
thereby, however, no supplemental indenture may (i) change the Stated Maturity
of or interest on any Note or reduce the principal amount thereof, the interest
rate specified thereon or the Redemption Price with respect thereto or change
any place of payment where, or the coin or currency in which, any Note or any
interest thereon is payable, (ii) impair the right to institute suit for the
enforcement of certain provisions of the Indenture regarding payment, (iii)
reduce the percentage of the aggregate principal balance of the Notes the
consent of the holders of which is required for any such supplemental indenture
or the consent of the holders of which is required for any waiver of compliance
with certain provisions of the Indenture or of certain defaults thereunder and
their consequences as provided for in the Indenture, (iv) modify or alter the
provisions of the Indenture regarding the voting of Notes held by the Issuer,
the Transferor, the Administrative Agent, an affiliate of any of them or any
obligor on the Notes, (v) reduce the percentage of the aggregate principal
balance of the Notes the consent of the holders of which is required to direct
the Indenture Trustee to sell or liquidate the Lease Trust Estate if the
proceeds of such sale would be insufficient to pay the principal balance and
accrued but unpaid interest on the Notes, (vi) decrease the percentage of the
aggregate principal balance of the Notes required to amend the sections of the
Indenture which specify the applicable percentage of the aggregate principal
balance of the Notes necessary to amend the Indenture or the other Basic
Documents or (vii) permit the creation of any lien ranking prior to or on a
parity with the lien of the Indenture with respect to any of the collateral for
the Notes or, except as otherwise permitted or contemplated in the Indenture,
terminate the lien of the Indenture on any such collateral or deprive the holder
of any Note of the security afforded by the lien of the Indenture. (Indenture,
Section 9.2).
The Lease Trustee, on behalf of the Issuer, and the Indenture Trustee, upon
request by the Issuer, may also enter into supplemental indentures, with the
consent of holders of not less than a majority of the aggregate principal
balance of the Notes and with written notice to the Rating Agencies, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of modifying in any manner the rights of
Noteholders; provided, that (x) such action will not, (i) as evidenced by an
Opinion of Counsel, materially adversely affect the interests of any Noteholder
and (ii) as confirmed by each Rating Agency rating the Notes, cause the then
current rating assigned to either Class of Notes to be withdrawn or reduced and
(y) an Opinion of Counsel as to certain tax matters is delivered. (Indenture,
Section 9.1).
The Lease Trust Agreement requires the Lease Trustee to give the Lease
Trust Certificateholders 30 days written notice of any proposed supplemental
indenture if it materially adversely affects the Lease Trust Certificateholders
or if Noteholders consent is required and provides that the Lease Trustee will
not enter into such amendment unless Lease Trust Certificateholders holding 25%
or more of the principal balance of Lease Trust Certificates consent in writing.
See "Additional Document Provisions -- The Lease Trust Agreement."
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DESCRIPTION OF THE ADMINISTRATIVE AGENCY AGREEMENT
DUTIES OF THE ADMINISTRATIVE AGENT
The duties of the Administrative Agent with respect to the Series 1995-1
Assets are set forth in the Administrative Agency Agreement and the Series
1995-1 Supplement. The Administrative Agent will manage, service, administer,
and make collections on the Series 1995-1 Leases using the same degree of skill
and attention that it exercises with respect to all comparable retail automotive
leases and retail installment sales contracts that it services for itself or
others ("Accepted Servicing Practices"). The Administrative Agent will collect
and post all payments, respond to inquiries of Obligors, investigate
delinquencies, commence legal proceedings to enforce Series 1995-1 Leases
against delinquent Obligors, send invoices to Obligors, account for collections,
furnish monthly and annual statements to the FCTT Trustee with respect to
distributions, make Sale Proceeds Advances and Monthly Payment Advances, and pay
Administrative Purchase Amounts. The Administrative Agent will be required to
take all necessary steps to maintain evidence of FCTT's ownership on the
certificate of title of each Series 1995-1 Leased Vehicle. The Administrative
Agent will obtain all licenses required to be held by FCTT in connection with
the ownership of Series 1995-1 Leases and Series 1995-1 Leased Vehicles. The
Administrative Agent may contract with third parties to perform its duties under
the Administrative Agency Agreement, but shall remain responsible for the
performance of such duties. (Administrative Agency Agreement, Sections 4.1 and
4.5).
The Administrative Agency Agreement also sets forth the duties of the
Administrative Agent with respect to the origination and purchase of Leases and
Leased Vehicles by FCTT and the obtaining of certificates of title for such
Leased Vehicles. See "FCTT -- Lease Origination from Dealers and Assignment to
FCTT" and "-- Titling of Leased Vehicles."
COLLECTION OF TOTAL MONTHLY PAYMENTS; EXTENSION OF LEASES
The Administrative Agent will collect all payments under the Series 1995-1
Leases. The Administrative Agent may grant extensions, rebates, or adjustments
on Series 1995-1 Leases in accordance with Accepted Servicing Practices and in
its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Series 1995-1 Lease.
(Administrative Agency Agreement, Section 4.2).
The Administrative Agent may grant an extension of the Lease Term (a "Term
Extension") if the Obligor requesting such extension is not in default under the
Series 1995-1 Lease at the time of such request and agrees to continue to make
Total Monthly Payments in the same amount as required under the original terms
of such Series 1995-1 Lease. Because the granting of a Term Extension with
respect to any Series 1995-1 Lease would be deemed to have a material adverse
effect on holders of the Series 1995-1 Certificates, the Administrative Agent
will be required to purchase the beneficial interest in the related Series
1995-1 Leased Vehicle as of the date of such Term Extension. See "--
Administrative Purchases."
The Administrative Agent may also extend the term of a Series 1995-1 Lease
in accordance with Accepted Servicing Practices, by waiving the Total Monthly
Payment due in any month in exchange for extending the term of the Series 1995-1
Lease for one or more additional months beyond the Scheduled Lease End Date for
each month for which the Total Monthly Payment is waived (such extension, a
"Payment Extension"). The Obligor under any Payment Extension does not receive
an increase in the aggregate number of miles which the Series 1995-1 Leased
Vehicle may be driven by the Obligor without incurring an additional charge for
excess mileage under the related Series 1995-1 Lease. If the Administrative
Agent grants Payment Extensions in excess of, in the aggregate, three months
beyond the Scheduled Lease End Date of a related Series 1995-1 Lease, it will
purchase the beneficial interest in such Series 1995-1 Leased Vehicle as of the
date of the granting of such extension. (Administrative Agency Agreement,
Sections 4.2 and 4.7).
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REALIZATION ON LIQUIDATED LEASES
The Administrative Agent will use reasonable efforts (i) to repossess any
Series 1995-1 Leased Vehicle if it determines that eventual payment in full of
the related Series 1995-1 Lease is unlikely and (ii) to maximize Liquidation
Proceeds. Upon repossession, the Administrative Agent has discretion to repair a
damaged Series 1995-1 Leased Vehicle or sell such vehicle without repairs. This
determination will be based on whether the Administrative Agent believes repairs
will increase the related Liquidation Proceeds by an amount greater than the
cost of such repairs. (Administrative Agency Agreement, Section 4.3).
ADMINISTRATIVE PURCHASES
The Administrative Agent on behalf of Ford Credit and Ford Credit Leasing,
as holders of the EBCs, will be required to purchase the Issuer's beneficial
interest in any Series 1995-1 Asset as to which: either (i) any of the Specific
Eligibility Criteria and General Eligibility Criteria were not satisfied on the
Series 1995-1 Cut-Off Date; (ii) the Administrative Agent has breached certain
covenants in the Administrative Agency Agreement by either (a) failing to make
reasonable efforts to collect Total Monthly Payments from the related Obligor,
(b) failing to maintain record ownership in such Series 1995-1 Leased Vehicle,
(c) changing the Retail Operating Lease Factor of such Series 1995-1 Lease, (d)
modifying the number or amount of Monthly Payments due under the Series 1995-1
Lease, except in connection with a Payment Extension, or (e) otherwise impairing
the rights of FCTT or the Issuer in such Series 1995-1 Lease or Series 1995-1
Leased Vehicle and, in each case, such breach continues unremedied for a
specified period; (iii) the related Series 1995-1 Leased Vehicle has been
relocated to a jurisdiction where FCTT is not qualified or authorized to
maintain evidence of the ownership of Series 1995-1 Leased Vehicles; or (iv) the
Administrative Agent has granted a Term Extension. In addition, because the
granting of Payment Extensions in excess of, in the aggregate, three months
would be deemed to breach a material covenant of the Administrative Agent, the
Administrative Agent will be required to purchase the beneficial interest in the
related Series 1995-1 Leased Vehicle as of the date the proscribed Payment
Extension is granted. The amount payable for each such purchase will be the
Administrative Purchase Amount of the Series 1995-1 Lease and Series 1995-1
Leased Vehicle. (Administrative Agency Agreement, Sections 4.2, 4.5, 4.6 and
4.7; Series 1995-1 Supplement, Section 5.5).
SALE OF LEASED VEHICLES
On the Scheduled Lease End Date of a Series 1995-1 Lease, the Obligor has
the option to purchase the related Series 1995-1 Leased Vehicle for an amount
equal to or greater than its Residual Value. If the Obligor does not purchase
the Leased Vehicle, the Dealer may, at its option, purchase the Leased Vehicle.
If either the Obligor or the Dealer exercises such option, the Administrative
Agent, on behalf of FCTT will sell the Series 1995-1 Leased Vehicle to the
Dealer for an amount equal to the Residual Value thereof plus any unpaid amounts
owing from the related Obligor. If neither the related Obligor nor the Dealer
elects to purchase a Series 1995-1 Leased Vehicle upon termination of the
related Lease, the Dealer will inspect the Series 1995-1 Leased Vehicle and
assess any charges in respect of Excess Wear and Tear and Excess Mileage, and
the Administrative Agent will sell such Series 1995-1 Leased Vehicle at auction,
or otherwise in accordance with Accepted Servicing Practices. The Sale Proceeds
received by the Issuer with respect to a Series 1995-1 Leased Vehicle sold at
auction will be limited to the Transferor Purchase Option Price. See "Series
1995-1 Certificates -- Lease of the Series 1995-1 Certificates to the
Transferor" and "Special Considerations -- Residual Value Risk." (Administrative
Agency Agreement, Sections 5.1, 5.2 and 5.3).
If the Dealer determines that a Series 1995-1 Leased Vehicle requires
repairs in respect of Excess Wear and Tear and Excess Mileage, either the
Obligor will pay the estimated costs of such repairs or the Administrative Agent
will grant the Obligor a one-month Term Extension to permit the Obligor to
effect such repairs at its own expense. The Administrative Agent will purchase
the
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beneficial interest in the Series 1995-1 Leased Vehicle for the Administrative
Purchase Amount if it grants a Term Extension. See "-- Administrative
Purchases." The Administrative Agent will apply any security deposit or
reconditioning reserve to pay any amounts owed in respect of Uncollected Excess
Wear and Tear or Excess Mileage which are not paid by the Obligor.
(Administrative Agency Agreement, Section 5.1).
Upon receipt of Sale Proceeds, the Administrative Agent will deliver the
related certificate of title to the Obligor, Dealer or other purchaser, as the
case may be. The Administrative Agent will deposit the Sale Proceeds from the
sale of Series 1995-1 Leased Vehicles (but not an amount in excess of the
Transferor Purchase Option Price) in the Collection Account on the next
following Distribution Date (or on the business day preceding such Distribution
Date, if such Distribution Date is a Payment Date), or on the date it receives
such proceeds if any Monthly Remittance Condition has not been satisfied.
(Administrative Agency Agreement, Sections 5.2 and 5.3). See "Series 1995-1
Certificates -- Lease of the Series 1995-1 Certificates to the Transferor."
ADVANCES OF SALE PROCEEDS
If the Scheduled Lease End Date with respect to a Series 1995-1 Lease
occurs and the related Series 1995-1 Leased Vehicle is not sold by the last
business day of the Accrual Period in which the related Scheduled Lease End Date
occurred, the Administrative Agent will, on the business day preceding the
related Payment Date, make an advance (a "Sale Proceeds Advance") equal to the
Residual Value of such Series 1995-1 Leased Vehicle, but only if the
Administrative Agent determines, in its sole discretion, that such Sale Proceeds
Advance will be recoverable from the Sale Proceeds of the related Series 1995-1
Leased Vehicle. To the extent such Sale Proceeds are insufficient to reimburse
the Sale Proceeds Advance, such Sale Proceeds Advance will be reimbursed first
from the Sale Proceeds of other Series 1995-1 Leased Vehicles and then, if
required after the Notes and Lease Trust Certificates have been paid in full,
from a draw on the Limited RV Guaranty. (Administrative Agency Agreement,
Section 5.4; Series 1995-1 Supplement, Section 5.4).
VOLUNTARY EARLY TERMINATIONS, LIQUIDATED LEASES AND RECOVERIES
Upon termination of a Series 1995-1 Lease prior to its Scheduled Lease End
Date and receipt by the Administrative Agent of the related Voluntary Early
Termination Proceeds or Liquidation Proceeds, as the case may be, the
Administrative Agent will deliver the related certificate of title to the
purchaser, if any, of the related Series 1995-1 Leased Vehicle. From and after
such date the Series 1995-1 Certificates will represent a beneficial interest in
the Voluntary Early Termination Proceeds or Liquidation Proceeds and Recoveries
received with respect to such Series 1995-1 Asset and will no longer represent
an interest in such Series 1995-1 Lease or Series 1995-1 Leased Vehicle.
(Administrative Agency Agreement, Section 5.5).
REMITTANCE OF PAYMENTS; ALLOCATION OF FUNDS
The Administrative Agent will apply Total Monthly Payments received during
each Collection Period from each Obligor in the following order of priority to
pay (i) current and overdue Monthly Payments and Use and Lease Tax Amounts, in
the chronological order in which such payments were due; and (ii) current and
overdue Vehicle Insurance and Maintenance Amounts due to the related Dealer. The
Administrative Agent will retain amounts credited to overdue Monthly Payments to
the extent of any unreimbursed Monthly Payment Advances with respect to the
related Series 1995-1 Lease. (Administrative Agency Agreement, Section 6.1;
Series 1995-1 Supplement, Section 5.2).
If on any Distribution Date any portion of a Monthly Payment due on a
Series 1995-1 Lease during the related Collection Period has not been received
from the Obligor, the Administrative Agent will apply an amount equal to the
lesser of (i) the amount of Payaheads credited to such Obligor and (ii) the
portion of such Monthly Payment not received to pay the Monthly Payment with
respect to such Series 1995-1 Lease, and reduce the amount credited to such
Obligor by the
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amount so applied. Payaheads received from an Obligor in any Collection Period
will be credited to such Obligor. (Administrative Agency Agreement, Section
6.1).
The Administrative Agent will apply Sale Proceeds (up to the Transferor
Purchase Option Price, if applicable), Voluntary Early Termination Proceeds and
Recoveries which are not from Liquidated Leases received during a Collection
Period in the following order of priority: (i) to pay any sales, use and lease
taxes; (ii) to reduce the Adjusted Balance Subject to Lease Charges of the
related Series 1995-1 Lease until such Adjusted Balance Subject to Lease Charges
has been reduced to zero; (iii) to pay Uncollected Excess Wear and Tear and
Excess Mileage charges, if any; and (iv) as a Total Monthly Payment until an
amount equal to the Total Monthly Payment due in such Collection Period has been
credited as set forth in the first paragraph of this section. (Administrative
Agency Agreement, Section 6.1).
The Administrative Agent will apply Liquidation Proceeds and Recoveries
from Liquidated Leases received during a Collection Period in the following
order of priority: (i) to pay any sales, use and lease taxes; (ii) to reduce the
Adjusted Balance Subject to Lease Charges until such Adjusted Balance Subject to
Lease Charges has been reduced to zero and (iii) as a Total Monthly Payment
until an amount equal to the Total Monthly Payment due in such Collection Period
has been credited as set forth in the first paragraph of this section.
(Administrative Agency Agreement, Section 6.1).
The Administrative Agent will pay any Use and Lease Tax Amounts and any
other sales, use and lease taxes and any Vehicle Insurance and Maintenance
Amounts due in connection with a payment received from an Obligor to the
appropriate tax authorities and originating Dealers, respectively, and such
amounts will not be available to pay interest of and principal on the Notes or
the Lease Trust Certificates. (Administrative Agency Agreement, Section 6.1).
MONTHLY PAYMENT ADVANCES
If one or more Monthly Payments due (or any portion thereof) with respect
to a Series 1995-1 Lease during any Accrual Period has not been deposited to the
Collection Account as of the last day of such Accrual Period, the Administrative
Agent will make an advance (a "Monthly Payment Advance") in an amount equal to
the sum of the Monthly Payments due with respect to such Series 1995-1 Lease
during such Accrual Period minus amounts received from the related Obligor, but
only if the Administrative Agent determines, in its sole discretion, that such
Monthly Payment Advance will be recoverable from subsequent Monthly Payments on
such Series 1995-1 Lease. To the extent subsequent Monthly Payments with respect
to such Series 1995-1 Lease are insufficient to reimburse the Monthly Payment
Advance, such Monthly Payment Advance will be reimbursed first from Collections
(other than Sale Proceeds) with respect to other Series 1995-1 Leases and then,
if required, from a draw on the Reserve Account. (Administrative Agency
Agreement, Section 6.3; Series 1995-1 Supplement, Section 5.4).
STATEMENTS TO HOLDERS
On each Distribution Date, the FCTT Trustee will deliver to the Lease
Trustee a statement relying on the information included in the certificate of
the Administrative Agent described in "-- Reporting" for the related Collection
Period, setting forth for such Collection Period the following information with
respect to the Series 1995-1 Assets: (i) the aggregate Monthly Payments received
by the Administrative Agent with respect to the Series 1995-1 Assets; (ii) the
Pool Balance as of the beginning and end of such Collection Period and the
portion of such Pool Balance constituting the aggregate Residual Values of the
Series 1995-1 Leased Vehicles; (iii) the amount of the Administrative Agent Fee
payable to the Administrative Agent; (iv) the Series 1995-1 Credit Loss; (v) the
aggregate Administrative Purchase Amounts paid; (vi) the aggregate Available
Scheduled Termination Sale Proceeds, Voluntary Early Termination Proceeds,
Liquidation Proceeds and Recoveries received by the Administrative Agent
(separately stated); (vii) the aggregate amount of Payaheads credited to
Obligors and the aggregate amount of Payaheads either held by
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the Administrative Agent or on deposit in the Payahead Account as of the
beginning and end of the related Collection Period; (viii) the outstanding Sale
Proceeds Advances as of the beginning and end of the related Collection Period
and the aggregate Residual Values of those Series 1995-1 Leased Vehicles with
respect to which the related Series 1995-1 Leases have expired but have not been
sold as of the beginning and end of the related Collection Period; and (ix) the
outstanding Monthly Payment Advances as of the beginning and end of the related
Collection Period and the outstanding amount of Monthly Payments which were due
but not collected from the related Obligors as of the beginning and end of the
related Collection Period. In addition to the foregoing, on each Payment Date
the FCTT Trustee will include in such statement: (i) the Series 1995-1 Credit
Loss with respect to each of the three preceding Collection Periods; and (ii)
the Series 1995-1 Residual Loss with respect to each of the three preceding
Collection Periods. (Administrative Agency Agreement, Section 6.4; Series 1995-1
Supplement, Section 6.1).
NO RESIGNATION
The Administrative Agent may not resign from its obligations and duties
under the Administrative Agency Agreement unless, as evidenced by an Opinion of
Counsel, the performance of its duties is no longer permissible under applicable
law. No such resignation will become effective until the FCTT Trustee or a
successor Administrative Agent has assumed the responsibilities and obligations
of the Administrative Agent. (Administrative Agency Agreement, Section 7.2).
ADMINISTRATIVE AGENT EVENTS OF DEFAULT
Each of the following will constitute an event of default under the
Administrative Agency Agreement (each, an "Administrative Agent Event of
Default"): (i) failure by the Administrative Agent to make any distribution
required by the Administrative Agency Agreement or the Series 1995-1 Supplement
for three business days after written notice of such failure to the
Administrative Agent or after discovery of such failure by the Administrative
Agent; (ii) any failure by the Administrative Agent to observe or to perform in
any material respect any of its covenants or agreements in the Administrative
Agency Agreement or the Series 1995-1 Supplement, which failure materially
adversely affects the holders of the EBCs, the Issuer, as holder of the Series
1995-1 Certificates, or any other holder of an SBC, and continues for a period
of 30 days after written notice of such failure to the Administrative Agent or
after discovery of such failure by the Administrative Agent; (iii) any
representation, warranty, report or certification of the Administrative Agent
in, or pursuant to, the Administrative Agency Agreement or the Series 1995-1
Supplement was incorrect when made, which has a material adverse effect on any
holder of an EBC, the Issuer, or any other holder of an SBC, and continues for a
period of 30 days after written notice thereof to the Administrative Agent or
after discovery of such failure by the Administrative Agent; or (iv) the
occurrence of certain events of bankruptcy, insolvency, receivership or
liquidation with respect to the Administrative Agent; provided, however that the
occurrence of an event set forth in clauses (i), (ii), and (iii) with respect to
Series 1995-1 will be an Administrative Agent Event of Default only with respect
to Series 1995-1 and will not be an Administrative Agent Event of Default with
respect to any other Series or the EBCs. (Administrative Agency Agreement,
Section 7.1).
Upon the occurrence of any Administrative Agent Event of Default the sole
remedy available to the holders of the EBCs and the SBCs will be to remove the
Administrative Agent and appoint a successor Administrative Agent. See "--
Removal of the Administrative Agent."
REMOVAL OF THE ADMINISTRATIVE AGENT
The Transferor, with the consent of 100% of the Noteholders and 66 2/3 of
the Lease Trust Certificateholders, may at any time, for any reason, with
respect to the Series 1995-1 Assets only, remove the Administrative Agent and
appoint a substitute Administrative Agent. Upon appointment, the substitute
Administrative Agent will assume the rights and obligations of the
Administrative Agent under the Administrative Agency Agreement with respect to
administering and servicing the
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Series 1995-1 Assets. Until the appointment of such substitute Administrative
Agent, the predecessor Administrative Agent will continue to perform its duties
and obligations with respect to administering and servicing the Series 1995-1
Assets. No substitute Administrative Agent will have any responsibilities with
respect to the purchase of additional Leases and Leased Vehicles by FCTT.
(Administrative Agency Agreement, Section 7.1; Indenture, Section 6.13).
Upon the occurrence of an Administrative Agent Event of Default, the FCTT
Trustee may, to the extent such Administrative Agent Event of Default relates
(i) to all FCTT Assets, upon direction of the holders of the Series 1995-1
Certificates (which will be the Indenture Trustee so long as any of the Notes
are outstanding), all holders of any other SBCs and the holders of the EBCs
(excluding Ford Credit and Ford Credit Leasing or any other affiliate of the
Administrative Agent), terminate all of the rights and obligations of the
Administrative Agent under the Administrative Agency Agreement with respect to
all FCTT Assets, or (ii) only to the Series 1995-1 Assets, upon direction of the
holders of the Series 1995-1 Certificates (which will be the Indenture Trustee,
so long as any of the Notes are outstanding), terminate all of the rights and
obligations of the Administrative Agent under the Administrative Agency
Agreement and the Series 1995-1 Supplement, with respect to the Series 1995-1
Assets. In each case, the FCTT Trustee will effect such termination by
delivering notice thereof to the Administrative Agent (with a copy to each
Rating Agency then rating the Notes, the Lease Trust Certificates and any other
securities based on any SBCs affected by such Administrative Agent Event of
Default). (Administrative Agency Agreement, Section 7.1).
APPOINTMENT OF A SUCCESSOR
Upon termination or resignation of the Administrative Agent, the
predecessor Administrative Agent will continue to perform its functions as
Administrative Agent, in the case of termination of the Administrative Agent,
until the earlier of the date specified in the termination notice or, if no such
date is specified therein, the date of the Administrative Agent's receipt of
such notice and, in the case of resignation of the Administrative Agent, until
the later of (i) 45 days after the delivery to the FCTT Trustee of the written
resignation notice and (ii) the date upon which the predecessor Administrative
Agent becomes unable to act as Administrative Agent, as specified in the
resignation notice and accompanying Opinion of Counsel. (Administrative Agency
Agreement, Section 7.3).
In the event of the Administrative Agent's termination with respect to all
FCTT Assets or resignation, the FCTT Trustee, acting at the direction of the
holders of the EBCs and the outstanding SBCs will appoint a successor
Administrative Agent. In the event of a termination of the Administrative Agent
with respect to the Series 1995-1 Assets only, the FCTT Trustee, acting at the
direction of the holders of the Series 1995-1 Certificates (which will be the
Indenture Trustee so long as any of the Notes are outstanding) will appoint a
successor Administrative Agent. In each such case, the FCTT Trustee will have
the right to approve the successor Administrative Agent, such approval not to be
unreasonably withheld. If a successor Administrative Agent is not appointed by
the effective date of the predecessor Administrative Agent's resignation or
termination, then the FCTT Trustee will act as successor Administrative Agent.
If the FCTT Trustee is legally unable to act as Administrative Agent, then the
FCTT Trustee will be required to appoint, or petition a court of competent
jurisdiction to appoint, any established institution, having a net worth of not
less than $100,000,000 and whose regular business includes the servicing of
retail automotive leases and selling vehicles at the termination of leases, as
the successor Administrative Agent. (Administrative Agency Agreement, Section
7.3).
Upon appointment, the successor Administrative Agent will assume all of the
rights and obligations of the Administrative Agent under the Administrative
Agency Agreement; provided, however, that no successor Administrative Agent will
have any responsibilities with respect to the purchase of additional Leases and
Leased Vehicles by FCTT or with respect to making Monthly Payment Advances or
Sale Proceeds Advances. (Administrative Agency Agreement, Section 7.3).
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Any compensation payable to a successor Administrative Agent may not be in
excess of that permitted the predecessor Administrative Agent unless the holders
of the EBCs bear such excess costs exclusively. (Administrative Agency
Agreement, Section 7.3).
Any predecessor Administrative Agent will be entitled to reimbursement for
any outstanding Sale Proceeds Advances and Monthly Payment Advances to the
extent funds are available therefor. (Administrative Agency Agreement, Section
7.4).
CUSTODY OF LEASE FILES
The Administrative Agent will be the custodian of the Lease Files
(including certificates of title) for FCTT, including with respect to the Series
1995-1 Assets. The Administrative Agent will be required to maintain accurate
and complete accounts, records, and computer systems pertaining to each Lease
File and to conduct, or cause to be conducted, periodic audits of the Lease
Files and of the related accounts, records, and computer systems.
The Administrative Agent will maintain each Lease File at (i) one of the
offices specified in the Administrative Agency Agreement, (ii) at such other
office (which may be a third party contracted by the Administrative Agent to
hold Lease Files) as the Administrative Agent specifies to the FCTT Trustee by
written notice not later than 90 days after any change in location or (iii) at
one of the offices included in a list delivered to the FCTT Trustee not less
frequently than every 90 days. The Administrative Agent will make available to
the FCTT Trustee, the Lease Trustee, and the Indenture Trustee a list of
locations of the Lease Files, the Lease Files, and the related accounts,
records, and computer systems maintained by the Administrative Agent at such
times as the FCTT Trustee, the Lease Trustee or the Indenture Trustee may
instruct. As soon as practicable after any termination or resignation of the
Administrative Agent, the Administrative Agent will deliver the Lease Files and
the related accounts and records maintained by the Administrative Agent to the
FCTT Trustee or any successor Administrative Agent.
The Administrative Agent as custodian of the Lease Files will indemnify the
FCTT Trustee, the Issuer, and the Indenture Trustee for any and all liabilities
that result from any improper act or omission of the Administrative Agent with
respect to the Lease Files pertaining to the Series 1995-1 Assets. The
Administrative Agent will not be liable for claims resulting from the willful
misfeasance, bad faith, or negligence of the FCTT Trustee with respect to the
Lease Files. (Administrative Agency Agreement, Section 4.4).
REPORTING
On or before the tenth day of each calendar month, the Administrative Agent
will deliver to the FCTT Trustee a certificate containing information relating
to the distribution, on the following Distribution Date (or on the business day
preceding such Distribution Date, if such Distribution Date is a Payment Date),
of Collections from the preceding Collection Period and the information the FCTT
Trustee will provide to the Lease Trustee on such Distribution Date.
(Administrative Agency Agreement, Section 4.9).
On or before April 30th of each year, the Administrative Agent will deliver
to the FCTT Trustee an officer's certificate, dated as of December 31 of the
preceding calendar year, stating that (i) a review of the activities of the
Administrative Agent during the preceding 12-month period and of its performance
under the Administrative Agency Agreement and the Series 1995-1 Supplement has
been made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Administrative Agent has
fulfilled all of its obligations under the Administrative Agency Agreement and
the Series 1995-1 Supplement throughout such period, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof. (Administrative Agency
Agreement, Section 4.10).
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The Administrative Agent will be required to deliver to the FCTT Trustee,
within five business days of having obtained knowledge thereof, written notice
in an officer's certificate of any event which with the giving of notice or
lapse of time, or both, would become an Administrative Agent Event of Default.
(Administrative Agency Agreement, Section 4.10).
On or before April 30 of each year beginning April 30, 1996, a firm of
independent certified public accountants, who may also render other services to
the Administrative Agent or to Ford or any affiliate of either of them, will
deliver a report to the Administrative Agent, the FCTT Trustee, the Lease
Trustee and the Indenture Trustee (with a copy to each Rating Agency then rating
the Notes and the Lease Trust Certificates), stating that such firm has audited
the financial statements of the Administrative Agent for the prior calendar year
and that such audit (i) was made in accordance with generally accepted auditing
standards, (ii) included procedures relating to retail automotive leases
serviced for others in accordance with applicable industry standards, and (iii)
except as described in such report, disclosed no exceptions or errors in the
records relating to the Series 1995-1 Leases serviced that, in the firm's
opinion, should be included in such report. (Administrative Agency Agreement,
Section 4.11).
ADDITIONAL DOCUMENT PROVISIONS
THE LEASE TRUST AGREEMENT
Authority and Duties of the Lease Trustee. The Lease Trustee will
administer the Issuer in the interest of the Lease Trust Certificateholders,
subject to the lien of the Indenture, in accordance with the Lease Trust
Agreement and the other Basic Documents. (Lease Trust Agreement, Section 6.2).
The holders of the Transferor Lease Trust Certificates may, by written
instruction, direct the Lease Trustee in the administration of the Issuer;
provided, that such instruction shall not, as evidenced by an Opinion of
Counsel, materially adversely affect the Noteholders or Lease Trust
Certificateholders. However, the Lease Trustee will not be required to follow
any such instruction if it reasonably determines or is advised by counsel that
so doing (i) is likely to result in liability to the Lease Trustee, (ii) is
contrary to the terms of the Lease Trust Agreement or any other Basic Document,
or (iii) is unlawful. (Lease Trust Agreement, Section 6.3).
The Lease Trustee will not be required to perform any of the obligations of
the Issuer under the Lease Trust Agreement or the other Basic Documents that are
required to be performed by (i) the Administrative Agent under the
Administrative Agency Agreement or the Series 1995-1 Supplement, (ii) the
Transferor under the Transfer Agreement or the Program Operating Lease or (iii)
the Indenture Trustee under the Indenture. (Lease Trust Agreement, Section 7.1).
Restrictions on Actions by Lease Trustee. The Lease Trustee may not (i)
initiate or settle any claim or lawsuit involving the Issuer (unless brought by
the Administrative Agent to collect amounts owed under a Series 1995-1 Lease),
(ii) amend the Indenture where Noteholder consent is required, (iii) amend the
Indenture where Noteholder consent is not required if such amendment materially
adversely affects the Lease Trust Certificateholders or (iv) amend any Basic
Document other than the Indenture if such amendment materially adversely affects
the Lease Trust Certificateholders, unless (a) the Lease Trustee provides 30
days written notice thereof to the Lease Trust Certificateholders and the Rating
Agencies and (b) Lease Trust Certificateholders holding at least 25% of the
aggregate principal balance of the Lease Trust Certificates do not object in
writing to any such proposed amendment within 30 days of such notice. (Lease
Trust Agreement, Section 4.1).
Actions by Lease Trust Certificateholders with Respect to Certain
Matters. The Lease Trustee may not, except upon the occurrence of an
Administrative Agent Event of Default subsequent to the payment in full of the
Notes and in accordance with the written directions of Lease Trust
Certificateholders holding 100% of the aggregate principal balance of the Lease
Trust Certificates (excluding the Transferor Lease Trust Certificates), remove
the Administrative Agent with respect
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to the Series 1995-1 Assets or appoint a successor Administrative Agent with
respect thereto; provided, however, that the Lease Trustee will not be required
to follow any directions of the Lease Trust Certificateholders if so doing would
be contrary to any obligation of the Lease Trustee or the Issuer. The Lease
Trustee may not, other than following a bankruptcy and dissolution of the Issuer
or Ford Credit Leasing, sell the Series 1995-1 Certificates. (Lease Trust
Agreement, Sections 4.2 and 4.4).
The right of the Transferor or Lease Trust Certificateholders to take any
action affecting the Lease Trust Estate will be subject to the rights of the
Indenture Trustee under the Indenture.
Resignation and Removal of the Lease Trustee. The Lease Trustee may resign
at any time upon written notice to the Administrative Agent, the Transferor and
the Lease Trust Certificateholders, whereupon the Transferor will be obligated
to appoint a successor Lease Trustee. The Transferor or the Lease Trust
Certificateholders holding not less than a majority of the aggregate principal
balance of the Lease Trust Certificates may remove the Lease Trustee if the
Lease Trustee ceases to be eligible, becomes insolvent or becomes legally unable
to act. Upon removal of the Lease Trustee, the Transferor or the Lease Trust
Certificateholders holding not less than a majority of the aggregate principal
balance of the Lease Trust Certificates will appoint a successor Lease Trustee.
The Transferor will be required to deliver written notice to the Rating Agencies
of any resignation or removal of the Lease Trustee. (Lease Trust Agreement,
Section 10.2).
The Lease Trustee, and any successor thereto, must at all times (i) be able
to exercise corporate trust powers, (ii) be subject to supervision or
examination by federal or state authorities, (iii) have a combined capital and
surplus of $50,000,000 and (iv) have a long-term debt rating of investment grade
by each of the Rating Agencies or be otherwise acceptable to the Rating
Agencies. (Lease Trust Agreement, Section 10.1). Any co-trustee or separate
trustee appointed for the purpose of meeting applicable state requirements will
not be required to meet these eligibility requirements. (Lease Trust Agreement,
Section 10.5).
Termination. The Lease Trust Agreement will terminate (i) upon the final
distribution of all moneys or other property or proceeds of the Lease Trust
Estate in accordance with the terms of the Indenture and the final distribution
on the Transferor Lease Trust Certificates pursuant to the Lease Trust
Agreement, (ii) upon the occurrence of certain events of bankruptcy, insolvency,
receivership or liquidation with respect to the Transferor or Ford Credit
Leasing, or (iii) upon the termination of the Transferor in accordance with the
terms of the Basic Documents. Upon termination of the Lease Trust Agreement, the
Lease Trustee will direct the Indenture Trustee to sell the assets of the Lease
Trust Estate, other than amounts on deposit in the Payment Account, in a
commercially reasonable manner and on commercially reasonable terms. (Lease
Trust Agreement, Sections 9.1 and 9.2). The Indenture Trustee will apply the
proceeds of such sale to pay amounts owed to the Indenture Trustee and interest
on and principal of the Notes and Lease Trust Certificates in accordance with
the terms of the Indenture. See "Description of the Notes -- Indenture --
Remedies."
Liabilities and Indemnification. The holders of the Transferor Lease Trust
Certificates will be directly liable to any injured party for any claims against
the Issuer, as if the Issuer were a partnership and the holders of the
Transferor Lease Trust Certificates were general partners thereof. (Lease Trust
Agreement, Section 2.7). The holders of the Transferor Lease Trust Certificates
will indemnify the Lease Trustee for any expenses incurred by the Lease Trustee
in the performance of its duties under the Lease Trust Agreement. The holders of
the Transferor Lease Trust Certificates will not be entitled to make any claim
upon the Lease Trust Estate for the payment of any such indemnified expenses
(Lease Trust Agreement, Section 8.2). The holders of the Transferor Lease Trust
Certificates will not indemnify the Lease Trustee for expenses resulting from
the willful misconduct, bad faith or negligence of the Lease Trustee, or for the
inaccuracy of any representation or warranty of the Lease Trustee in the Lease
Trust Agreement. The Lease Trustee will not be liable for (i) any error of
judgment made by an officer of the Lease Trustee, (ii) any action taken or
omitted to be taken in accordance with the instructions of any Lease Trust
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Certificateholder, the Indenture Trustee, the Transferor or the Administrative
Agent, (iii) the interest on or principal of the Notes or the Lease Trust
Certificates and (iv) the default or misconduct of the Administrative Agent, the
Transferor, or the Indenture Trustee. (Lease Trust Agreement, Section 7.1).
REPRESENTATIONS, WARRANTIES AND COVENANTS
The Administrative Agent, in the Series 1995-1 Supplement, and each of Ford
Credit and Ford Credit Leasing, in the Asset Contribution Agreement, will
represent and warrant that each Series 1995-1 Lease and Series 1995-1 Leased
Vehicle meet the Specific Eligibility Criteria set forth in "The Leases and the
Leased Vehicles -- Eligibility Criteria" and certain other eligibility criteria
(the "General Eligibility Criteria") including, among other things, that (i)
each Series 1995-1 Leased Vehicle was titled in the name of "Ford Credit Titling
Trust," "Ford Credit Titling Trust, Comerica Bank, Trustee" or such
substantially similar words acceptable to the relevant governmental authority;
(ii) the Residual Value of each Series 1995-1 Leased Vehicle does not exceed an
amount established by the Administrative Agent consistent with its policies and
practices regarding the setting of residual values as applied with respect to
closed-end retail automobile and light-duty truck leases; (iii) all of the
originating Dealer's right, title and interest in such Series 1995-1 Lease and
the related Series 1995-1 Leased Vehicle was validly assigned by such Dealer to
FCTT; (iv) each Series 1995-1 Lease was originated by a Dealer in the ordinary
course of its business and in compliance with the Administrative Agent's normal
credit and collection policies and practices and contains customary and
enforceable provisions; (v) at its inception, and at the Series 1995-1 Cut-Off
Date, each Series 1995-1 Lease complied in all material respects with all
requirements of applicable federal, state, and local laws and regulations; (vi)
each Series 1995-1 Lease represents the genuine, legal, valid and binding
payment obligation in writing of the related Obligor, enforceable by the holder
thereof in accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and general principles of equity; (vii) none of the
Series 1995-1 Leases is an obligation of the United States of America or any
state or of any agency, department, or instrumentality of the United States of
America or any state; (viii) as of the date of the Series Specification Notice
with respect to Series 1995-1, no Series 1995-1 Lease had been satisfied,
subordinated, rescinded, cancelled or terminated; (ix) no provision (other than
the assessment of a security deposit or reconditioning reserve) of a Series
1995-1 Lease has been waived; (x) no right of rescission, setoff, counterclaim,
or defense has been asserted or threatened with respect to any Series 1995-1
Lease; (xi) each Obligor, to the best knowledge of the Administrative Agent, has
obtained or agreed to obtain physical damage insurance and liability insurance
covering the Series 1995-1 Leased Vehicle as required under the related Series
1995-1 Lease; (xii) no Series 1995-1 Asset has been sold, transferred, assigned,
or pledged by any Dealer to any person or entity other than FCTT; (xiii) the
FCTT Trustee, for the benefit of the Issuer, has good and marketable title to
each Series 1995-1 Lease and each Series 1995-1 Leased Vehicle, free and clear
of all liens, encumbrances, security interests, and rights of others, including
liens or claims for work, labor or material relating to such Series 1995-1
Leased Vehicle; (xiv) no Series 1995-1 Leased Vehicle or Series 1995-1 Lease is
subject to the laws of, and no Series 1995-1 Lease was originated in, any
jurisdiction under which the sale, transfer, and assignment of such Series
1995-1 Lease and Series 1995-1 Leased Vehicle to FCTT or of a beneficial
interest in such Series 1995-1 Lease or Series 1995-1 Leased Vehicle pursuant to
transfers of Series 1995-1 Certificates is unlawful, void, or voidable; (xv) no
Dealer has entered into any agreement with any Obligor that prohibits, restricts
or conditions the assignment of any portion of the related Series 1995-1 Lease;
(xvi) all filings (including, without limitation, UCC filings) necessary in any
jurisdiction to give Comerica, on behalf of FCTT, a first perfected ownership
interest in each Series 1995-1 Lease have been made; (xvii) each Series 1995-1
Lease constitutes "chattel paper" as defined in the UCC; (xviii) there is only
one original of each Series 1995-1 Lease, which is held by the Administrative
Agent on behalf of FCTT; and (xix) each Series 1995-1 Lease is a "true lease"
for federal income tax purposes. (Series 1995-1 Supplement,
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Section 3.1; Asset Contribution Agreement, Section 3.2). See "Description of
Administrative Agency Agreement -- Administrative Purchases" for circumstances
in which a breach of the foregoing representations will cause a purchase of the
beneficial interest in a Series 1995-1 Lease and Series 1995-1 Leased Vehicle.
AMENDMENT PROVISIONS
General. So long as any of the Notes are outstanding, the Issuer's rights
in the Series 1995-1 Certificates will be subject to the lien of the Indenture,
and after the Notes have been paid in full will be subject to the Program
Operating Lease. The Indenture Trustee will be the holder of the Series 1995-1
Certificates for purposes of determining whether any proposed amendment to the
FCTT Agreement, the Administrative Agency Agreement, the Series 1995-1
Supplement and the RCL Trust Agreement will materially adversely affect the
interests of the holder of the Series 1995-1 Certificates.
The FCTT Agreement, the RCL Trust Agreement and the Administrative Agency
Agreement (including the Series 1995-1 Supplement) each may be amended without
the consent of the holder of the Series 1995-1 Certificates; provided, however,
(x) that such amendment may not, as evidenced by an Opinion of Counsel,
materially adversely affect the interests of the holder of the Series 1995-1
Certificates, (y) as confirmed by each Rating Agency, that such amendment may
not cause the then current rating assigned to either Class of Notes or the Lease
Trust Certificates to be withdrawn or reduced and (z) an Opinion of Counsel as
to certain tax matters is delivered.
The Program Operating Lease and Asset Contribution Agreement each may be
amended without the consent of the Noteholders or Lease Trust
Certificateholders; provided, however, (x) that such amendment may not, as
evidenced by an Opinion of Counsel, materially adversely affect the interests of
the Noteholders or Lease Trust Certificateholders, (y) as confirmed by each
Rating Agency, that such amendment may not cause the then current rating
assigned to either Class of Notes or the Lease Trust Certificates to be
withdrawn or reduced and (z) an Opinion of Counsel as to certain tax matters is
delivered.
Amendment of the Lease Trust Agreement. The Lease Trust Agreement may be
amended by the Transferor and the Lease Trustee, with prior written notice to
the Rating Agencies, without the consent of any of the Noteholders or the Lease
Trust Certificateholders, to cure any ambiguity or defect therein, to correct or
supplement any provisions therein, to add any provisions thereto or change in
any manner or eliminate any of the provisions therein or to modify in any manner
the rights of the Noteholders or the Lease Trust Certificateholders; provided,
however, that (x) no such amendment may, as evidenced by an Opinion of Counsel,
materially adversely affect the interests of the Indenture Trustee, any
Noteholder or Lease Trust Certificateholder, (y) as confirmed by each Rating
Agency, cause the then current rating of either Class of Notes or the Lease
Trust Certificates to be withdrawn or reduced or (z) an Opinion of Counsel as to
certain tax matters is delivered. (Lease Trust Agreement, Section 12.1).
The Lease Trust Agreement may be amended by the Transferor and the Lease
Trustee, with prior written notice to each Rating Agency, with the consent of
the Noteholders holding not less than a majority of the aggregate principal
balance of each Class of Notes and, to the extent affected thereby, the consent
of Lease Trust Certificateholders holding not less than a majority of the
aggregate principal balance of the Lease Trust Certificates, to add any
provisions thereto or change in any manner or eliminate any of the provisions
therein or modify in any manner the rights of the Noteholders or the Lease Trust
Certificateholders; provided, that (x) no such amendment may (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of
distributions that are required to be made for the benefit of the Noteholders or
the Lease Trust Certificateholders and (ii) reduce the percentage of the
aggregate principal balance of each Class of Notes or the aggregate principal
balance of the Lease Trust Certificates required to consent to any such
amendment, without the consent of the holders of 100% of all outstanding Lease
Trust Certificates
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(other than the Transferor Lease Trust Certificates) and (y) by an Opinion of
Counsel as to certain tax matters is delivered. (Lease Trust Agreement, Section
12.1).
BANKRUPTCY PROVISIONS
Ford Credit Leasing. The FCTT Trustee, the Lease Trustee, the Transferor,
the Indenture Trustee, the RCL Trustee, Ford Credit, the Administrative Agent,
and each holder of an SBC, and each Lease Trust Certificateholder (other than
Ford Credit Leasing) by accepting a Lease Trust Certificate and each Noteholder
by accepting a Note, will covenant that for a period of one year and one day
after payment in full of all amounts due to each holder of an SBC, they will not
institute, or join in instituting, any bankruptcy, reorganization, insolvency or
liquidation proceeding, or other similar proceeding against Ford Credit Leasing
without the consent of 100% of the holders of the SBCs (excluding Ford Credit
Leasing, the Transferor or any of their affiliates). (RCL Trust Agreement,
Section 10.8; Administrative Agency Agreement, Section 8.9; FCTT Agreement,
Section 9.8; Lease Trust Agreement, Section 12.8).
FCTT. The FCTT Trustee and the Administrative Agent each will not have the
power to commence a voluntary bankruptcy proceeding with respect to FCTT unless
each holder of an EBC (initially Ford Credit and Ford Credit Leasing) and each
holder of an SBC approves such commencement and certifies to the FCTT Trustee or
the Administrative Agent, as the case may be, that it reasonably believes that
FCTT is insolvent. (FCTT Agreement, Section 9.8; Administrative Agency
Agreement, Section 8.9).
The FCTT Trustee, the Lease Trustee, the Transferor, the Indenture Trustee,
the RCL Trustee, Ford Credit, Ford Credit Leasing, the Administrative Agent,
each holder of an EBC and each holder of an SBC, will covenant that for a period
of one year and one day after payment in full of all distributions owing to each
holder of an SBC, they will not institute, or join in instituting, any
bankruptcy, reorganization, insolvency or liquidation proceeding, or other
similar proceeding against FCTT without the consent of 100% of the holders of
the SBCs (excluding Ford Credit Leasing, the Transferor or any of their
affiliates). (RCL Trust Agreement, Section 10.8; Administrative Agency
Agreement, Section 8.9; FCTT Agreement, Section 9.8; Lease Trust Agreement,
Section 12.8).
The Transferor. The RCL Trustee will not commence a voluntary bankruptcy
proceeding with respect to the Transferor unless it reasonably believes that the
Transferor is insolvent and each beneficiary of the Transferor approves such
commencement and certifies to the RCL Trustee that it reasonably believes that
the Transferor is insolvent. (RCL Trust Agreement, Section 10.8).
The Lease Trustee, the Transferor, the Indenture Trustee, each Lease Trust
Certificateholder by accepting a Lease Trust Certificate and each Noteholder by
accepting a Note, will covenant not to institute or join in the institution of
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other similar proceeding against the Transferor for a period of
one year and a day after the Series 1995-1 Certificates have been paid in full;
provided, however, that 100% of the Noteholders or, if the Notes have been paid
in full, 100% of the Lease Trust Certificateholders (excluding Ford Credit
Leasing, the Transferor or any of their affiliates) may at any time institute,
or join in instituting, any bankruptcy, reorganization, insolvency or
liquidation proceeding against the Transferor. (Lease Trust Agreement, Section
12.8; Indenture, Section 11.16).
The Issuer. The Lease Trustee will not commence a voluntary bankruptcy
proceeding with respect to the Issuer unless each Lease Trust Certificateholder
and each Noteholder approves such commencement and certifies to the Lease
Trustee that it reasonably believes that the Issuer is insolvent. (Lease Trust
Agreement, Section 4.3).
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The Lease Trustee, the Transferor, the Indenture Trustee and each Lease
Trust Certificateholder by accepting a Lease Trust Certificate and each
Noteholder by accepting a Note, will covenant not to institute, or join in
instituting, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding, against the Issuer for a period of one year and a day
after the Series 1995-1 Certificates have been paid in full; provided, however,
that 100% of the Noteholders may institute, or join in instituting any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding
against the Issuer. (Lease Trust Agreement, Section 12.8; Indenture, Section
11.16).
FEES AND EXPENSES
FCTT Trustee. On each Payment Date, the FCTT Trustee will be entitled to a
fee for its services with respect to Series 1995-1 Assets, which shall be paid
by the Administrative Agent on behalf of the holders of the EBCs. The amount of
such fee will equal a pro rata percentage of the total fees and expenses payable
to the FCTT Trustee with respect to all FCTT Assets (excluding any extraordinary
items relating only to specific Series or the EBCs), the amount of which will be
agreed upon from time to time by the FCTT Trustee and the holders of the EBCs.
(FCTT Agreement, Section 6.8; Series 1995-1 Supplement, Section 4.1).
The Administrative Agent. On each Payment Date, as compensation for
servicing the Series 1995-1 Assets and administering the distribution of funds
in respect thereof, the Administrative Agent will be paid the Administrative
Agent Fee (equal to the sum, for each of the three Collection Periods preceding
such Payment Date, of the product of 1/12 of 1.00% and the Pool Balance as of
the beginning of each such Collection Period) from the Total Available Funds
distributed on such Payment Date. The Administrative Agent also will receive the
Supplemental Administrative Agent Fee and certain other fees collected in
connection with Series 1995-1 Assets. (Administrative Agency Agreement, Section
4.8; Series 1995-1 Supplement, Section 4.3).
The Administrative Agent also will receive fees with respect to the
servicing and administration of the Non-Specified Assets and other Series
Specified Assets from payments and proceeds of such Non-Specified Assets and
other Series Specified Assets.
The Administrative Agent will pay all expenses incurred by it in the
performance of its duties under the Administrative Agency Agreement, including
fees and disbursements of independent accountants, taxes imposed on the
Administrative Agent and expenses incurred in connection with distributions and
reports to the FCTT Trustee, the Lease Trustee and the Indenture Trustee. The
Administrative Agent will pay the fees and expenses of the Lease Trustee, the
Indenture Trustee and the FCTT Trustee. The Administrative Agent will be
required to pay all expenses relating to the sale or disposition of any Series
1995-1 Leased Vehicle after the termination of the related Series 1995-1 Lease.
(Administrative Agency Agreement, Section 4.13).
The RCL Trustee. The RCL Trustee will receive such fees as Ford Credit,
Ford Credit Leasing and the RCL Trustee from time to time agree and will be
reimbursed for all reasonable expenses. Such fees and reimbursements will be
paid first from amounts available for distribution to the beneficiaries of the
Transferor and second, to the extent such amounts are insufficient, directly by
Ford Credit and Ford Credit Leasing. (RCL Trust Agreement, Section 6.9).
The Lease Trustee. The Administrative Agent will pay the Lease Trustee such
fees as have been agreed among the Transferor, the Administrative Agent and the
Lease Trustee and the Administrative Agent will reimburse the Lease Trustee for
all reasonable expenses. The Transferor will not be entitled to be reimbursed
from the Lease Trust Estate for the payment of such expenses. (Lease Trust
Agreement, Section 8.1).
GOVERNING LAW
The FCTT Agreement will be governed by the laws of the State of Michigan.
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The Administrative Agency Agreement, the Series 1995-1 Supplement, the
Asset Contribution Agreement, the Transfer Agreement, the Program Operating
Lease, the Limited RV Guaranty and the Indenture each will be governed by the
laws of the State of New York.
The RCL Trust Agreement and the Lease Trust Agreement each will be governed
by the laws of the State of Delaware.
RATINGS OF THE NOTES
It is a condition to the issuance of the Notes that they be rated in the
highest investment rating category by at least one Rating Agency. The ratings of
the Notes could be downgraded in the event of any unfunded ERISA liability of
the Ford affiliated group.
The rating assigned to either Class of Notes is not a recommendation to
purchase, hold or sell such Class of Notes, inasmuch as such rating does not
comment as to market price of suitability for a particular investor. There is no
assurance that the rating with respect to either Class of Notes will remain for
any given period of time or that the rating will not be lowered or withdrawn
entirely by such Rating Agency if in its judgment circumstances in the future so
warrant.
CERTAIN LEGAL ASPECTS OF FCTT
AND THE SERIES 1995-1 CERTIFICATES
SERIES 1995-1 CERTIFICATES
The Series 1995-1 Certificates will be issued pursuant to the FCTT
Agreement and will evidence a beneficial interest in FCTT and the Series 1995-1
Assets. The Series 1995-1 Certificates will not represent a direct interest in
the Series 1995-1 Assets or any other assets of FCTT the beneficial interest in
which is represented by the EBCs or any other Series which may be issued
pursuant to the FCTT Agreement. Pursuant to the FCTT Agreement, the Lease
Trustee with the consent of the Indenture Trustee and the Transferor (or, upon
the occurrence of an Event of Default, the Indenture Trustee) or the Transferor,
with the consent of the Indenture Trustee and the Lease Trustee, may at any time
direct Comerica to distribute the Series 1995-1 Assets to the Issuer. Any such
distribution will be at the expense of the Transferor, and the Series 1995-1
Assets will remain subject to the lien of the Indenture and the rights of the
Transferor under the Program Operating Lease. Except in certain limited
circumstances as described in "Special Considerations -- Structural
Considerations," proceeds from assets of FCTT other than the Series 1995-1
Assets will not be available to make payments with respect to the Series 1995-1
Certificates or to cover expenses and liabilities of FCTT allocable to the
Series 1995-1 Assets. See "FCTT -- Exchangeable Beneficial Certificates and
Specified Beneficial Certificates."
INSOLVENCY RELATED MATTERS
Each of Ford Credit, Ford Credit Leasing, FCTT (or the FCTT Trustee when
acting on its behalf) and the Transferor (or the RCL Trustee when acting on its
behalf) has taken steps in structuring the transactions described herein and has
undertaken to act throughout the life of such transactions in a manner intended
to ensure that the voluntary or involuntary commencement of a case or proceeding
by or against Ford Credit under the Bankruptcy Code or similar applicable state
laws ("Insolvency Laws") will not result in the commencement of a similar case
or proceeding under such Insolvency Laws with respect to any of Ford Credit
Leasing, FCTT or the Transferor, and that the separate legal existence of each
of Ford Credit Leasing, FCTT and the Transferor will be respected such that none
of their respective assets and liabilities will be consolidated with the assets
and liabilities of Ford Credit.
Ford Credit Leasing has been formed as a separate, limited-purpose
corporate subsidiary of Ford Credit pursuant to a certificate of incorporation
containing certain limitations (including restrictions on the nature of Ford
Credit Leasing's business and its ability to incur indebtedness, a
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requirement that it have at least two "Independent Directors" and a restriction
on its ability to voluntarily commence a case or proceeding under any Insolvency
Law without the unanimous affirmative vote of all of its directors, including
each Independent Director). Ford Credit Leasing has represented that it has no
intention of voluntarily commencing a case or proceeding under any Insolvency
Law for so long as it is solvent and it does not reasonably foresee becoming
insolvent.
The activities of FCTT are limited by the terms of the FCTT Agreement which
also provides that FCTT is not intended to be and shall not constitute a
"business trust" within the meaning of the Bankruptcy Code (which provision, if
respected, would result in FCTT not being eligible to become a debtor in a case
under the Bankruptcy Code). To the extent that FCTT may be eligible for relief
under any Insolvency Law, the FCTT Trustee is not authorized to commence a case
or proceeding thereunder without the consent of each holder of an EBC and each
holder of an SBC. Each of the FCTT Trustee, Ford Credit, Ford Credit Leasing and
the holders from time to time of the Series 1995-1 Certificates have agreed not
to institute a case or proceeding against FCTT under any Insolvency Law for a
period of one year and a day after payment in full of all distributions to
holders of SBCs under the FCTT Agreement.
The activities of the Transferor are limited by the terms of the RCL Trust
Agreement. The Transferor has been formed as a Delaware business trust pursuant
to the applicable statute. To the extent that the Transferor may be eligible for
relief under any Insolvency Law, the RCL Trustee is not authorized to commence a
case or proceeding thereunder without the consent of Ford Credit and Ford Credit
Leasing, as the sole beneficiaries of the Transferor. Each of the RCL Trustee,
Ford Credit and Ford Credit Leasing has agreed not to institute a case or
proceeding against the Transferor under any Insolvency Law for a period of one
year and a day after payment in full of the Series 1995-1 Certificates.
There can be no assurance, however, that the limitations on the activities
of Ford Credit Leasing, FCTT and the Transferor, as well as the restrictions on
their respective abilities to obtain relief under Insolvency Laws or lack of
eligibility thereunder, as described above, would prevent a court from
concluding that their respective assets and liabilities should be consolidated
with those of Ford Credit if Ford Credit becomes the subject of a case or
proceeding under any Insolvency Law. Skadden, Arps, Slate, Meagher & Flom will
deliver an opinion based on a reasoned analysis of analogous case law (although
there is no precedent based on directly similar facts) to the effect that,
subject to certain facts, assumptions and qualifications specified therein,
under present reported decisional authority and statutes applicable to federal
bankruptcy cases, if Ford Credit were to become the subject of a case under the
Bankruptcy Code, it would not be a proper exercise by a court of its equitable
discretion to disregard the separate legal existence of any of Ford Credit
Leasing, FCTT or the Transferor from that of Ford Credit and to require the
consolidation of the assets and liabilities of any of Ford Credit Leasing, FCTT
or the Transferor with the assets and liabilities of Ford Credit. Among other
things, such opinion will assume that each of Ford Credit Leasing, FCTT (or the
FCTT Trustee when acting on its behalf) and the Transferor (or the RCL Trustee
when acting on its behalf) will follow certain procedures in the conduct of its
affairs, including maintaining records and books of account separate from those
of Ford Credit, refraining from commingling its respective assets with those of
Ford Credit, doing business from an office separate from that of Ford Credit and
refraining from holding itself out as having agreed to pay, or being liable for,
the debts of Ford Credit. In addition, such opinion will assume that other than
as expressly provided by the FCTT Agreement, the Administrative Agency Agreement
and the Limited RV Guaranty (each of which contains terms and conditions
consistent with those that would be arrived at on an arms' length basis between
unaffiliated entities in the belief of the parties thereto), Ford Credit will
not generally guaranty the obligations of Ford Credit Leasing, FCTT or the
Transferor to third parties, and will not conduct the day-to-day business or
activities of any thereof other than in its capacity as Administrative Agent
acting under and in accordance with the Administrative Agency Agreement. Each of
Ford Credit, Ford Credit Leasing, FCTT and the Transferor intends to follow and
has represented to such counsel that it will follow these and other
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procedures related to maintaining the separate identity and legal existences of
each of Ford Credit Leasing, FCTT and the Transferor. Such a legal opinion,
however, is not binding on any court.
If a case or proceeding under any Insolvency Law were to be commenced by or
against any of Ford Credit Leasing, FCTT or the Transferor, or if a court were
to conclude in favor of the consolidation of the assets and liabilities of any
thereof with those of Ford Credit, or if an attempt were made to litigate any of
the foregoing issues, delays in distributions on the Series 1995-1 Certificates
(and possible reductions in the amount of such distributions) to the Issuer
(either directly or, if the Program Operating Lease remains in effect,
indirectly to the extent resulting in delayed or reduced payments from the
Transferor to the Issuer under the Program Operating Lease), and therefore to
the Noteholders, could occur. In addition, if a bankruptcy or insolvency occurs
with respect to Ford Credit Leasing, the FCTT Agreement provides that FCTT will
be terminated, and if the Transferor or the Issuer becomes bankrupt or
insolvent, or is terminated (which could occur as a result of the bankruptcy or
insolvency of Ford Credit Leasing or the bankruptcy, insolvency or termination
of the Transferor), the FCTT Agreement provides that FCTT will be terminated
with respect to holding the Series 1995-1 Assets. In each case the FCTT Trustee
is required to distribute the Series 1995-1 Assets to the holder of the Series
1995-1 Certificates. Because the Issuer has pledged its rights to the Series
1995-1 Certificates to the Indenture Trustee, such distribution would be made to
the Indenture Trustee who would be responsible for retitling the Series 1995-1
Leased Vehicles. The cost of such retitling would reduce the amounts payable
from the Series 1995-1 Assets which are available for payments of interest on
and principal of the Notes, and in such event Noteholders could suffer a loss on
their investment.
Each of Ford Credit and Ford Credit Leasing will treat its conveyance of
the Series 1995-1 Certificates to the Transferor as an absolute transfer of all
of its interest therein for all purposes, including without limitation tax and
financial accounting purposes. If such conveyances constitute absolute
transfers, the Series 1995-1 Certificates and the proceeds thereof would not be
part of Ford Credit's or Ford Credit Leasing's bankruptcy estate under Section
541 of the Bankruptcy Code should Ford Credit or Ford Credit Leasing become the
subject of a case thereunder. However, if a case or proceeding under any
Insolvency Law were commenced by or against Ford Credit or Ford Credit Leasing,
and a creditor, receiver or trustee-in-bankruptcy of Ford Credit or Ford Credit
Leasing were to take the position that the transfer of the Series 1995-1
Certificates by Ford Credit and Ford Credit Leasing to the Transferor should
instead be treated as a pledge of such Series 1995-1 Certificates to secure a
borrowing by Ford Credit and Ford Credit Leasing, delays in payments of proceeds
of such Series 1995-1 Certificates to the Issuer, and therefore to the
Noteholders, could occur or (should the court rule in favor of such creditor,
receiver or trustee-in-bankruptcy) reductions in the amount of such payments
could result. Skadden, Arps, Slate, Meagher & Flom will deliver an opinion to
the effect that, subject to certain facts, assumptions and qualifications
specified therein, in the event that either Ford Credit or Ford Credit Leasing
were to become the subject of a case under the Bankruptcy Code subsequent to the
transfer of the Series 1995-1 Certificates to the Transferor, the transfer of
the Series 1995-1 Certificates from Ford Credit and Ford Credit Leasing would be
respected as an absolute transfer (that is, a "true sale") of the Series 1995-1
Certificates from Ford Credit and Ford Credit Leasing to the Transferor, and the
Series 1995-1 Certificates and the proceeds thereof would not be included in
Ford Credit's or Ford Credit Leasing's bankruptcy estate pursuant to Section 541
of the Bankruptcy Code. As indicated above, such a legal opinion is not binding
on any court.
As a precautionary measure, the Transferor will take the actions requisite
to obtaining a perfected security interest in the Series 1995-1 Certificates as
against Ford Credit and Ford Credit Leasing. Accordingly, if the conveyances of
the Series 1995-1 Certificates by Ford Credit and Ford Credit Leasing to the
Transferor were not respected as absolute transfers, the Transferor (and
ultimately the Issuer and the Indenture Trustee as successors in interest)
should be treated as a secured creditor of Ford Credit and Ford Credit Leasing,
although a case or proceeding under any Insolvency Law with respect to Ford
Credit or Ford Credit Leasing could result in delays or
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reductions in distributions under the Series 1995-1 Certificates as indicated
above notwithstanding such perfected security interest.
In the event that Ford Credit were to become subject to a case under the
Bankruptcy Code, certain payments made within one year of the commencement of
such case may be recoverable by Ford Credit as debtor-in-possession or by a
creditor or a trustee in bankruptcy as a preferential transfer from Ford Credit.
These payments include payments made by Ford Credit under the Limited RV
Guaranty and the portion of payments of Administrative Purchase Amounts
allocable to Ford Credit in respect of the purchase of beneficial interests in
certain Series 1995-1 Assets as to which an uncured breach of certain
representations and warranties or certain servicing covenants has occurred. See
"Description of the Notes -- Limited RV Guaranty" and "Description of the
Administrative Agency Agreement -- Administrative Purchases."
In addition, the commencement of a case or proceeding under any Insolvency
Law with respect to Ford Credit is an Administrative Agent Event of Default, and
if so directed by the holders of the Series 1995-1 Certificates (which for such
purpose will be the Indenture Trustee so long as the Notes are outstanding),
Ford Credit may be removed as the Administrative Agent, which may have an
adverse impact on timely payments to Noteholders. However, if the commencement
of such a case or proceeding were the only default, Ford Credit (or its
trustee-in bankruptcy) may have the power to prevent any such removal. See
"Description of the Administrative Agency Agreement -- Administrative Agent
Events of Default" and "-- Removal of the Administrative Agent."
INSURANCE
Each Obligor is required to maintain liability, collision and comprehensive
insurance coverage in certain amounts on its Leased Vehicle at all times during
the term of the related Lease. The cost of such insurance is borne solely by the
Obligor. Failure to comply with stipulated insurance requirements may result in
early termination of the Lease.
The failure of Obligors to maintain the required insurance coverage for
claims arising from injuries caused by the Series 1995-1 Leased Vehicles could
result in reductions in distributions on the Series 1995-1 Certificates and
losses to Noteholders on their investments.
To protect against such losses, Ford Credit self-insures against the first
$5 million per occurrence for property damage or personal liability suffered by
third persons caused by any vehicle owned by Ford Credit or FCTT. Additionally,
Ford maintains excess insurance policies which name FCTT as an additional
insured party. These policies cover claims in excess of $5 million per
occurrence (together with the self-insurance of Ford Credit, the "Contingent and
Excess Liability Insurance"). The Administrative Agent will covenant that, so
long as the Series 1995-1 Certificates are outstanding, it will (i) maintain or
cause to be maintained Contingent and Excess Liability Insurance with respect to
third party claims relating to the Series 1995-1 Leased Vehicles, FCTT or
Comerica in such amounts as it deems reasonable and prudent and (ii) not amend
or terminate any such Contingent and Excess Liability Insurance unless (x) after
giving effect to such amendment or termination, there remains coverage of at
least $25 million per occurrence and $50 million annually in the aggregate or
(y) as confirmed by each Rating Agency, such amendment or termination will not
cause the rating of any of the Notes or Lease Trust Certificates to be reduced
or withdrawn. To the extent the Contingent and Excess Liability Insurance is
insufficient to cover the full amount of any claims and no third party
reimbursement for such claims is available and Ford Credit and Ford Credit
Leasing fail to perform their obligations to indemnify the Issuer, the
Noteholders could incur a loss on their investment to the extent that payment of
such claims reduce the amounts otherwise distributable to the Noteholders from
the Series 1995-1 Certificates.
In the event that a Series 1995-1 Leased Vehicle is damaged, the failure of
the related Obligor to maintain the required collision insurance coverage could
result in a reduction of amounts distributable with respect to the related
Series 1995-1 Assets and therefore a reduction in the aggregate amount
distributable on the Series 1995-1 Certificates. In the event that collision
coverage is
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exhausted and no third-party reimbursement for such damage to a Series 1995-1
Leased Vehicle is available, the Noteholders could incur a loss on their
investment.
Ford Credit provides Obligors with Guaranteed Automobile Protection ("GAP")
coverage on Leased Vehicles, including the Series 1995-1 Leased Vehicles. In the
event a Leased Vehicle is destroyed or stolen, GAP coverage would reimburse the
Obligor for the difference between the insurance valuation of the Leased Vehicle
and the remaining amount required to be paid under the Lease.
CERTAIN LEGAL ASPECTS OF THE LEASES
AND LEASED VEHICLES
UCC FILINGS
The Series 1995-1 Certificates are either certificated securities or
general intangibles under the UCC. To the extent that the Series 1995-1
Certificates are certificated securities, the Indenture Trustee has perfected
its interest by possession. To the extent that the Series 1995-1 Certificates
are general intangibles and the transfer thereof is deemed to be a transfer for
security, the Transferor will file UCC-1 financing statements against both Ford
Credit and Ford Credit Leasing to perfect its interest in such Series 1995-1
Certificates. The Transferor has assigned its perfected security interest to the
Issuer and the Indenture Trustee, and the Issuer in turn will assign its
interest to the Indenture Trustee. Financing statements covering the Series
1995-1 Certificates will also be filed naming (i) the Transferor as debtor and
the Issuer as secured party, which financing statement will be assigned to the
Indenture Trustee, (ii) the Transferor as debtor and the Indenture Trustee as
secured party and (iii) the Issuer as debtor and the Indenture Trustee as
secured party.
The FCTT Assets consist principally of the Leases and the ownership
interest in the Leased Vehicles (subject to the rights of the Obligors under the
Leases). To the extent that the Series 1995-1 Certificates were viewed as
representing a transfer of the assets of FCTT, the Series 1995-1 Leases would be
"chattel paper" as defined in the UCC. Pursuant to the UCC a non-possessory
security interest in chattel paper may be perfected by filing a UCC-1 financing
statement with the appropriate filing office in the state where the debtor has
its chief executive office. Accordingly, as a precaution, UCC-1 financing
statements relating to the Series 1995-1 Leases will be filed naming: (i) FCTT
as debtor and Ford Credit and Ford Credit Leasing as secured parties, which
financing statements will be assigned to the Transferor, the Issuer and then the
Indenture Trustee; (ii) each of Ford Credit and Ford Credit Leasing as debtors
and the Transferor as secured party, which financing statement has been assigned
to the Issuer and then the Indenture Trustee; (iii) the Transferor as debtor and
the Issuer as secured party, which financing statement has been assigned to the
Indenture Trustee, (iv) the Transferor as debtor and the Indenture Trustee as
secured party and (v) the Issuer as debtor and the Indenture Trustee as secured
party. Perfection and the effect of perfection or non-perfection of a security
interest in the Series 1995-1 Leased Vehicles are governed by the certificate of
title statutes of the states in which such Series 1995-1 Leased Vehicles are
located. Because of the administrative burden and expense of perfecting an
interest in motor vehicles under the certificate of title statutes in
California, New York and Pennsylvania, the Indenture Trustee's interest in the
Series 1995-1 Leased Vehicles will be unperfected, and if the transfer of the
Series 1995-1 Certificates were viewed as a transfer of the Series 1995-1
Assets, the Indenture Trustee would only have a perfected security interest in
the Series 1995-1 Leases. However, the Indenture Trustee's security interest in
the Series 1995-1 Leases could be subordinate to persons who take actual
possession of the Series 1995-1 Leases without knowledge of such security
interest. The Series 1995-1 Leases will not be stamped to indicate these
precautionary security arrangements.
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VICARIOUS TORT LIABILITY
The Series 1995-1 Leased Vehicles will be operated by the Obligors and
their respective invitees. State laws differ as to whether anyone suffering
injury to person or property as a result of an accident involving a leased
vehicle may bring an action against the person who, holding title to the
vehicle, is its legal owner.
In California, under Section 17150, California Vehicle Code, the owner of a
motor vehicle that is subject to a lease is responsible for injuries to persons
or property resulting from the negligent or wrongful operation of the vehicle by
any person using the vehicle with the owner's permission. The owner's liability
for personal injuries is limited to $15,000 per person and $30,000 in total per
accident and for property damage is limited to $5,000 per accident. Recourse for
any judgment arising out of the operation of the vehicle must first be had
against the operator's property, if the operator is within the court's
jurisdiction.
In New York, under Section 388, New York Vehicle and Traffic Law, the owner
of a motor vehicle that is subject to a lease is responsible for injuries to
persons or property resulting from the negligent operation of the vehicle by any
person using the vehicle with the owner's permission. A lessee of a motor
vehicle is considered an owner of the vehicle if the lessee has the exclusive
use of the vehicle for a period greater than 30 days. In situations involving
more than one owner of the same vehicle, the liability of the owners for
negligent operation of the vehicle is joint and several.
In Pennsylvania, a victim of such an accident has no cause of action
against the owner of a leased vehicle arising from the negligent operation of
such leased vehicle unless the owner has negligently entrusted or negligently
continues to entrust the vehicle to an inappropriate lessee.
Following an accident involving a Series 1995-1 Leased Vehicle, under
certain circumstances FCTT may be the subject of an action for damages as a
result of its ownership of such Series 1995-1 Leased Vehicle. In the event that
liability on FCTT were imposed and the coverage provided by the Contingent and
Excess Liability Insurance was insufficient to cover the full amount of such
claims (or, in certain circumstances claims arising from ownership of Leased
Vehicles that are not Series 1995-1 Leased Vehicles), claims could be imposed
against the assets of FCTT, including the Series 1995-1 Leased Vehicles. The
Noteholders could incur a loss on their investment to the extent that payment of
such claims reduced the amounts otherwise distributable to the Noteholders.
REPOSSESSION OF LEASED VEHICLES
In the event of a default by an Obligor, the Administrative Agent will
notify the Obligor and, after affording the Obligor an opportunity to cure, will
repossess the Series 1995-1 Leased Vehicle if the Obligor remains in default.
Under California, New York and Pennsylvania law, repossession may take place
without notice, but only if it can be accomplished without a breach of the
peace. If repossession cannot be achieved peaceably, court action would be
required. In Pennsylvania, a writ of replevin may be used to accomplish
repossession.
After repossession, the Administrative Agent may afford the Obligor an
opportunity to cure the default. Absent cure, the Administrative Agent will
ordinarily attempt to sell the Series 1995-1 Leased Vehicle. There is no
assurance that the proceeds from such a sale will equal or exceed the remaining
amounts due under the related Series 1995-1 Lease at the time of the Obligor's
default.
DEFICIENCY JUDGMENTS
Once a repossessed Series 1995-1 Leased Vehicle is sold, the proceeds from
the sale will be used to cover the expenses of repossession and resale and then
to satisfy any remaining amounts due under the related Series 1995-1 Lease. If
the proceeds from the sale of the Series 1995-1 Leased Vehicle are insufficient
to satisfy the remaining amount due under the related Series 1995-1 Lease, the
amount of such shortfall will be treated as a credit loss, and will be included
the calculation of the Series 1995-1 Credit Loss in the Collection Period in
which the related Series
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1995-1 Lease became a Liquidated Lease. The Administrative Agent may seek a
deficiency judgment for the amount of any such shortfall. To the extent such
deficiency judgment is collected in a Collection Period other than the
Collection Period in which such Series 1995-1 Lease became a Liquidated Lease,
such amount shall be treated as a Recovery.
However, California, New York and Pennsylvania place limits on a secured
party's ability to obtain a deficiency judgment. In these states, a deficiency
judgment may be prohibited or reduced in amount if the Obligor was not given
proper notice of the resale or if the terms of the resale were not commercially
reasonable. Even if a deficiency judgment is obtained, there is no assurance
that the full amount of the judgment would ultimately be collected. A deficiency
judgment is a personal judgment against the defaulting Obligor, who generally
has few remaining assets or sources of income after repossession. As a result,
obtaining a deficiency judgment may not be useful in that only a small portion
of it, or perhaps none of it, will ever be collected.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and regulations impose
requirements on retail lease contracts such as the Series 1995-1 Leases. The
federal Consumer Leasing Act of 1976 and Regulation M promulgated by the Board
of Governors of the Federal Reserve System, for example, require that a number
of disclosures be made at the time a vehicle is leased, including the amount of
any periodic payments and the circumstances under which the lessee may terminate
the lease prior to the end of the lease term. The various consumer protection
laws would apply to FCTT as the assignee of each Series 1995-1 Lease and may
also apply to the Issuer as holder of the Series 1995-1 Certificates which
represent a beneficial interest in the Series 1995-1 Leases, among other things.
The failure of FCTT, or the Administrative Agent acting on behalf of FCTT, to
comply with such laws and regulations may give rise to liabilities on the part
of FCTT, and claims by FCTT or the Administrative Agent acting on behalf of FCTT
with respect to Obligors may be subject to set-off as a result of non-compliance
with such laws and regulations.
Courts have applied general equitable principles in litigation relating to
repossession and deficiency balances. These equitable principles may have the
effect of relieving a lessee from some or all of the legal consequences of a
default.
In several cases, consumers have asserted that the self-help remedies of
lessors violate the due process protection provided under the Fourteenth
Amendment to the Constitution of the United States. Courts have generally found
that repossession and resale by a lessor do not involve sufficient state action
to afford constitutional protection to consumers.
Each of New York, California and Pennsylvania has adopted a law (each, a
"Lemon Law") providing redress to consumers who purchase or lease a vehicle
which remains out of conformance with its manufacturer's warranty after a
specified number of attempts to correct a problem or after a specific time
period. A successful claim under a Lemon Law with respect to a Series 1995-1
Leased Vehicle could result in, among other things, the termination of the
related Series 1995-1 Lease and/or the refunding to the related Obligor of some
portion of the Total Monthly Payments paid by such Obligor. To the extent an
Obligor is no longer required to make Total Monthly Payments with respect to a
Series 1995-1 Lease subject to a Lemon Law, or amounts are refunded to such
Obligor, such Series 1995-1 Lease will be deemed to be a Liquidated Lease and
the amounts received with respect to such lease will be limited to Liquidation
Proceeds and Recoveries. The net amount lost will be treated as a Series 1995-1
Credit Loss. Although FCTT or the Administrative Agent acting on behalf of FCTT
may be able to assert a claim against the manufacturer of any such defective
Series 1995-1 Leased Vehicle, there can be no assurance that any such claim
would be successful.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the Notes. This
discussion is based upon current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), existing and proposed Treasury Regulations
thereunder, current administrative rulings, judicial decisions and other
applicable authorities in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect. There can be no assurance that the
Internal Revenue Service ("IRS") will not challenge the conclusions reached
herein, and no ruling from the IRS has been or will be sought on any of the
issues discussed below.
This summary does not purport to deal with all aspects of federal income
taxation that may be relevant to Note Owners in light of their personal
investment circumstances nor, except for certain limited discussions of
particular topics, to certain types of Note Owners subject to special treatment
under the federal income tax laws (e.g.,financial institutions, broker-dealers,
life insurance companies and tax-exempt organizations). This information is
directed to Note Owners who hold the Notes as "capital assets" within the
meaning of Section 1221 of the Code.
GENERAL
Tax Status of the Notes, FCTT, the Transferor and the Issuer. On the
Closing Date, Skadden, Arps, Slate, Meagher & Flom ("Special Tax Counsel"), will
render its opinion that for federal income tax purposes under existing law, and
subject to the assumptions and qualifications therein: (i) the Notes will be
treated as debt, (ii) the Lease Trust Certificates (other than the Transferor
Lease Trust Certificates) should be treated as debt, and (iii) neither FCTT, the
Transferor nor the Issuer will be classified as an association (or publicly
traded partnership) taxable as a corporation.
Stated Interest. Stated interest on the Notes will be taxable as ordinary
income for federal income tax purposes when received or accrued in accordance
with a Note Owner's method of tax accounting.
Original Issue Discount. A Note will be treated as issued with Original
Issue Discount ("OID") if the excess of the Note's "stated redemption price at
maturity" over its issue price equals or exceeds a de minimis amount equal to
1/4 of 1 percent of the Note's stated redemption price at maturity multiplied by
the number of complete years (based on the anticipated weighted average life of
a Note) to its maturity. Generally, the issue price of a Note should be the
first price at which a substantial amount of the Notes included in the issue of
which the Note is a part is sold to other than bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers. The stated redemption price at maturity of a Note is
expected to equal the principal amount of the Note. Any de minimis OID must be
included in income as principal payments are received on the Notes in the
proportion that each such payment bears to the original principal balance of the
Note.
If the Notes are treated as issued with OID, a Note Owner will be required
to include OID in income before the receipt of cash attributable to such income
using the constant-yield method. The amount of OID includible in income is the
sum of the daily portions of OID with respect to a Note for each day during the
taxable year or portion of the taxable year in which the Note Owner holds the
Note. The amount of OID includible in income by a Note Owner of a Note will be
computed by allocating to each day during a taxable year a pro rata portion of
the OID that accrued during the relevant "accrual period." Such OID is generally
equal to the product of the yield to maturity of the Note (adjusted for the
length of the accrual period) and its adjusted issue price at the beginning of
the accrual period, reduced by any payments of "qualified stated interest."
Accrual periods with respect to a Note may be any set of periods (which may be
of varying lengths) selected by the Note Owner as long as (i) no accrual period
is longer than one year and (ii) each scheduled payment of interest or principal
on the Note occurs on either the final or first day of an accrual period.
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The adjusted issue price of a Note is the sum of its issue price plus prior
accruals of OID, reduced by the total payments made with respect to such Note in
all prior periods, other than "qualified stated interest payments." Qualified
stated interest payments are interest payments on the Notes that are
unconditionally payable at least annually at a single fixed rate applied to the
outstanding principal amount of the obligation.
Under the Code, the amount of OID to be included in income by a holder of a
debt instrument that is subject to acceleration due to prepayments on other
obligations securing such instruments (a "Prepayable Obligation") is computed by
taking into account the anticipated rate of prepayments assumed in pricing the
debt instrument. It is unclear whether this provision will apply to the Notes,
the payments on which are directly secured by the Series 1995-1 Assets, rather
than by payments on other debt obligations. In the absence of regulations,
however, and based on the legislative history of the relevant Code provisions,
it appears that the rules applicable to a Prepayable Obligation would not apply
to the Notes. The IRS could, however, take the position that the Prepayable
Obligation rules apply. If the Prepayable Obligation rules were to apply, the
portion of OID includible in the income of a Note Owner for any period would be
increased or decreased to take account of whether prepayments on the Series
1995-1 Leases (including as a result of a default and liquidation) occurred at a
greater or lesser rate than anticipated.
Market Discount. The Notes, whether or not issued with original issue
discount, will be subject to the "market discount rules" of section 1276 of the
Code. In general, these rules provide that if the Note Owner-purchases a Note at
a market discount (that is, a discount from its stated redemption price at
maturity or, if the Notes were issued with OID, its original issue price plus
any accrued original issue discount that exceeds a de minimis amount specified
in the Code) and thereafter (a) recognizes gain upon a disposition, or (b)
receives payments of principal, the lesser of (i) such gain or principal
payment, or (ii) the accrued market discount, will be taxed as ordinary interest
income. Generally, the accrued market discount will be the total market discount
on the Note multiplied by a fraction, the numerator of which is the number of
days the Note Owner held the Note and the denominator of which is the number of
days from the date the Note Owner acquired the Note until its maturity date. The
Note Owner may elect, however, to determine accrued market discount under the
constant-yield method.
Limitations imposed by the Code which are intended to match deductions with
the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Note with accrued market discount. A Note Owner may elect to include market
discount in gross income as it accrues and, if such Note Owner makes such an
election, is exempt from this rule. Any such election will apply to all debt
instruments acquired by the taxpayer on or after the first day of the first
taxable year to which such election applies. The adjusted basis of a Note
subject to such election will be increased to reflect market discount included
in gross income, thereby reducing any gain or increasing any loss on a sale or
taxable disposition.
Election to Treat All Interest as Original Issue Discount. A Note Owner may
elect to include in gross income all interest that accrues on a Note using the
constant-yield method described above under the heading "-- Original Issue
Discount," with modifications described below. For purposes of this election,
interest includes stated interest, OID, de minimis original issue discount,
market discount, de minimis market discount and unstated interest, as adjusted
by any amortizable bond premium (described below under "-- Amortizable Bond
Premium") or acquisition premium.
In applying the constant-yield method to a Note with respect to which this
election has been made, the issue price of the Note will equal the electing U.S.
Note Owner's adjusted basis in the Note immediately after its acquisition, the
issue date of the Note will be the date of its acquisition by the electing Note
Owner, and no payments on the Note will be treated as payments of qualified
stated interest. This election will generally apply only to the Note with
respect to which it is made and
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may not be revoked without the consent of the IRS. Note Owners should consult
with their own tax advisers as to the effect in their circumstances of making
this election.
Amortizable Bond Premium. In general, if a Note Owner purchases a Note at a
premium (that is, an amount in excess of the amount payable upon the maturity
thereof), such Note Owner will be considered to have purchased such Note with
"amortizable bond premium" equal to the amount of such excess. Such Note Owner
may elect to amortize such bond premium as an offset to interest income and not
as a separate deduction item as it accrues under a constant-yield method over
the remaining term of the Note. Such Note Owner's tax basis in the Note will be
reduced by the amount of the amortized bond premium. Any such election shall
apply to all debt instruments (other than instruments the interest on which is
excludible from gross income) held by the Note Owner at the beginning of the
first taxable year for which the election applies or thereafter acquired and is
irrevocable without the consent of the IRS. Bond premium on a Note held by a
Note Owner who does not elect to amortize the premium will decrease the gain or
increase the loss otherwise recognized on the disposition of the Note.
Disposition of Notes. A Note Owner's adjusted tax basis in a Note will be
its cost, increased by the amount of any OID, market discount and gain
previously included in income with respect to the Note, and reduced by the
amount of any payments on the Note that is not qualified stated interest and the
amount of bond premium previously amortized with respect to the Note. A Note
Owner will generally recognize gain or loss on the sale or retirement of a Note
equal to the difference between the amount realized on the sale or retirement
and the tax basis of the Note. Such gain or loss will be capital gain or loss
(except to the extent attributable to accrued but unpaid interest or as
described above under "-- Market Discount") and will be long-term capital gain
or loss if the Note was held for more than one year. In addition, if the
Prepayable Obligation rules apply, any OID that has not accrued at the time of
the payment in full of a Note will be treated as ordinary income.
WAIVERS AND AMENDMENTS
The Indenture permits the Noteholders to waive an Event of Default or
rescind an acceleration of the Notes in some circumstances upon a vote of the
requisite percentage of Noteholders. Any such waiver or rescission, or any
amendment of the terms of the Notes, could be treated for federal income tax
purposes as a constructive exchange by a Noteholder of the Notes for new notes,
upon which gain or loss would be recognized.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Indenture Trustee will be required to report annually to the IRS, and
to each Note Owner, the amount of interest paid on the Notes (and the amount
withheld for federal income taxes, if any) for each calendar year, except as to
exempt recipients (generally, corporations, tax-exempt organizations, qualified
pension and profit-sharing trusts, individual retirement accounts, or
nonresident aliens who provide certification as to their status). Each Note
Owner (other than Note Owners who are not subject to the reporting requirements)
will be required to provide, under penalties of perjury, a certificate
containing the Note Owner's name, address, correct federal taxpayer
identification number (which includes a social security number) and a statement
that the Holder is not subject to backup withholding. Should a non-exempt Note
Owner fail to provide the required certification or should the IRS notify the
Indenture Trustee or the Issuer that the Note Owner has provided an incorrect
federal taxpayer identification number or is otherwise subject to backup
withholding, the Indenture Trustee will be required to withhold (or cause to be
withheld) 31% of the interest otherwise payable to the Note Owner, and remit the
withheld amounts to the IRS as a credit against the Note Owner's federal income
tax liability.
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TAX CONSEQUENCES TO FOREIGN INVESTORS
The following information describes the U.S. federal income tax treatment
of investors that are not U.S. persons (each, a "Foreign Person"). The term
"Foreign Person" means any person other than (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity organized in or
under the laws of the United States or any political subdivision thereof or
(iii) an estate or trust the income of which is includible in gross income for
U.S. federal income tax purposes, regardless of its source.
(a) Interest paid or accrued to a Foreign Person that is not
effectively connected with the conduct of a trade or business within the
United States by the Foreign Person, will generally be considered
"portfolio interest" and generally will not be subject to United States
federal income tax and withholding tax, as long as the Foreign Person (i)
is not actually or constructively a "10 percent shareholder" of the Issuer
or a "controlled foreign corporation" with respect to which the Issuer is a
"related person" within the meaning of the Code, and (ii) provides an
appropriate statement, signed under penalties of perjury, certifying that
the Holder is a Foreign Person and providing that Foreign Person's name and
address. If the information provided in this statement changes, the Foreign
Person must so inform the Indenture Trustee within 30 days of such change.
The statement generally must be provided in the year a payment occurs or in
either of the two preceding years. If such interest were not portfolio
interest, then it would be subject to United States federal income and
withholding tax at a rate of 30 percent unless reduced or eliminated
pursuant to an applicable income tax treaty.
(b) Any capital gain realized on the sale or other taxable disposition
of a Note by a Foreign Person will be exempt from United States federal
income and withholding tax, provided that (i) the gain is not effectively
connected with the conduct of a trade or business in the United States by
the Foreign Person, and (ii) in the case of an individual Foreign Person,
the Foreign Person is not present in the United States for 183 days or more
in the taxable year and certain other requirements are met.
(c) If the interest, gain or income on a Note held by a Foreign Person
is effectively connected with the conduct of a trade or business in the
United States by the Foreign Person, the Holder (although exempt from the
withholding tax previously discussed if a duly executed Form 4224 is
furnished) generally will be subject to United States federal income tax on
the interest, gain or income at regular federal income tax rates. In
addition, if the Foreign Person is a foreign corporation, it may be subject
to a branch profits tax equal to 30 percent of its "effectively connected
earnings and profits" within the meaning of the Code for the taxable year,
as adjusted for certain items, unless it qualifies for a lower rate under
an applicable tax treaty.
CERTAIN STATE TAX CONSEQUENCES
Set forth below is a summary of certain state income tax consequences of
the purchase, ownership and disposition of the Notes. This discussion is based
upon current law, administrative rulings, judicial decisions and other
applicable authorities in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect. There can be no assurance that
state income tax authorities will not challenge the conclusions reached herein,
and no ruling from state income tax authorities has been or will be sought on
any of the issues discussed below. Because of the variation in each state's
income tax laws, it is impossible to predict tax consequences to Note Owners in
all states. Note Owners are urged to consult their own tax advisors with respect
to state tax consequences arising out of the purchase, ownership and disposition
of Notes.
Michigan. In general, state tax laws conform to federal income tax
principles, and partnerships, grantor trusts and mere security devices are not
subject to tax at the entity level. The State of Michigan, however, imposes a
single business tax on corporations, partnerships and other entities
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doing business in Michigan. Because the Administrative Agent is headquartered in
Michigan, tax authorities in Michigan may attempt to assert that FCTT, the
Transferor or the Issuer is subject to an entity level tax.
In the opinion of J. D. Bringard, Esq., the Vice President -- General
Counsel of Ford Credit ("Michigan Tax Counsel"), assuming that the Notes and the
Lease Trust Certificates (other than the Transferor Lease Trust Certificates)
will be treated as debt for federal income tax purposes, (i) the Notes and the
Lease Trust Certificates (other than the Transferor Lease Trust Certificates)
will be treated as debt for Michigan income and single business tax purposes and
(ii) Note Owners not otherwise subject to taxation in Michigan would not become
subject to taxation in Michigan solely because of a Note Owner's ownership of a
Note. Assuming further that none of FCTT, the Transferor or the Issuer will be
subject to federal income tax at the entity level, none of FCTT, the Transferor
or the Issuer should be subject to Michigan income and single business tax at
the entity level.
Delaware. The Transferor has been organized as a Delaware business trust.
In the opinion of Special Tax Counsel, assuming that the Notes are treated as
debt for federal income tax purposes, the Notes will be treated as debt for
Delaware state income tax purposes. Assuming further that none of FCTT, the
Transferor or the Issuer will be subject to federal income taxes at the entity
level, none of FCTT, the Transferor or the Issuer will be subject to the
Delaware state income tax at the entity level. Further, in the opinion of
Special Tax Counsel, Note Owners not otherwise subject to taxation in Delaware
would not become subject to taxation in Delaware solely because of a Note
Owner's ownership of a Note.
* * *
In the event that any state imposes a tax on FCTT, the Transferor or the
Issuer at the entity level, Ford Credit and Ford Credit Leasing have agreed to
indemnify the holders of the SBCs for the full amount of such taxes. If Ford
Credit and Ford Credit Leasing should fail to fulfill their respective
indemnification obligations, amounts otherwise distributable to them as holders
of the EBCs will be used to satisfy such indemnification obligations. However,
it is possible that the Noteholders could incur a loss on their investment
because Ford Credit and Ford Credit Leasing did not have sufficient assets
available (including distributions on the EBCs) to satisfy such state tax
liabilities.
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY, DO NOT PURPORT TO ADDRESS THE APPLICABILITY OF STATE
TAX LAWS OTHER THAN THE TREATMENT OF THE TRUST AND THE NOTEHOLDERS UNDER THE LAW
OF MICHIGAN AND DELAWARE AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTE OWNER'S
PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP
AND DISPOSITION OF NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and/or Section 4975 of the Code, prohibits a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and Keogh Plans (each a "Benefit Plan") from engaging in certain
transactions with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other penalties and liabilities under ERISA and the Code for such persons. Title
I of ERISA also requires that fiduciaries of a Benefit Plan subject to ERISA
make investments that are prudent, diversified (except if prudent not to do so)
and in accordance with governing plan documents.
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Certain transactions involving the Issuer might be deemed to constitute
prohibited transactions under ERISA and the Code if assets of the Issuer were
deemed to be assets of a Benefit Plan. Under a regulation issued by the United
States Department of Labor (the "Plan Assets Regulation"), the assets of the
Issuer would be treated as plan assets of a Benefit Plan for purposes of ERISA
and the Code only if the Benefit Plan acquires an "Equity Interest" in the
Issuer and none of the exceptions contained in the Plan Assets Regulation
(discussed below) is applicable. An Equity Interest is defined under the Plan
Assets Regulation as an interest other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features. The Transferor believes that the Notes should be treated as
indebtedness without substantial equity features for purposes of the Plan Assets
Regulation. However, without regard to whether the Notes are treated as an
Equity Interest for such purposes, the acquisition or holding of Notes by or on
behalf of a Benefit Plan could be considered to give rise to a prohibited
transaction if the Issuer, the Lease Trustee or the Indenture Trustee, or any of
their respective affiliates, is or becomes a party in interest or a disqualified
person with respect to such Benefit Plan. In such case, certain exemptions from
the prohibited transaction rules could be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a Note.
Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 90-1, regarding investments by insurance company pooled separate
accounts; PTCE 91-38, regarding investments by bank collective investment funds;
and PTCE 84-14, regarding transactions effected by "qualified professional asset
managers."
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Notes should consult its tax
and/or legal advisors regarding whether the assets of the Issuer would be
considered plan assets, the possibility of exemptive relief from the prohibited
transaction rules and other issues and their potential consequences.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement"), the Transferor has agreed to cause the Issuer to
sell to the underwriters named below (the "Underwriters") and each of the
Underwriters has severally agreed to purchase the initial principal balance of
Notes as set forth opposite its name:
<TABLE>
<CAPTION>
INITIAL PRINCIPAL BALANCE INITIAL PRINCIPAL BALANCE
UNDERWRITERS OF CLASS A-1 NOTES OF CLASS A-2 NOTES
- ------------------------------------------------- ------------------------- -------------------------
<S> <C> <C>
J.P. Morgan Securities Inc....................... $ $
Goldman Sachs & Co...............................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................
------------- -------------
Total....................................... $ 113,000,000 $ 500,521,000
============= =============
</TABLE>
The Transferor has been advised by the several Underwriters that the
several Underwriters propose initially to offer the Class A-1 Notes and Class
A-2 Notes to the public at the respective prices set forth on the cover page of
this Prospectus, and to certain dealers at such prices less an initial
concession not in excess of % per Class A-1 Note and % per Class A-2
Note. The several Underwriters may allow and such dealers may reallow a
concession not in excess of % per Class A-1 Note and % per Class A-2
Note to certain other dealers. After the initial public offering of the Notes,
the public offering prices and such concessions may be changed.
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The closing of the sale of the Notes is conditioned on the closing of the
sale of the Lease Trust Certificates.
The Indenture Trustee may, from time to time, invest the funds in the
Collection Account, the Payahead Account, the Reserve Account and the Payment
Account in Eligible Investments acquired from the Underwriters.
In the ordinary course of business, the Underwriters and their affiliates
have engaged and may engage in investment banking and commercial banking
transactions with Ford and its affiliates.
The Transferor, Ford Credit and Ford Credit Leasing have agreed to jointly
and severally indemnify the Underwriters against certain liabilities, including
civil liabilities under the Securities Act, or to contribute to payments which
the Underwriters may be required to make in respect thereof.
LEGAL MATTERS
Certain legal matters relating to the Notes will be passed upon for the
Issuer and Ford Credit by J.D. Bringard, Esq., Vice President -- General Counsel
of Ford Credit, and for the Underwriter by Skadden, Arps, Slate, Meagher & Flom,
New York, New York. Certain federal income tax and other matters will be passed
upon for the Issuer by Skadden, Arps, Slate, Meagher & Flom. Certain Michigan
income tax and other matters will be passed upon for the Issuer by Mr. Bringard.
Mr. Bringard is a full time employee of Ford Credit and owns and holds
options to purchase shares of Common Stock of Ford. Skadden, Arps, Slate,
Meagher & Flom has from time to time represented Ford and Ford Credit in
connection with certain transactions.
EXPERTS
The financial statements, which are incorporated in this Prospectus by
reference to Ford Credit's Annual Report on Form 10-K for 1994, have been
audited by Coopers & Lybrand, L.L.P. independent certified public accountants,
to the extent indicated in their report therein, and have been so incorporated
in reliance upon the report of that firm and upon their authority as experts in
accounting and auditing.
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<PAGE> 86
GLOSSARY OF TERMS
"Accepted Servicing Practices" is defined on page 57 in "Description of the
Administrative Agency Agreement -- Duties of the Administrative Agent."
"Accrual Available Scheduled Termination Sale Proceeds" is defined on page
50 in "Description of the Notes -- Limited RV Guaranty."
"Accrual Period" means, (i) with respect to any Payment Date other than the
first Payment Date, the period from and including the first day of the third
preceding Collection Period up to and including the last day of the preceding
Collection Period, and (ii) with respect to the first Payment Date, the period
from and including the Series 1995-1 Cut-Off Date up to and including the last
day of the preceding Collection Period, in each case whether or not such day is
a business day.
"Additional Fee" is defined on page 37 in footnote 2 to the Composition of
the Series 1995-1 Assets in "The Leases and Leased Vehicles -- Characteristics
of the Series 1995-1 Assets"
"Adjusted Balance Subject to Lease Charges" means, with respect to any
Leased Vehicle as of any date, the Balance Subject to Lease Charges minus the
sum of the principal portion of all Constant Yield Payments which have been
scheduled to have been received as of such date; provided that the Adjusted
Balance Subject to Lease Charges of a Leased Vehicle shall be zero as of the
date on which the related Lease terminates, whether on or after the Scheduled
Lease End Date or earlier, or if an Administrative Purchase Amount has been
received with respect to such Lease and Leased Vehicle.
"Administrative Agency Agreement" means the agreement dated as of January
31, 1994 among Comerica Bank, as trustee, Ford Credit, as Administrative Agent,
and Ford Credit and Ford Credit Leasing, as beneficiaries.
"Administrative Agent" is Ford Credit.
"Administrative Agent Fee" means as of any Payment Date the fee payable to
the Administrative Agent equal to the sum, for each of the three Collection
Periods preceding such Payment Date, of the product of 1/12 of 1.00% and the
Pool Balance as of the beginning of each such Collection Period.
"Administrative Agent Event of Default" is defined on page 61 in
"Description of the Administrative Agency Agreement -- Administrative Agent
Events of Default."
"Administrative Purchase Amount" is defined on page 47 in "Description of
the Notes -- The Indenture Cash Flows."
"Advance Payment Plan" means, with respect to any lease originated under
the Red Carpet Lease Plan, a payment option of the related lessee pursuant to
which such lessee prepays all monthly payments in a single advance payment,
generally discounted to reflect the present value of such single advance payment
and the reduction in the risk of credit loss.
"Aggregate Net Monthly Payment Advances" is defined on page 48 in
"Description of the Notes -- The Indenture Cash Flows."
"Aggregate Net Sale Proceeds Advances" is defined on page 48 in
"Description of the Notes -- The Indenture Cash Flows."
"Asset Contribution Agreement" means the agreement dated as of May , 1995
among Ford Credit, as a contributor, Ford Credit Leasing, as a contributor and
the Transferor, as contributee.
"Available Funds" is defined on page 7 in "Summary -- Principal" and on
page 48 in "Description of the Notes -- The Indenture Cash Flows."
"Available RV Guaranty Amount" is defined on page 49 in "Description of the
Notes -- Limited RV Guaranty."
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<PAGE> 87
"Available Scheduled Termination Sale Proceeds" is defined on page 47 in
"Description of the Notes -- The Indenture Cash Flows."
"Balance Subject to Lease Charges" means the amount paid by FCTT to the
Dealer in connection with the acquisition of the Lease and Leased Vehicle, which
is the total acquisition cost used to calculate the Monthly Payment.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. sec.
sec. 101-1330.
"Basic Documents" means the FCTT Agreement, the Administrative Agency
Agreement, the Series 1995-1 Supplement, the Program Operating Lease, the Asset
Contribution Agreement, the Transfer Agreement, the Limited RV Guaranty, the
Lease Trust Agreement, the Indenture, and each instrument and certificate
delivered in connection therewith.
"Basic Payment" is defined on page 12 in "Summary -- Reserve Account" and
on page 31 in "Series 1995-1 Certificates -- Lease of the Series 1995-1
Certificates to the Transferor."
"Benefit Plan" is defined on page 81 in "ERISA Considerations."
"Cede" means Cede & Co.
"Class" means a class of Notes; as the case may be, the Class A-1 Notes or
the Class A-2 Notes.
"Class A-1 Notes" means the Class A-1 % Asset Backed Notes of the Issuer.
"Class A-2 Notes" means the Class A-2 % Asset Backed Notes of the Issuer.
"Closing Date" means May , 1995.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collections" is defined on page 47 in "Description of the Notes -- The
Indenture Cash Flows."
"Collection Account" means the Series 1995-1 Collection Account established
pursuant to the Series 1995-1 Supplement.
"Collection Period" means any calendar month.
"Commission" means the Securities and Exchange Commission.
"Constant Yield Payment" means the payment made by the Obligor which
provides a fixed internal rate of return equal to the Retail Operating Lease
Factor and amortizes the Balance Subject to Lease Charges of the related Leased
Vehicle to the Residual Value over the term of the Lease.
"Contingent and Excess Liability Insurance" is defined on page 73 in
"Certain Legal Aspects of FCTT and the Series 1995-1 Certificates -- Insurance."
"Dealer" means a motor vehicle dealer who, in the ordinary course of
business, leases automobiles and light-duty trucks to Obligors pursuant to the
Red Carpet Lease Plan or such other plan as Ford Credit or its affiliates may
implement from time to time.
"Deferred Amount" is defined on page 25 in "The Issuer -- Capitalization of
the Issuer."
"Definitive Notes" is defined on page 43 in "Description of the Notes --
General."
"Distribution Date" means the date on which distributions are made with
respect to the Series 1995-1 Certificates, which shall be the 15th day of each
month, and if such day is not a business day, the next succeeding business day.
"DTC" means The Depository Trust Company.
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<PAGE> 88
"EBC" means an Exchangeable Beneficial Certificate.
"Eligible Account" means a segregated trust account at a financial
institution having a long-term debt rating by each Rating Agency of at least
"Baa3" or the equivalent.
"Eligible Institution" means a depository institution organized under the
laws of the United States of America or any one of the states thereof or
incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and subject
to supervision and examination by federal or state banking authorities which at
all times has a short-term deposit rating of P-1 and a long-term deposit rating
of A2 by Moody's Investors Service, Inc. and a short-term deposit rating of A-1+
by Standard and Poor's Ratings Group and, in the case of any such institution
organized under the laws of the United States of America, whose deposits are
insured by the Federal Deposit Insurance Corporation or any successor thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Events of Default" means any of the events of default under the Indenture
as set forth on page 52 in "Descriptions of the Notes -- Indenture -- Events of
Default."
"Excess Deferred Gross" means, with respect to any Lease and Leased
Vehicle, the amount, if any, withheld from the total amount paid to the related
Dealer in connection with assignment of such Lease and Leased Vehicle. Excess
Deferred Gross is withheld if the acquisition cost of a Leased Vehicle exceeds
the manufacturer's suggested retail price of a Leased Vehicle, if the Residual
Value of a Leased Vehicle as set forth in the related Lease exceeds the maximum
amount permitted for such Leased Vehicle by the Administrative Agent, or the
security deposit or reconditioning reserve for such Lease is waived by the
Dealer.
"Excess Wear and Tear and Excess Mileage" means, with respect to any Lease
and Leased Vehicle, amounts due from an Obligor upon termination of such Lease
on or after the Scheduled Lease End Date (i) as a result of excess wear and tear
with respect to the related Leased Vehicle and (ii) mileage charges incurred in
excess of the amount permitted pursuant to the related Lease.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchangeable Beneficial Certificate" or "EBC" means a certificate of
beneficial interest in FCTT and the Non-Specified Assets.
"FCTT" means Ford Credit Titling Trust, formed pursuant to the FCTT
Agreement.
"FCTT Agreement" means the Amended and Restated Trust Agreement dated as of
January 31, 1994 among the FCTT Trustee, Ford Credit and Ford Credit Leasing.
"FCTT Assets" means (i) each Lease and related Leased Vehicle, (ii) all
collections of monies with respect to such Lease and related Leased Vehicle,
(iii) the related certificates of title, (iv) the rights of the lessor to any
security deposit or reconditioning reserve, (v) any recourse to Dealers with
respect to such Leases and Leased Vehicles and (vi) all proceeds of the
foregoing.
"FCTT Trustee" means Comerica Bank, in its capacity as trustee of FCTT.
"Ford" means Ford Motor Company.
"Ford Credit" means Ford Motor Credit Company.
"Ford Credit Leasing" means Ford Credit Leasing Company, Inc.
"Ford Holdings" means Ford Holdings, Inc.
"Foreign Person" is defined on page 80 in "Certain Federal Income Tax
Consequences -- Tax Consequences to Foreign Investors."
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<PAGE> 89
"GAP" is defined on page 74 in "Certain Legal Aspects of FCTT and the
Series 1995-1 Certificates -- Insurance."
"General Eligibility Criteria" is defined on page 66 in "Additional
Document Provisions -- Representations, Warranties and Covenants."
"Indenture" means the Indenture dated as of May , 1995 between the Issuer
and the Indenture Trustee.
"Indenture Trustee" is Chemical Bank.
"Indirect Participants" is defined on page 43 in "Description of the Notes
- -- Book-Entry Registration."
"Initial Pool Balance" is defined on page 10 in "Summary -- The Series
1995-1 Assets."
"Initial Reserve Account Deposit" is defined on page 12 in "Summary --
Reserve Account" and on page 50 in "Description of the Notes -- Reserve Account
Withdrawals and Deposits."
"Initial RV Guaranty Amount" is defined on page 49 in "Description of the
Notes -- Limited RV Guaranty."
"Insolvency Laws" is defined on page 70 in "Certain Legal Aspects of FCTT
and the Series 1995-1 Certificates -- Insolvency Related Matters."
"IRS" means the Internal Revenue Service.
"Issuer" is Ford Credit Auto Lease Trust 1995-1.
"Lease" means any retail lease contract for an automobile or a light-duty
truck which has been entered into between an Obligor and a Dealer and assigned
by the Dealer to FCTT.
"Lease Files" means the certificate of title (or application therefor), the
original of the Lease and related documentation with respect to a Lease and
Leased Vehicle.
"Lease Term" is defined on page 32 in "The Leases and Leased Vehicles --
Origination Procedures."
"Lease Trust Agreement" means the Ford Credit Auto Lease Trust 1995-1 Trust
Agreement dated as of May , 1995 between the RCL Trustee and the Lease
Trustee.
"Lease Trustee" is PNC Bank, Delaware.
"Lease Trust Certificates" means the % Asset Backed Lease Trust
Certificates of the Issuer.
"Lease Trust Certificateholders" means the holders of any Lease Trust
Certificates.
"Lease Trust Estate" is defined on page 11 in "Summary -- Property of the
Issuer; Pledge to the Indenture Trustee" and on page 26 in "Property of the
Issuer."
"Leased Vehicle" means any automobile or light-duty truck which is subject
to a Lease.
"Lemon Law" is defined on page 76 in "Certain Legal Aspects of the Lease
and Leased Vehicles -- Consumer Protections Laws."
"Limited Guarantor" is Ford Credit, as provider of the Limited RV Guaranty.
"Limited RV Guaranty" is defined on page 49 in "Description of the Notes --
Limited RV Guaranty."
"Limited RV Guaranty Fee" is defined on page 50 in "Description of the
Notes -- Limited RV Guaranty."
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<PAGE> 90
"Liquidated Lease" means a Lease which is in default and with respect to
which the Administrative Agent has repossessed or attempted to repossess the
related Leased Vehicle or the related Obligor is the subject of a bankruptcy
proceeding, or a Lease subject to a Lemon Law with respect to which amounts have
either been refunded to the related Obligor or such Obligor is no longer
obligated to make Total Monthly Payments.
"Liquidation Proceeds" is defined on page 48 in "Description of the Notes
- -- The Indenture Cash Flows."
"Michigan Tax Counsel" is J.D. Bringard, Esq., Vice President -- General
Counsel of Ford Credit.
"Monthly Payment" is defined on page 60 in "Description of the Notes -- The
Indenture Cash Flows."
"Monthly Payment Advance" is defined on page 59 in "Description of the
Administrative Agency Agreement -- Monthly Payment Advances."
"Monthly Remittance Condition" means that (i) Ford Credit is the
Administrative Agent, (ii) the rating of Ford Credit's short-term unsecured debt
is at least P-1 by Moody's Investors Service, Inc. and A-1 by Standard & Poor's
Ratings Group and (iii) no Administrative Agent Event of Default with respect to
Series 1995-1 shall have occurred under the Administrative Agency Agreement.
"MSRP" means the Manufacturer's Suggested Retail Price.
"Net Credit Losses" is defined on page 35 in footnote 3 to the Red Carpet
Lease Portfolio table in "The Leases and Leased Vehicles -- Delinquency,
Repossession, Residual Value and Loss Data."
"Non-Specified Assets" is defined on page 28 in "FCTT -- Exchangeable
Beneficial Certificates and Specified Beneficial Certificates."
"Noteholder" means, as of any date, the individual or entity in whose name
a Note is registered on the Note Register.
"Note Owner" is defined on page 43 in "Description of the Notes --
General."
"Note Pool Factor" is defined on page 42 in "Pool Factors and Trading
Information."
"Note Register" means the Note register maintained pursuant to the
Indenture.
"Note Registrar" means, initially, the Indenture Trustee.
"Notes" means the Class A-1 Notes and the Class A-2 Notes.
"Obligor" means the lessee under a Lease.
"OID" means Original Issue Discount.
"Opinion of Counsel" means a written opinion of counsel which may be
counsel to Ford Credit.
"Participants" is defined on page 43 in "Description of the Notes --
Book-Entry Registration."
"Payaheads" are amounts received in a Collection Period from Obligors in
excess of the amount required to be currently applied against such Obligor's
current and past due Monthly Payments and which are not proceeds from the
disposition of the related Leased Vehicle.
"Payahead Account" means the Series 1995-1 Payahead Account established
pursuant to the Series 1995-1 Supplement.
"Payahead Credits" is defined on page 47 in "Description of the Notes --
The Indenture Cash Flows."
"Payment Account" means the Series 1995-1 Payments Account established
pursuant to the Indenture.
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<PAGE> 91
"Payment Date" means August 15, November 15, February 15 and May 15 of each
year, commencing August 15, 1995 or, if any such day is not a business day, the
next succeeding business day.
"Payment Extension" is defined on page 57 in "Description of the
Administrative Agency Agreement -- Collection of Total Monthly Payments;
Extension of Leases."
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Investments" means (i) direct obligations of, and obligations
fully guaranteed by, the United States of America or any agency or
instrumentality of the United States the obligations of which are backed by the
full faith and credit of the United States; (ii) commercial paper issued by any
corporation incorporated under the laws of the United States or any State so
long as at the time such commercial paper is issued it is rated at least P-1 by
Moody's Investors Service, Inc. and A-1 by Standard and Poor's Ratings Group; or
(iii) any other investment otherwise approved by any Rating Agency.
"Plan Asset Regulations" is defined on page 82 in "ERISA Considerations."
"Pool Balance" means, as of any date of determination, the aggregate
Adjusted Balance Subject to Lease Charges of Series 1995-1 Leased Vehicles as of
such date.
"Pool Balance Decline" means, with respect to any Payment Date, the
difference between the Pool Balance at the beginning of the related Accrual
Period and the Pool Balance as of the end of the related Accrual Period.
"Prepayable Obligation" is defined on page 78 in "Certain Federal Income
Tax Consequences -- General -- Original Issue Discount."
"Program Operating Lease" means the agreement dated as of May , 1995
between the Issuer as lessor and the Transferor as lessee.
"Program Operating Lease Payments" is defined on page 5 in "Summary --
Overview."
"Prospectus" means this prospectus relating to the Notes.
"PTCE" means Prohibited Transaction Class Exemption.
"Rating Agency" means a nationally recognized rating agency rating the
Notes and/or the Lease Trust Certificates at the request of the Issuer.
"RCL Trust Agreement" means the Amended and Restated Trust Agreement dated
as of May , 1995 by and among Ford Credit, Ford Credit Leasing and the RCL
Trustee.
"RCL Trustee" is The Chase Manhattan Bank (USA).
"Record Date" means, with respect to any Payment Date or Redemption Date,
the close of business on the fourteenth day of the calendar month in which such
Payment Date or Redemption Date occurs (or, if Definitive Notes are issued, the
last day of the preceding calendar month).
"Recoveries" is defined on page 48 in "Description of the Notes -- The
Indenture Cash Flows."
"Red Carpet Lease Plan" is defined on page 32 in "The Leases and Leased
Vehicles -- Origination Procedures."
"Red Carpet Lease Portfolio" is defined on page 33 in "The Leases and
Leased Vehicles -- Delinquency, Repossession, Residual Value and Loss Data."
"Redemption Date" means the Payment Date on which the Series 1995-1
Certificates are purchased by the Administrative Agent pursuant to the Series
1995-1 Supplement, which Payment Date shall be the date on which the Notes are
redeemed pursuant to the Indenture.
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<PAGE> 92
"Redemption Price" means the outstanding principal amount of the Notes plus
accrued and unpaid interest thereon, to but not including the Redemption Date.
"Required Interest Payment" on any Payment Date means the Administrative
Agent Fee plus the amount of interest accrued on the outstanding Notes and Lease
Trust Certificates since the preceding Payment Date (or, in the case of the
first Payment Date, since the Closing Date) plus any previously due but unpaid
interest (and interest thereon) plus the Limited RV Guaranty Fee due on such
Payment Date.
"Required Reserve Account Amount" is defined on page 13 in "Summary --
Reserve Account" and on page 50 in "Description of the Notes -- Reserve Account
Withdrawals and Deposits."
"Required Scheduled Termination Sale Proceeds" is defined on page 50 in
"Description of the Notes -- Limited RV Guaranty."
"Reserve Account" means the Reserve Account established pursuant to the
Program Operating Lease.
"Reserve Account Amount" is defined on page 12 in "Summary -- Reserve
Account" and on page 50 in "Description of the Notes -- Reserve Account
Withdrawals and Deposits."
"Reserve Account Deposit Amount" is defined on page 51 in "Description of
the Notes -- Reserve Account Withdrawals and Deposits."
"Reserve Account Draw Amount" is defined on page 51 in "Description of the
Notes -- Reserve Account Withdrawals and Deposits."
"Reserve Account Investments" means (i) the Hanover 100% U.S. Treasury
Securities Fund, (ii) if the Hanover 100% U.S. Treasury Securities Fund is not
available, the Hanover U.S. Treasury Fund or (iii) if the Hanover 100% U.S.
Treasury Securities Fund and the Hanover U.S. Treasury Fund both are not
available, the Fidelity U.S. Government Reserve Fund.
"Reserve Account Release Amount" is defined on page 51 in "Description of
the Notes -- Reserve Account Withdrawals and Deposits."
"Residual Loss" is defined on page 36 in footnote 5 to the Red Carpet Lease
Portfolio table in "The Leases and Leased Vehicles -- Delinquency, Repossession,
Residual Value and Loss Data."
"Residual Value" means the value of the Leased Vehicle at its Scheduled
Lease End Date as calculated by the Administrative Agent at the inception of the
related Lease and set forth in the related Lease.
"Retail Operating Lease Factor" means the per annum yield of a Lease
determined by the Administrative Agent.
"RV Guaranty Draw Amount" is defined on page 50 in "Description of the
Notes -- Limited RV Guaranty."
"RV Guaranty Draw Shortfall" is defined on page 50 in "Description of the
Notes -- Limited RV Guaranty."
"Sale Proceeds" means all amounts realized from the sale of Leased
Vehicles.
"Sale Proceeds Advance" is defined on page 59 in "Description of the
Administrative Agency Agreement -- Advances of Sale Proceeds."
"SBC" means a Specified Beneficial Certificate.
"Scheduled Lease End Date" means with respect to any Lease, the date set
forth in such Lease as the termination date for such Lease.
"Securities Act" means the Securities Act of 1933, as amended.
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"Series" means any series of Specified Beneficial Certificates.
"Series 1995-1" means the Series 1995-1 Certificates and the related Series
1995-1 Assets.
"Series 1995-1 Assets" are the Series Specified Assets with respect to
Series 1995-1, including the Series 1995-1 Leases and Series 1995-1 Leased
Vehicles.
"Series 1995-1 Certificates" means the series of Specified Beneficial
Certificates designated as Series 1995-1 representing an interest in the Series
1995-1 Assets.
"Series 1995-1 Credit Loss" means with respect to any Collection Period and
Series 1995-1 Assets, (i) the aggregate Adjusted Balance Subject to Lease
Charges of all Series 1995-1 Leases and Series 1995-1 Leased Vehicles which
become Liquidated Leases during such Collection Period, plus the aggregate
amount of Uncollected Excess Wear and Tear and Excess Mileage relating to Series
1995-1 Leased Vehicles which were sold in such Collection Period with respect to
which Sale Proceeds of the related Series 1995-1 Leased Vehicle were received
plus any uncollected Monthly Payments minus (ii) Liquidation Proceeds and
Recoveries received during such Collection Period.
"Series 1995-1 Cut-Off Date" means April 30, 1995.
"Series 1995-1 Leases" means the Leases designated in the Series
Specification Notice relating to Series 1995-1 and the Series 1995-1 Supplement.
"Series 1995-1 Leased Vehicles" means the Leased Vehicles designated in the
Series Specification Notice relating to Series 1995-1 and the Series 1995-1
Supplement.
"Series 1995-1 Residual Loss" means the aggregate Residual Values of all
Series 1995-1 Leased Vehicles the related Series 1995-1 Leases of which
terminated on or after their respective Scheduled Lease End Dates in a
Collection Period minus Sale Proceeds of such Series 1995-1 Leased Vehicles (but
in no event for any Series 1995-1 Leased Vehicle, an amount greater than the
Transferor Purchase Option Price) minus amounts assessed against Obligors with
respect to Excess Wear and Tear and Excess Mileage with respect to such Series
1995-1 Leased Vehicles.
"Series 1995-1 Supplement" means the Series 1995-1 Supplement to the
Administrative Agency Agreement.
"Series Issue Date" is defined on page 28 in "FCTT -- Exchangeable
Beneficial Certificates and Specified Beneficial Certificates."
"Series Specified Assets" means the Leases and Leased Vehicles designated
in the Series Specification Notice and the Supplement relating to such Series,
including the related certificates of title and all other FCTT Assets relating
to such Leases and Leased Vehicles.
"Series Specification Notice" means a notice delivered by the
Administrative Agent, acting at the unanimous direction of the holders of the
EBCs, to the FCTT Trustee directing such FCTT Trustee to (i) designate certain
FCTT Assets as Series Specified Assets, (ii) designate a date on which SBCs
representing the interest in such Series Specified Assets are to be issued to
the holders of the EBCs and (iii) set the date on which payments related to such
Series Specified Assets shall be allocated to the related SBCs. The Series
Specification Notice relating to Series 1995-1 shall contain such additional
information as is reasonably necessary for the FCTT Trustee to identify
separately the Series 1995-1 Assets and to allocate proceeds from such Series
1995-1 Assets.
"Special Tax Counsel" is Skadden, Arps, Slate, Meagher & Flom.
"Specific Eligibility Criteria" is defined on page 37 in "The Leases and
Leased Vehicles -- Eligibility Criteria."
"Specified Beneficial Certificate" or "SBC" means a certificate
representing a beneficial interest in FCTT and certain designated Series
Specified Assets.
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"Stated Maturity" means with respect to the Class A-1 Notes, the May 15,
1996 Payment Date and with respect to the Class A-2 Notes, the October 15, 1998
Payment Date.
"Supplemental Administrative Agent Fee" means, with respect to any
Collection Period, all late fees, prepayment charges and certain other
administrative fees and expenses or similar charges allowed by applicable law
with respect to Leases and Leased Vehicles, and interest on amounts invested in
the Payment Account.
"Term Extension" is defined on page 57 in "Description of the
Administrative Agency Agreement -- Collection of Total Monthly Payments;
Extension of Leases."
"Total Available Funds" is defined on page 7 in "Summary -- Principal" and
on page 49 in "Description of the Notes -- The Indenture Cash Flows."
"Total Monthly Payment" is defined on page 9 in "Summary -- The Series
1995-1 Assets."
"Transfer Agreement" means the Transfer Agreement dated as of May , 1995
between the Transferor, as transferor, and the Lease Trustee, on behalf of the
Issuer, as transferee.
"Transferor" is RCL Trust 1995-1.
"Transferor Lease Trust Certificates" means the Lease Trust Certificates
held by the Transferor and Ford Credit Leasing which in addition to representing
the rights of a Lease Trust Certificate also represents the right to the
Deferred Amount.
"Transferor Purchase Option Price" is defined on page 12 in "Summary --
Transferor Leased Vehicle Purchase Option" and on page 31 in "Series 1995-1
Certificates -- Lease of the Series 1995-1 Certificates to the Transferor."
"UCC" means the Uniform Commercial Code.
"Uncollected Excess Wear and Tear and Excess Mileage" means, with respect
to any Payment Date and the related Accrual Period, all amounts which are due
but not collected from an Obligor with respect to a Series 1995-1 Lease which
terminated on its Scheduled Lease End Date as a result of (i) excess wear and
tear with respect to such Series 1995-1 Leased Vehicle and (ii) mileage charges
incurred in excess of the amount permitted pursuant to the related Series 1995-1
Lease.
"Underwriting Agreement" is defined on page 82 in "Underwriting."
"Underwriters" are J.P. Morgan Securities Inc, Goldman Sachs & Co. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Use and Lease Tax Amounts" is defined on page 32 in "The Leases and Leased
Vehicles -- Origination Procedures."
"VCR" is defined on page 33 in "The Leases and Leased Vehicles -- Servicing
Procedures."
"Vehicle Insurance and Maintenance Amounts" means, with respect to any
Lease, any payment due in connection with a Monthly Payment for remittance to
the related Dealer in connection with servicing of the related Leased Vehicle or
the provision of vehicle insurance.
"Voluntary Early Termination" is defined on page 33 in "The Leases and
Leased Vehicles -- Servicing Procedures."
"Voluntary Early Termination Proceeds" is defined on page 48 in
"Description of the Notes -- The Indenture Cash Flows."
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the offering described in this Registration Statement.
<TABLE>
<S> <C>
Securities and Exchange Commission............................................... $211,214
Rating agency fees............................................................... $150,000
Printing......................................................................... $ 50,000
Legal fees and expenses.......................................................... $100,000
Accountants' fees................................................................ $ 40,000
Fees and expenses of the RCL Trustee............................................. $ 25,000
Fees and expenses of the Lease Trustee........................................... $ 25,000
Fees and expenses of the Indenture Trustee....................................... $ 25,000
Miscellaneous expenses........................................................... $ 23,786
--------
Total..................................................................... $650,000
=========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 3803 of the Delaware Business Trust Statute provides as follows:
3803. Liability of Beneficial Owners and Trustees.
(a) Except to the extent otherwise provided in the governing
instrument of the business trust, the beneficial owners shall be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit.
(b) Except to the extent otherwise provided in the governing
instrument of a business trust, a trustee, when acting in such capacity,
shall not be personally liable to any person other than the business
trust or a beneficial owner for any act, omission or obligation of the
business trust or any trustee thereof.
Section 3817 of the Delaware Business Trust Statute provides as follows:
3817. Indemnification.
(a) Subject to such standards and restrictions, if any, as are set forth in
the governing instrument of a business trust, a business trust shall have the
power to indemnify and hold harmless any trustee or beneficial owner or other
person from and against any and all claims and demands whatsoever.
(b) The absence of a provision for indemnity in the governing instrument of
a business trust shall not be construed to deprive any trustee or beneficial
owner or other person of any right to indemnity which is otherwise available to
such person under the laws of this State.
Section 2.7 of the Amended and Restated Trust Agreement of RCL Trust 1995-1
provides as follows:
Section 2.7 Indemnification. Notwithstanding Section 3803 of the Trust
Statute, Ford Credit Leasing shall be liable to any injured party entitled
thereto and shall indemnify, defend and hold harmless the RCL Trustee, including
its successors, assigns, officers, directors, shareholders, employees and
agents, for all losses, claims, damages, liabilities and expenses
("Liabilities") of RCL, or incurred in connection with RCL Assets to the extent
that Ford Credit Leasing would be liable if RCL were a partnership under the
Delaware Revised Uniform Limited Partnership Act and Ford Credit Leasing was a
general partner thereof, and Ford Credit Leasing hereby covenants and agrees
that it will maintain capital in an amount sufficient to maintain its status as
a general partner of RCL and the Lease Trust; provided, however, that in no
event shall the RCL Trustee be indemnified or held harmless for any Liabilities
incurred (i) by reason of the RCL Trustee's willful
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malfeasance, bad faith or negligence or (ii) incurred by reason of the RCL
Trustee's breach of its representations and warranties set forth in Section 6.6.
In addition, if necessary, to the extent not otherwise reimbursed, the RCL
Trustee shall be entitled to indemnification from the RCL Account, subject to
the liens under the Basic Documents of the Lease Trustee on behalf of the Lease
Trust and the Indenture Trustee on behalf of the Noteholders, for any claims
against the RCL Trustee the indemnification for which is provided pursuant to
this Section 2.7.
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 expenses which the Court of Chancery or such other
court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct
set forth in subsections (a) and (b) of this section. Such determination
shall be made (1) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even
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though less than a quorum, or (2) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to
be indemnified by the corporation as authorized in this section. Such
expenses (including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the
board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position
under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any
employee benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer, employee,
or agent of the corporation which imposes duties on, or involves
services by, such director, officer, employee, or agent with respect to
an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed to
be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this
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section or under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise. The Court of Chancery may
summarily determine a corporation's obligation to advance expenses
(including attorneys' fees).
Article Ninth, Section 5 of the Certificate of Incorporation of Ford Motor
Credit Company provides as follows:
SECTION 5.
INDEMNIFICATION
5.1. Directors, Officers and Employees of the Corporation. Every
person now or hereafter serving as a director, officer or employee of the
corporation shall be indemnified and held harmless by the corporation from
and against any and all loss, cost, liability and expense that may be
imposed upon or incurred by him in connection with or resulting from any
claim, action, suit, or proceeding, civil or criminal, in which he may
become involved, as a party or otherwise, by reason of his being or having
been a director, officer or employee of the corporation, whether or not he
continues to be such at the time such loss, cost, liability or expense
shall have been imposed or incurred. As used herein, the term "loss, cost,
liability and expense" shall include, but shall not be limited to, counsel
fees and disbursements and amounts of judgments, fines or penalties
against, and amounts paid in settlement by, any such director, officer or
employee; provided, however, that no such director, officer or employee
shall be entitled to claim such indemnity: (1) with respect to any matter
as to which there shall have been a final adjudication that he has
committed or allowed some act or omission, (a) otherwise than in good faith
in what he considered to be the best interests of the corporation, and (b)
without reasonable cause to believe that such act or omission was proper
and legal; or (2) in the event of a settlement of such claim, action, suit,
or proceeding unless (a) the court having jurisdiction thereof shall have
approved of such settlement with knowledge of the indemnity provided
herein, or (b) a written opinion of independent legal counsel, selected by
or in manner determined by the Board of Directors, shall have been rendered
substantially concurrently with such settlement, to the effect that it was
not probable that the matter as to which indemnification is being made
would have resulted in a final adjudication as specified in clause (1)
above, and that the said loss, cost, liability or expense may properly be
borne by the corporation. A conviction or judgment (whether based on a plea
of guilty or nolo contendere or its equivalent, or after trial) in a
criminal action, suit or proceeding shall not be deemed an adjudication
that such director, officer or employee has committed or allowed some act
or omission as hereinabove provided if independent legal counsel, selected
as hereinabove set forth, shall substantially concurrently with such
conviction or judgment give to the corporation a written opinion that such
director, officer or employee was acting in good faith in what he
considered to be the best interests of the corporation or was not without
reasonable cause to believe that such act or omission was proper and legal.
5.2. Directors, Officers and Employees of Subsidiaries. Every person
(including a director, officer or employee of the corporation) who at the
request of the corporation acts as a director, officer or employee of any
other corporation in which the corporation owns shares of stock or of which
it is a creditor shall be indemnified to the same extent and subject to the
same conditions that the directors, officers and employees of the
corporation are indemnified under the preceding paragraph, except that the
amounts of such loss, cost, liability or expense paid to any such director,
officer or employee shall be reduced by and to the extent of any amounts
which may be collected by him from such other corporation.
5.3. Miscellaneous. The provisions of this Section 5 of Article NINTH
shall cover claims, actions, suits and proceedings, civil or criminal,
whether now pending or hereafter commenced and shall be retroactive to
cover acts or omissions or alleged acts or omissions which heretofore have
taken place. In the event of death of any person having a right of
indemnification under the provisions of this Section 5 of Article NINTH,
such right shall inure to the benefit
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of his heirs, executors, administrators and personal representatives. If
any part of this Section 5 of Article NINTH should be found to be invalid
or ineffective in any proceeding, the validity and effect of the remaining
provisions shall not be affected.
5.4. Indemnification Not Exclusive. The foregoing right of
indemnification shall not be deemed exclusive of any other right to which
those indemnified may be entitled, and the corporation may provide
additional indemnity and rights to its directors, officers or employees.
Article V of the Certificate of Incorporation of Ford Credit Leasing
Company, Inc. provides as follows:
ARTICLE V
(a) A director of the corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the
corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law or
(iv) for any transaction from which the director derived an
improper personal benefit.
If the Delaware General Corporation Law is amended after approval by
the stockholders of this Article V to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the corporation shall be eliminated or limited
to the fullest extent permitted by the Delaware General Corporation Law, as
so amended.
(b) Any repeal or modification of paragraph (a) of this Article V by
the stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such
repeal or modification.
(c) (i) Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative, investigative or otherwise (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom he
or she is the legal representative, is or was a director, officer or
employee of the corporation or is or was serving at the request of the
corporation as a director, officer or employee of another corporation or of
a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such
proceeding is alleged action in an official capacity as a director, officer
or employee or in any other capacity while serving as a director, officer
or employee, shall be indemnified and held harmless by the corporation to
the fullest extent authorized by the Delaware General Corporation Law, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the corporation
to provide broader indemnification rights than said law permitted the
corporation to provide prior to such amendment), against all expense,
liability and loss (including penalties, fines, judgments, attorneys' fees,
amounts paid or to 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 V) only if such proceeding (or part thereof) was
authorized by the Board of Directors of the corporation. The right to
indemnification conferred in this subparagraph (c)(i) of Article V
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shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law so requires, the payment of such expenses incurred
by a director or officer in his or her capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding shall be made only upon delivery to the corporation of an
undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this subparagraph (c)(i)
of Article V or otherwise.
(ii) If a claim which the corporation is obligated to pay under
subparagraph (c)(i) of this Article V is not paid in full by the
corporation within 60 days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the
expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the
required undertaking, if any is required, has been tendered to the
corporation) that the claimant has not met the standards of conduct which
make it permissible under the Delaware General Corporation Law for the
corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the corporation. Neither the
failure of the corporation (including its Board of Directors, independent
legal counsel or its stockholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor
an actual determination by the corporation (including its Board of
Directors, independent legal counsel or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the Claimant has not met the applicable
standard of conduct.
(iii) The provisions of this paragraph (c) of Article V shall cover
claims, actions, suits and proceedings, civil or criminal, whether now
pending or hereafter commenced, and shall be retroactive to cover acts or
omissions or alleged acts or omissions which heretofore have taken place.
If any part of this paragraph (c) of Article V should be found to be
invalid or ineffective in any proceeding, the validity and effect of the
remaining provisions shall not be affected.
(iv) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in
this paragraph (c) of Article V shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision
of the Certificate of Incorporation, By-Law, agreement, vote of
stockholders or disinterested directors or otherwise.
(v) The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
(vi) The corporation may, to the extent authorized from time to time
by the Board of Directors, grant rights to indemnification, and rights to
be paid by the corporation the expenses incurred in defending any
proceeding in advance of its final disposition, to any agent of the
corporation to the fullest extent of the provisions of this paragraph (c)
of Article V with respect to the indemnification and advancement of
expenses of director, officers and employees of the corporation.
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ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not Applicable
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(A) EXHIBITS:
<TABLE>
<S> <C>
1.1 -- Form of Underwriting Agreement.
3.1 -- Form of Amended and Restated Trust Agreement of RCL Trust 1995-1, among Ford
Credit, Ford Credit Leasing and the RCL Trustee.*
3.2 -- Restated Certificate of Incorporation of Ford Motor Credit Company.**
3.3 -- By-Laws of Ford Motor Credit Company.**
3.4 -- Certificate of Incorporation of Ford Credit Leasing Company, Inc.*
3.5 -- By-Laws of Ford Credit Leasing Company, Inc.*
4.1 -- Form of Trust Agreement of the Issuer, between the RCL Trustee and the Lease
Trustee.*
4.2 -- Form of Trust Indenture, between the Lease Trustee and the Indenture Trustee.*
4.3 -- Form of Class A-1 Note (included as part of Exhibit 4.2).*
4.4 -- Form of Class A-2 Note (included as part of Exhibit 4.2).*
4.5 -- Form of Limited RV Guaranty.*
5.1 -- Opinion of J.D. Bringard, Esq., Vice President-General Counsel of Ford Motor
Credit Company with respect to legality.
8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to tax matters.
8.2 -- Opinion of J.D. Bringard, Esq., Vice President-General Counsel of Ford Motor
Credit Company with respect to Michigan income tax matters.
10.1 -- Form of FCTT Trust Agreement, among Ford Credit, Ford Credit Leasing and
Comerica.*
10.2 -- Form of Administrative Agency Agreement, among Comerica, Ford Credit and Ford
Credit Leasing.*
10.3 -- Form of Series 1995-1 Supplement, among Comerica, Ford Credit and Ford Credit
Leasing.*
10.4 -- Form of Asset Contribution Agreement, among Ford Credit, Ford Credit Leasing and
the RCL Trustee.*
10.5 -- Form of Transfer Agreement, between the RCL Trustee and the Lease Trustee.*
10.6 -- Form of Program Operating Lease, between the RCL Trustee and the Lease Trustee.*
10.7 -- Form of Appendix A and Appendix I -- Definitions.*
23.1 -- Consent of J.D. Bringard Esq., Vice President-General Counsel of Ford Motor Credit
Company (included as part of Exhibit 5.1).
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included as part of Exhibit 8.1).
23.3 -- Consent of Coopers & Lybrand L.L.P.
24.1 -- Powers of Attorney of officers and directors of Ford Motor Credit Company.*
24.2 -- Powers of Attorney of officers and directors Ford Credit Leasing Company, Inc.*
25.1 -- Form T-1 of Chemical Bank.
</TABLE>
- -------------------------
* Previously filed
** Incorporated by reference to Exhibits 3.1 (Restated Certificate of
Incorporation) and 3.2 (By-Laws) to Ford Motor Credit Company's Registration
Statement on Form S-1 (Registration No. 33-25082)
II-7
<PAGE> 102
(B) FINANCIAL STATEMENTS:
[Not Applicable]
ITEM 17. UNDERTAKINGS.
(a) To provide to the Underwriter at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in such
names as required by the Underwriter to permit prompt delivery to each
purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 14 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(b) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933 each posteffective 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-8
<PAGE> 103
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 4 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Detroit and the State of Michigan on the 8th day of May, 1995.
RCL TRUST 1995-1
By FORD MOTOR CREDIT COMPANY,
Depositor and Beneficiary of the
Registrant
By WILLIAM E. ODOM*
--------------------------------------
(William E. Odom, Chairman
of the Board of Directors of
Ford Motor Credit Company)
By FORD CREDIT LEASING COMPANY,
INC., Depositor and Beneficiary
of the Registrant
By HURLEY D. SMITH*
--------------------------------------
(Hurley D. Smith, Chairman
of the Board of Directors of
Ford Credit Leasing Company, Inc.)
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 4 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Detroit and the State of Michigan on
the 8th day of May, 1995.
FORD MOTOR CREDIT COMPANY
By WILLIAM E. ODOM*
------------------------------------------
(William E. Odom, Chairman
of the Board of Directors of
Ford Motor Credit Company)
II-9
<PAGE> 104
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to the Registration Statement has been signed below by the following
officers and directors of FORD MOTOR CREDIT COMPANY, in the capacities and on
the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------- -----------
<S> <C> <C>
WILLIAM E. ODOM* Chairman of the Board of May 8, 1995
- --------------------------------------------- Directors and Director
(William E. Odom) (principal executive
officer)
KENNETH J. COATES* Director and Executive Vice May 8, 1995
- --------------------------------------------- President-Finance
(Kenneth J. Coates) (principal financial
officer)
TERRENCE F. MARRS* Controller (principal May 8, 1995
- --------------------------------------------- accounting officer)
(Terrence F. Marrs)
JOHN G. CLISSOLD* Director May 8, 1995
- ---------------------------------------------
(John G. Clissold)
EDSEL B. FORD II* Director May 8, 1995
- ---------------------------------------------
(Edsel B. Ford II)
DAVID N. MCCAMMON* Director May 8, 1995
- ---------------------------------------------
(David N. McCammon)
ROBERT D. WARNER* Director May 8, 1995
- ---------------------------------------------
(Robert D. Warner)
KENNETH WHIPPLE* Director May 8, 1995
- ---------------------------------------------
(Kenneth Whipple)
</TABLE>
*By /s/ R. P. CONRAD
-------------------------------
(R. P. Conrad, Attorney in
Fact)
II-10
<PAGE> 105
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to the Registration Statement has been signed below by the following
officers and directors of FORD CREDIT LEASING COMPANY, INC., in the capacities
and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------- -----------
<S> <C> <C>
HURLEY D. SMITH* Chairman of the Board of May 8, 1995
- --------------------------------------------- Directors and Director
(Hurley D. Smith) (principal executive
officer)
TERRENCE F. MARRS* Controller (principal May 8, 1995
- --------------------------------------------- financial officer)
(Terrence F. Marrs)
RICHARD P. CONRAD* Director May 8, 1995
- ---------------------------------------------
(Richard P. Conrad)
KEVIN F. KELLY* Director May 8, 1995
- ---------------------------------------------
(Kevin F. Kelly)
MARIO SPIVAK* Director May 8, 1995
- ---------------------------------------------
(Mario Spivak)
</TABLE>
*By /s/ R. P. CONRAD
-------------------------------
(R. P. Conrad, Attorney in
Fact)
II-11
<PAGE> 106
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION PAGE
- -------- -------------------------------------------------------------------------- ----
<S> <C> <C> <C>
1.1 -- Form of Underwriting Agreement.
3.1 -- Form of Amended and Restated Trust Agreement of RCL Trust 1995-1, among
Ford Credit, Ford Credit Leasing and the RCL Trustee.*
3.2 -- Restated Certificate of Incorporation of Ford Motor Credit Company.**
3.3 -- By-Laws of Ford Motor Credit Company.**
3.4 -- Certificate of Incorporation of Ford Credit Leasing Company, Inc.*
3.5 -- By-Laws of Ford Credit Leasing Company, Inc.*
4.1 -- Form of Trust Agreement of the Issuer, between the RCL Trustee and the
Lease Trustee.*
4.2 -- Form of Trust Indenture, between the Lease Trustee and the Indenture
Trustee.*
4.3 -- Form of Class A-1 Note (included as part of Exhibit 4.2).*
4.4 -- Form of Class A-2 Note (included as part of Exhibit 4.2).*
4.5 -- Form of Limited RV Guaranty.*
5.1 -- Opinion of J.D. Bringard, Esq., Vice President-General Counsel of Ford
Motor Credit Company with respect to legality.
8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom with respect to tax
matters.
8.2 -- Opinion of J.D. Bringard, Esq., Vice President-General Counsel of Ford
Motor Credit Company with respect to Michigan income tax matters.
10.1 -- Form of FCTT Agreement, among Ford Credit, Ford Credit Leasing and
Comerica.*
10.2 -- Form of Administrative Agency Agreement, among Comerica, Ford Credit and
Ford Credit Leasing.*
10.3 -- Form of Series 1995-1 Supplement, among Comerica, Ford Credit and Ford
Credit Leasing.*
10.4 -- Form of Asset Contribution Agreement, among Ford Credit, Ford Credit
Leasing and the RCL Trustee.*
10.5 -- Form of Transfer Agreement, between the RCL Trustee and the Lease
Trustee.*
10.6 -- Form of Program Operating Lease, between the RCL Trustee and the Lease
Trustee.*
10.7 -- Form of Appendix A and Appendix I -- Definitions.*
23.1 -- Consent of J.D. Bringard Esq., Vice President - General Counsel of Ford
Motor Credit Company (included as part of Exhibit 5.1).
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included as part of
Exhibit 8.1).
23.3 -- Consent of Coopers & Lybrand.
24.1 -- Powers of Attorney of officers and directors of Ford Motor Credit
Company.*
24.2 -- Powers of Attorney of officers and directors of Ford Credit Leasing
Company, Inc.*
25.1 -- Form T-1 of Chemical Bank.
</TABLE>
- -------------------------
* Previously filed
** Incorporated by reference to Exhibits 3.1 (Restated Certificate of
Incorporation) and 3.2 (By-Laws) to Ford Motor Credit Company's Registration
Statement on Form S-1 (Registration No. 33-25082)
<PAGE> 1
EXHIBIT 1.1
FORD CREDIT AUTO LEASE TRUST 1995-1
$_________ ASSET BACKED NOTES
CLASS A-1, CLASS A-2
RCL TRUST 1995-1
(Seller)
FORD MOTOR CREDIT COMPANY
(Issuer of Limited RV Guaranty)
UNDERWRITING AGREEMENT
________ __, 1995
J.P. Morgan Securities Inc.
As Representative of the Several Underwriters
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
1. Introductory. RCL Trust 1995-1, a Delaware business trust (the
"Seller"), proposes to sell to J.P. Morgan Securities Inc. (the
"Underwriter") $___________ initial principal balance of __% Class A-1 Asset
Backed Notes and $___________ initial principal balance of __% Class A-2 Asset
Backed Notes (collectively, the "Notes"), issued by Ford Credit Auto Lease
Trust 1995-1 (the "Issuer"). Each Note will be secured by the assets of the
Issuer (the "Lease Trust Estate"), which include, among other things,
certificates (the "Series 1995-1 Certificates") representing a 100% undivided
beneficial interest in specified retail automobile and light-duty truck leases
originated in the states of California, New York and Pennsylvania (the
"Series 1995-1 Leases"), certain monies due thereunder on or after ______ __,
1995 (the "Series 1995-1 Cut-Off Date"), the related leased vehicles (the
"Series 1995-1 Leased Vehicles") and all proceeds from the sale of Series
1995-1 Leased Vehicles upon termination of the related Series 1995-1 Leases.
The Series 1995-1 Leases are to be administered for the Issuer by Ford Motor
Credit Company (the "Administrative Agent" or "Ford Credit"). The Lease
<PAGE> 2
Trust Estate will include the Issuer's rights under the Ford Credit Residual
Value Guaranty 1995-1 to be dated as of ________ __, 1995 (the "Limited RV
Guaranty"), pursuant to which Ford Credit will agree to reimburse the Issuer
for specified shortfalls between the proceeds from certain sales of Series
1995-1 Leased Vehicles and their respective Residual Values up to an aggregate
amount of $_________. The Notes will be issued pursuant to an Indenture to be
dated as of ________ __, 1995 (the "Indenture"), between PNC Bank, Delaware
(the "Lease Trustee"), on behalf of the Issuer, and Chemical Bank as Indenture
Trustee (the "Indenture Trustee"). Simultaneously with the issuance and sale
of the Notes as contemplated herein, the Issuer will also issue $_________
initial principal balance of __% Asset Backed Lease Trust Certificates (the
"Lease Trust Certificates"), payments in respect of which are, to the extent
specified in the Indenture and the Lease Trust Agreement, subordinated to the
rights of the holders of the Notes.
Capitalized terms used herein and not otherwise defined shall have the
meanings given them in the Indenture. For purposes of this Agreement, the
"Basic Documents" mean, collectively, the Indenture, the FCTT Agreement, the
Administrative Agency Agreement, the Series 1995-1 Supplement, the RCL Trust
Agreement, the Asset Contribution Agreement, the Transfer Agreement, the
Program Operating Lease, the Limited RV Guaranty and the Lease Trust 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. 33-57827), including a
prospectus, on Form S-1 relating to the Notes and Form S-3 relating to the
Limited RV Guaranty has been filed with the Securities and Exchange Commission
(the "Commission") in the form heretofore delivered to the Underwriters.
Such registration statement in such form, including all exhibits thereto but
excluding Form T-1 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,
2
<PAGE> 3
as amended (the "Act") is hereinafter referred to as the "Prospectus." Any
reference to any amendment or supplement to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to include any
documents filed after the effective date of the Registration Statement or the
date of such preliminary prospectus or Prospectus, as the case may be, under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and so
incorporated by reference therein. 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
Exchange Act, where applicable, and the rules and regulations of the Commission
under the Act or the Exchange Act, as applicable, and will not, as of the
Effective Date, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statement or omission made in reliance upon
and in conformity with information furnished in writing to the Seller, Ford
Credit or Ford Credit Leasing by the Underwriters expressly for use in the
Registration Statement; when the Registration Statement became effective the
Indenture was, and at all times thereafter the Indenture has been and will be,
duly qualified under the Trust Indenture Act, and when the Registration
Statement became effective the Indenture conformed, and at all times thereafter
the Indenture has conformed and will conform, in all material respects to the
requirements of the Trust Indenture Act. On the date of this Agreement, the
Registration Statement conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b), the Registration Statement and the Prospectus will
conform, in all material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder (the "Rules and Regulations"),
and, except as aforesaid, neither of such documents includes, or will include,
any untrue statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. Any documents incorporated by refer-
3
<PAGE> 4
ence in the Prospectus, when they are filed with the Commission, will
conform in all material respects to the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder.
(c) The Seller has been duly formed and is validly existing as
a business trust in good standing under the laws of the State of Delaware, is
duly qualified to transact business and is in good standing in each
jurisdiction in the United States of America in which the conduct of its
business or the ownership of its property requires such qualification.
(d) The consummation by the Seller of the transactions
contemplated by this Agreement and the Basic Documents, and the fulfillment
of the terms thereof, will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, or result in the
creation of any lien, charge, or encumbrance upon any of the property or assets
of the Seller pursuant to the terms of, any indenture, mortgage, deed of trust,
loan agreement, guarantee, lease financing agreement, or similar agreement or
instrument under which the Seller is a debtor or guarantor.
(e) This Agreement has been duly authorized, executed and
delivered by the Seller; on the Closing Date, the Notes will have been duly
executed, authenticated, issued and delivered; on the Closing Date, the Basic
Documents to which the Seller is a party will have been duly authorized,
executed and delivered by and will constitute valid and binding obligations of
the Seller in accordance with their terms except as the same may be limited by
bankruptcy, insolvency, reorganization or other similar laws relating to or
affecting the enforcement of creditors' rights generally and by general
equitable principles, regardless of whether such enforceability is considered
in a proceeding in equity or at law; and the Basic Documents will conform to
the description thereof in the Prospectus in all material respects.
(f) The computer tape with respect to the Series 1995-1 Assets
(the "Computer Tape") to be delivered by Ford Credit as Administrative Agent
to the Lease Trustee, the Indenture Trustee and J.P. Morgan Securities, Inc.,
as representative of the Underwriters (the
4
<PAGE> 5
"Representative"), will be complete and accurate in all material respects
as of the date thereof.
3. Representations and Warranties of Ford Credit. Ford Credit
represents and warrants to and agrees with the Underwriters that:
(a) The Registration Statement has been filed with the
Commission in the form heretofore delivered to the Underwriters.
(b) On the Effective Date, the Registration Statement will
conform, in all material respects to the requirements of the Act, the Exchange
Act, where applicable, and the rules and regulations of the Commission under
the Act or the Exchange Act, as applicable, and will not, as of the
Effective Date, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this representation
and warranty shall not apply to any statement or omission made in reliance upon
and in conformity with information furnished in writing to the Seller, Ford
Credit or Ford Credit Leasing by the Underwriters expressly for use in the
Registration Statement; when the Registration Statement became effective the
Indenture was, and at all times thereafter the Indenture has been and will be,
duly qualified under the Trust Indenture Act, and when the Registration
Statement became effective the Indenture conformed, and at all times thereafter
the Indenture has conformed and will conform, in all material respects to the
requirements of the Trust Indenture Act. On the date of this Agreement, the
Registration Statement conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b), the Registration Statement and the Prospectus will
conform, in all material respects to the requirements of the Act and the Rules
and Regulations, 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. Any documents incorporated by
reference in the Prospectus, when they are filed with the Commission, will
conform in all material respects to the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder.
5
<PAGE> 6
(c) Ford Credit has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware; and has corporate power and authority, and has all licenses, permits,
orders and other governmental and regulatory approvals, to own or lease its
properties and conduct its business and is in good standing in each
jurisdiction in the United States of America in which the conduct of its
business or the ownership of its property requires such qualification, with
only such exceptions as are not material to the business of Ford Credit and its
subsidiaries considered as a whole.
(d) This Agreement has been duly authorized, executed and
delivered by Ford Credit; on the Closing Date, the Basic Documents to which
Ford Credit is a party will have been duly authorized, executed and delivered
by and will constitute valid and binding obligations of Ford Credit in
accordance with their terms except as the same may be limited by bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights generally and by general equitable principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law; and the Basic Documents will conform to the description
thereof in the Prospectus in all material respects.
(e) There is no consent, approval, authorization, order,
registration or qualification of or with any court or any regulatory authority
or other governmental body having jurisdiction over Ford Credit which is
required for, and the absence of which would materially affect, the
consummation of the transactions contemplated herein or in the Basic Documents,
except the registration under the Act of the Notes, the qualification of the
Indenture under the Trust Indenture Act, such consents, approvals,
authorizations, registrations or qualifications as may be required under the
securities or Blue Sky laws of any jurisdiction in connection with the public
offering of the Notes by the Underwriters and the filing of any financing
statements required to perfect the Seller's interest in the Series 1995-1
Certificates or the Issuer's or Indenture Trustee's interest in the Lease Trust
Estate and such other consents, approvals, authorizations, registrations or
qualifications as have been obtained.
6
<PAGE> 7
(f) The Computer Tape to be delivered by Ford Credit as
Administrative Agent to the Lease Trustee, the Indenture Trustee and the
Representative will be complete and accurate in all material respects as of the
date thereof.
(g) On or before the Closing Date, Ford Credit as
Administrative Agent for FCTT will mark the books and records of FCTT (in
whatever medium maintained) to show that the Series 1995-1 Assets are Series
Specified Assets with respect to Series 1995-1
4. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties, and agreements herein contained, but subject to
the terms and conditions herein set forth, the Seller agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Seller, the aggregate principal amounts of each Class of
Notes set forth opposite the names of the Underwriters in Schedule I hereto.
The Class A-1 Notes are to be purchased at the purchase price of _____% of the
aggregate principal amount thereof and the Class A-2 Notes are to be purchased
at the purchase price of _____% of the aggregate principal amount thereof, in
each case plus accrued interest at the interest rate of ___% for the Class A-1
Notes and ___% for the Class A-2 Notes calculated from (and including) _____
__, 1995 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 Notes to the
Representative, for the account of the Underwriters, at the office of Skadden,
Arps, Slate, Meagher & Flom on _______ __, 1994, at 10:00 a.m., New York time,
or at such other time not later than seven full business days thereafter as
the Representative and the Seller determine, such time being herein referred to
as the "Closing Date." The Notes to be so delivered will be initially
represented by one or more Notes registered in the name of Cede & Co., the
nominee of The Depository Trust Company ("DTC"). The interests of beneficial
owners of the Notes will be represented by book entries on the records of DTC
and participating members thereof. Definitive Notes will be available only
under limited circumstances.
7
<PAGE> 8
5. Offering by Underwriters. It is understood that, after the
Registration Statement becomes effective, the Underwriters propose to offer
the Notes for sale to the public (which may include selected dealers), as set
forth in the Prospectus.
6. Covenants of the Seller. The Seller covenants and agrees with the
Underwriters:
(a) If required, to 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 Notes
for offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or the Prospectus
as amended or supplemented or for additional information; and, 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 Notes or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal.
(c) Promptly from time to time to take such action as the
Representative may reasonably request in order to qualify the Notes for
offering and sale under the securities laws of such states as the
Representative may request and to continue such qualifications in effect so
long as necessary under such laws for the
8
<PAGE> 9
distribution of such Notes, provided that in connection therewith the Seller
shall not be required to qualify as a foreign corporation to do business, or to
file a general consent to service of process in any jurisdiction, and provided
further that the expense of maintaining any such qualification more than one
year from the Closing Date with respect to such Notes shall be at the
Representative's expense.
(d) To furnish the Underwriters with copies of the Registration
Statement (including exhibits and documents incorporated by reference
therein) 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 Notes, either (i) any event shall have
occurred as a result of which the Prospectus would include any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or (ii) for any other reason it shall be necessary
during such same period to amend or supplement the Prospectus as amended or
supplemented, to notify the Representative and to prepare and furnish to the
Representative as the Representative may from time to time reasonably request
an amendment or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance; and in case any Underwriter is
required by law to deliver a prospectus in connection with sales of any of such
Notes at any time six months or more after the Closing Date, upon the
Representative's request, but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many copies as the Representative may
request of an amended or supplemented prospectus complying with Section
10(a)(3) of the Act.
(e) To make generally available to Noteholders as soon as
practicable after the Effective Date of the Registration Statement (as such
date is defined in Rule 158(c) under the Act), an earnings statement of the
Seller complying with Rule 158 under the Act and covering a period of at least
twelve consecutive months beginning after such Effective Date.
9
<PAGE> 10
(f) To furnish to the Representative copies of the Registration
Statement (one of which will be signed and will include all exhibits and, if
the Representative so requests, documents incorporated by reference therein),
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 Notes are outstanding, to furnish
the Representative copies of all reports or other communications (financial or
other) furnished to Noteholders, and to deliver to the Representative during
such same period, (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission by the Seller or
Ford Credit and (ii) such additional information concerning the business and
financial condition of the Seller, Ford Credit or Ford Credit Leasing as the
Representative may from time to time reasonably request.
(h) To pay the following costs and expenses incident to the
performance of its obligations under this Agreement: (i) the Commission's
filing fees with respect to the Registration Statement; (ii) all fees of
the Rating Agency; (iii) all fees and expenses of the Indenture Trustee and the
Lease Trustee; (iv) all reasonable fees and expenses of Kelley Drye & Warren,
as counsel to the Indenture Trustee, Bayard Handelman & Murdoch, P.C., as
counsel to the Lease Trustee, Richards, Layton & Finger, as counsel to the RCL
Trustee and Bodman, Longley & Dahling, L.L.P., as counsel to the FCTT Trustee;
(v) all fees and expenses of Coopers & Lybrand relating to the letter re-
ferred to in Section 7(a) of this 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 Indenture or the Administrative
Agency Agreement; (vii) the cost of printing any preliminary and final
prospectus relating to the Notes and the Registration Statement; and (viii) any
other fees and expenses incurred in connection with the performance of its
obligations under this Agreement.
The Underwriters will pay the following costs and expenses
incident to the performance of their obligations under this Agreement: (x) all
Blue Sky fees and expenses as well as reasonable fees and expenses of
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<PAGE> 11
counsel in connection with state securities law qualifications and any legal
investment surveys; and (y) the reasonable fees and expenses of Skadden, Arps,
Slate, Meagher & Flom (excluding fees and expenses for tax advice rendered to
Ford Credit). Except as provided in this Section 6(h) and Sections 8 and 10 of
this Agreement, the Underwriter will pay all its own costs and expenses,
including, without limitation, the cost of printing any agreement among
underwriters, any transfer taxes on resale of the Notes by the Underwriters and
any advertising expenses connected with any offers that the Underwriters may
make.
(i) For a period from the date of this Agreement until the
retirement of the Notes, or until such time as the Underwriters shall cease
to maintain a secondary market in the Notes, whichever occurs first, Ford
Credit as the Administrative Agent will furnish to the Representative (i)
copies of each certificate, the annual statements of compliance and the annual
independent certified public accountant's servicing reports delivered to the
FCTT Trustee pursuant to Article IV of the Administrative Agency Agreement, by
first-class mail as soon as practicable after such statements and reports are
furnished to the FCTT Trustee, (ii) copies of each certificate and the annual
statements of compliance delivered to the Indenture Trustee pursuant to Article
III of the Indenture, by first-class mail as soon as practicable after such
statements and reports are furnished to the Indenture Trustee, (iii) copies
of each amendment to any Basic Document and (iv) on or about each Payment Date,
a copy of the report to Noteholders delivered to each Noteholder pursuant to
Article VIII of the Indenture, by telex or telecopy.
(j) On or before the Closing Date, the Seller shall cause Ford
Credit as Administrative Agent to (i) deliver the Computer Tape to the Lease
Trustee, the Indenture Trustee and the Representative and (ii) mark the books
and records of FCTT (in whatever medium maintained) to show that the Series
1995-1 Assets are Series Specified Assets with respect to Series 1995-1. From
and after the Closing Date, neither the Seller nor Ford Credit shall take any
action inconsistent with the specification of the Series 1995-1 Assets as
Series Specified Assets with respect to Series 1995-1 and the provisions
11
<PAGE> 12
of the Basic Documents relating to such specification, except as permitted by
the Basic Documents.
(k) To the extent, if any, that the rating provided with
respect to the Notes by the rating agency or agencies that initially rate the
Notes is conditional upon the furnishing of documents or the taking of any
other actions by the Seller or Ford Credit, the Seller or Ford Credit, as the
case may be, shall furnish such documents and take any such other actions.
7. Conditions of the Obligation of the Underwriters. The obligation of
the Underwriters to purchase and pay for the Notes will be subject to the
accuracy of the representations and warranties on the part of the Seller and
Ford Credit herein, to the accuracy of the statements of officers of the
Seller, Ford Credit and Ford Credit Leasing pursuant to the provisions hereof,
to the performance by the Seller, Ford Credit and Ford Credit Leasing of their
respective obligations hereunder and to the following additional conditions
precedent:
(a) At the time this Agreement is executed and delivered by
the Seller and at the Closing Date, Coopers & Lybrand shall have furnished to
the Representative letters dated, respectively, as of the date of this
Agreement and as of the Closing Date substantially in the form and substance of
the drafts 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 ______ __, 1995, or such later date as
shall have been consented to by the Representative; prior to the Closing
Date no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Seller, shall be contemplated by the
Commission; and all requests for additional information from the Commission
with respect to the Registration Statement shall have been complied with to the
satisfaction of the Representative.
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<PAGE> 13
(c) The Representative shall have received a officer's
certificate, dated the Closing Date, signed by the beneficiaries of the Seller
representing and warranting that, as of the Closing Date, except to the extent
that they relate expressly to another date in which case they will be true and
correct as of such date on the Closing Date, the representations and warranties
of the Seller in this Agreement, the Asset Contribution Agreement and the Lease
Trust Agreement are true and correct, that the Seller has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date, that no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or, to the best of their
knowledge, are contemplated by the Commission.
(d) Since the respective dates as of which information is given
in the Prospectus as amended or supplemented, there shall not have occurred
any material adverse change, or any development involving a prospective
material adverse change, in or affecting particularly the business or assets of
the Seller, Ford Credit or Ford Credit Leasing, or any material adverse change
in the financial position or results or operations of the Seller, Ford Credit
or Ford Credit Leasing, otherwise than as set forth or contemplated in the
Prospectus, which in any such case makes it impracticable or inadvisable in the
Representative's reasonable judgment to proceed with the public offering or the
delivery of the Notes on the terms and in the manner contemplated in the
Prospectus as amended or supplemented.
(e) Subsequent to the execution and delivery of this Agreement,
the United States shall not have become engaged in hostilities which have
resulted in the declaration of a national emergency or a declaration of war,
which makes it impracticable or inadvisable in the Representative's reasonable
judgment to proceed with the public offering of the Notes on the terms and in
the manner contemplated in the Prospectus as amended or supplemented.
(f) J.D. Bringard, Esq., Vice President-General Counsel of
Ford Credit and Ford Credit Leasing, or other counsel satisfactory to the
Representative in its reasonable judgment, shall have furnished to the
13
<PAGE> 14
Underwriter, his written opinion, dated the Closing Date, in form satisfactory
to the Representative in its reasonable judgment, to the effect that:
(i) The Seller has been duly formed and is validly
existing as a business trust in good standing under the laws
of the State of Delaware, and is duly qualified to transact
business and is in good standing in each jurisdiction in the
United States of America in which the conduct of its business
or the ownership of its property requires such qualification.
(ii) FCTT has been duly formed and is validly existing
as a trust under the laws of the State of Michigan, and is
duly qualified to transact business in each jurisdiction in
the United States of America in which the conduct of its
business or the ownership of its property requires such
qualification.
(iii) The FCTT Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding
obligation of, each of Ford Credit and Ford Credit Leasing.
(iv) This Agreement has been duly authorized, executed
and delivered by the Seller.
(v) The Program Operating Lease, the Asset Contribution
Agreement, the Transfer Agreement, the RCL Trust Agreement,
the RCL Assignment and the Lease Trust Agreement have been
duly authorized, executed and delivered by, and each
constitutes a valid and binding obligation of, the Seller.
(vi) The consummation of the transactions contemplated
by this Agreement and the Basic Documents and the fulfillment
of the terms thereof, will not conflict with or result in a
material breach of any of the terms or provisions of, or
constitute a default under,
14
<PAGE> 15
or result in the creation or imposition of any material lien,
charge or encumbrance upon any of the property or assets
of the Seller pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement, guarantee, lease
financing agreement or similar agreement or instrument under
which the Seller is a debtor or guarantor, nor will such
action result in any violation of the provisions of the
Certificate of Trust of the Seller.
(vii) The Seller has full power and authority to
transfer and assign the Series 1995-1 Certificates to the
Issuer pursuant to the Transfer Agreement and has duly
authorized such transfer and assignment to the Issuer by all
necessary trustee action.
(viii) The Seller has full power and authority to
transfer and assign a 1% interest in its assets and
liabilities to Ford Credit Leasing pursuant to the RCL
Assignment and has duly authorized such transfer and
assignment to Ford Credit Leasing by all necessary trustee
action.
(ix) Such counsel does not know of any legal or
governmental proceedings pending to which the Seller is a
party or of which any property of the Seller is the subject,
and no such proceedings are known by such counsel to be
threatened or contemplated by governmental authorities or
threatened by others, other than as set forth or contemplated
in the Prospectus as amended or supplemented and other than
such proceedings which, in his opinion, will not have a
material adverse effect upon the general affairs, business,
prospects, management, financial position, net worth or
results of operations (on an annual basis) of the Seller and
will not materially and adversely affect the performance by
the Seller of its obligations under, or the validity and
enforceability of, the Basic Documents or the Notes.
(x) The Notes have been duly authorized; when executed
by the Lease Trustee
15
<PAGE> 16
and authenticated by the Indenture Trustee in accordance
with the Indenture and delivered and paid for pursuant to this
Agreement, the Notes will constitute valid and binding
obligations of the Issuer enforceable in accordance with their
terms.
(xi) The Registration Statement has become effective
under the Act and, to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose
has been instituted or threatened by the Commission; the
Registration Statement and the Prospectus as amended or
supplemented and any further amendments and supplements
thereto made by the Seller prior to the Closing Date (other
than the financial statements and other accounting
information contained or incorporated by reference in the
Registration Statement or the Prospectus as amended or
supplemented or any further amendments or supplements
thereto, or omitted therefrom, as to which such counsel need
express no opinion) comply as to form in all material respects
with the requirements of the Act and the Trust Indenture
Act.
(xii) Such counsel believes that the Registration
Statement (other than the financial statements and other
accounting information contained or incorporated by reference
therein or omitted therefrom, as to which such counsel need
express no opinion), at the time the same became effective,
did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(xiii) Such counsel believes that the Prospectus as
amended or supplemented as of its date and as of the Closing
Date (other than the financial statements and other accounting
information contained or incorporated by reference therein or
omitted therefrom, as to which such counsel need express no
opinion)
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<PAGE> 17
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.
(xiv) Such counsel does not know of any contract or
other document of a character required to be filed as an
exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus as amended or
supplemented or required to be described in the Registration
Statement or the Prospectus as amended or supplemented which
is not filed or incorporated by reference or described as
required.
(xv) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated herein or in the
Basic Documents, except such as have been obtained and made
under the Act, the Trust Indenture Act and as may be required
under state securities laws, and the filing of any financing
statements required to perfect the Seller's interest in the
Series 1995-1 Certificates or the Issuer's or Indenture
Trustee's interest in the Lease Trust Estate and such other
approvals as have been obtained.
(xvi) Neither the issuance or sale of the Notes, nor
the execution and delivery of the Notes, this Agreement or the
Basic Documents, nor the consummation of any of the other
transactions contemplated herein or in the Basic Documents by
the Seller will contravene the terms of any material provision
of any statute, order, or regulation applicable to the Seller,
the failure with which to comply could have a material adverse
effect on the Seller.
(xvii) The Notes, the Basic Documents and this
Agreement each conforms in all material respects with the
descriptions
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<PAGE> 18
thereof contained in the Registration Statement and the
Prospectus.
(xviii) The Seller is not required to be registered
under the Investment Company Act of 1940, as amended.
(xix) Each Series 1995-1 Lease constitutes "chattel
paper" as defined in the Michigan UCC.
(xx) The Series 1995-1 Certificates are either
"certificated securities" or "general intangibles" as defined
in the Michigan UCC.
Such opinion may be made subject to the qualifi-
cations that the enforceability of the terms of the Indenture,
the Program Operating Lease, the Asset Contribution Agreement,
the Transfer Agreement, the RCL Trust Agreement, the RCL
Assignment, the Lease Trust Agreement and the Notes may be
limited by bankruptcy, insolvency, reorganizations or other
similar laws relating to or affecting the enforcement of
creditors' rights generally and by general equitable
principles, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(g) J.D. Bringard, Esq., Vice President-General Counsel of Ford
Credit, or other counsel satisfactory to the Representative in its reasonable
judgment, shall have furnished to the Representative his written opinion, dated
as of the Closing Date, in form satisfactory to the Representative in its
reasonable judgment, to the effect that:
(i) Ford Credit has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, and is duly qualified to
transact business and is in good standing in each jurisdiction
in the United States of America in which the conduct of its
business or the ownership of its property requires such
qualification, with only such exceptions as are not
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<PAGE> 19
material to the business of Ford Credit and its subsidiaries
considered as a whole.
(ii) This Agreement has been duly authorized, executed
and delivered by Ford Credit.
(iii) The FCTT Agreement, the Administrative Agency
Agreement, the Series 1995-1 Supplement, the Asset
Contribution Agreement, the Limited RV Guaranty and the RCL
Trust Agreement have been duly authorized, executed and
delivered by, and each constitutes a valid and binding
obligation of, Ford Credit.
(iv) To the best of such counsel's knowledge, the
obligations of Ford Credit under the Limited RV Guaranty rank
pari passu with all other unsecured indebtedness of Ford
Credit.
(v) The consummation of the transactions contemplated
by this Agreement and the Basic Documents, and the fulfillment
of the terms thereof, will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under (in each case material to Ford Credit and its
subsidiaries considered as a whole), or result in the creation
or imposition of any lien, charge or encumbrance (in each case
material to Ford Credit and its subsidiaries considered as a
whole) upon any of the property or assets of Ford Credit
pursuant to the terms of, any indenture, mortgage, deed of
trust, loan agreement, guarantee, lease financing agreement
or similar agreement or instrument known to such counsel under
which Ford Credit is a debtor or guarantor, nor will such
action result in any violation of the provisions of the
Certificate of Incorporation or By-Laws of Ford Credit.
(vi) 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
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<PAGE> 20
to be threatened or contemplated by governmental
authorities or threatened by others, other than as set forth
or contemplated in the Prospectus as amended or supplemented
and other than such proceedings which, in his opinion, will
not have a material adverse effect upon the general affairs,
financial position, net worth or results of operations (on
an annual basis) of Ford Credit and its subsidiaries
considered as a whole and will not materially and adversely
affect the performance by Ford Credit of its obligations
under, or the validity and enforceability of, the Basic
Documents.
(vii) Ford Credit has full power and authority to
contribute and assign its interest in the Series 1995-1
Certificates to the Seller pursuant to the Asset Contribution
Agreement and has duly authorized such contribution and
assignment to the Seller by all necessary corporate action.
(viii) The Issuer has full power and authority to
grant a security interest in the Series 1995-1 Certificates to
the Indenture Trustee pursuant to the Indenture and, subject
to such security interest, to grant to the Seller the right
to the use of and proceeds from the Series 1995-1 Certificates
pursuant to the Program Operating Lease and has duly
authorized each such grant by all necessary trustee action.
(ix) The statements in the Prospectus under the
caption "Certain Legal Aspects of FCTT and the Series 1995-1
Certificates" and "Certain Legal Aspects of the Leases and
Leased Vehicles," to the extent they constitute matters of
law or legal conclusions, are correct in all material
respects.
(x) Immediately prior to the transfer of its interest
in the Series 1995-1 Certificates to the Seller, Ford Credit
owned its interest in the Series 1995-1 Certificates free
and clear of any lien, security interest or charge;
immediately prior to the transfer
20
<PAGE> 21
and assignment of the Series 1995-1 Certificates to the
Issuer, the Seller owned the Series 1995-1 Certificates free
and clear of any lien, security interest or charge; and
immediately prior to the grant of a security interest in the
Series 1995-1 Certificates to the Indenture Trustee, the
Issuer owned the Series 1995-1 Certificates free and clear of
any lien, security interest or charge. The Series 1995-1
Certificates have been duly and validly assigned to the Seller
by Ford Credit and Ford Credit Leasing and to the Issuer by
the Seller, and a security interest in the Series 1995-1
Certificates has been duly and validly granted to the
Indenture Trustee by the Issuer. Subject to such security
interest, the right to the use of and proceeds from the Series
1995-1 Certificates has been duly and validly granted to the
Seller by the Issuer.
(xi) All filings necessary under applicable law to
perfect the assignment of the Series 1995-1 Certificates by
Ford Credit and Ford Credit Leasing to the Seller pursuant to
the Asset Contribution Agreement, the assignment of the Series
1995-1 Certificates by the Seller to the Issuer pursuant to
the Transfer Agreement and the grant of a security interest in
the Series 1995-1 Certificates to the Indenture Trustee
pursuant to the Indenture have been made and, provided that
neither Ford Credit nor Ford Credit Leasing relocates its
principal place of business in a state other than Michigan, no
other filings (other than the filing of continuation
statements) need be made to maintain the perfection of the
assignment of the Series 1995-1 Certificates to the Seller
pursuant to the Asset Contribution Agreement or to the Issuer
pursuant to the Transfer Agreement and of the grant of a
security interest in the Series 1995-1 Certificates to the
Indenture Trustee pursuant to the Indenture.
(xii) The Indenture is qualified under the Trust
Indenture Act, and neither the Issuer nor Ford Credit is
required to be regis-
21
<PAGE> 22
tered under the Investment Company Act of 1940, as
amended.
(xiii) Such counsel believes that the documents
incorporated by reference in the Registration Statement or the
Prospectus as amended or supplemented or any further
amendments or supplements thereto (other than the financial
statements and other accounting information contained in
such documents, 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 Exchange Act.
(xiv) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated herein or in the
Basic Documents, except such as have been obtained and made
under the Act, the Trust Indenture Act and as may be required
under state securities laws, and the filing of any financing
statements required to perfect the Seller's interest in the
Series 1995-1 Certificates or the Issuer's or Indenture
Trustee's interest in the Lease Trust Estate and such other
approvals as have been obtained.
(xv) Such counsel does not know of any legal or
governmental proceedings pending to which either Ford Credit
or the Seller is a party or of which any property of either
Ford Credit or the Seller is the subject, and no such
proceedings are known by such counsel to be threatened or
contemplated by governmental authorities or threatened by
others (1) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this
Agreement and the Basic Documents or (2) seeking adversely
to affect the federal income tax attributes of the Notes as
described in the Prospectus under the heading "Certain Federal
Income Tax Consequences."
(xvi) Neither the issuance or sale of the Notes, nor
the execution and deliv-
22
<PAGE> 23
ery of the Notes, this Agreement or the Basic Documents, nor
the consummation of any of the other transactions
contemplated herein or in the Basic Documents by Ford Credit
will contravene the terms of any material provision of any
statute, order, or regulation applicable to Ford Credit, the
failure with which to comply could have a material adverse
effect on Ford Credit and its subsidiaries considered as a
whole.
(h) J.D. Bringard, Esq., Vice President-General Counsel of Ford
Credit Leasing, or other counsel satisfactory to the Representative in its
reasonable judgment, shall have furnished to the Representative his written
opinion, dated as of the Closing Date, in form satisfactory to the
Representative in its reasonable judgment, to the effect that:
(i) Ford Credit Leasing has been duly incorporated and
is validly existing as a corporation in good standing under
the laws of the State of Delaware, and is duly qualified to
transact business and is in good standing in each jurisdiction
in the United States of America in which the conduct of its
business or the ownership of its property requires such
qualification.
(ii) This Agreement has been duly authorized, executed
and delivered by Ford Credit Leasing.
(iii) The FCTT Agreement, the Administrative Agency
Agreement, the Series 1995-1 Supplement, the Asset
Contribution Agreement,the RCL Trust Agreement and the RCL
Assignment have been duly authorized, executed and delivered
by, and each constitutes a valid and binding obligation of,
Ford Credit Leasing.
(iv) The consummation of the transactions contemplated
by this Agreement and the Basic Documents, and the fulfillment
of the terms thereof, will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under, or result in
23
<PAGE> 24
the creation or imposition of any lien, charge or encumbrance
upon any of the property or assets of Ford Credit Leasing
pursuant to the terms of, any indenture, mortgage, deed of
trust, loan agreement, guarantee, lease financing agreement or
similar agreement or instrument known to such counsel under
which Ford Credit Leasing is a debtor or guarantor, nor will
such action result in any violation of the provisions of the
Certificate of Incorporation or By-Laws of Ford Credit
Leasing.
(v) Ford Credit Leasing is not required to be
registered under the Investment Company Act of 1940, as
amended.
(vi) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated herein or in the
Basic Documents, except such as have been obtained and made
under the Act, the Trust Indenture Act and as may be required
under state securities laws, and the filing of any financing
statements required to perfect the Seller's interest in the
Series 1995-1 Certificates or the Issuer's or Indenture
Trustee's interest in the Lease Trust Estate and such other
approvals as have been obtained.
(vii) Such counsel does not know of any legal or
governmental proceedings pending to which Ford Credit Leasing
is a party or of which any property of Ford Credit Leasing is
the subject, and no such proceedings are known by such counsel
to be threatened or contemplated by governmental authorities
or threatened by others, other than as set forth or
contemplated in the Prospectus as amended or supplemented and
other than such proceedings which, in his opinion, will not
have a material adverse effect upon the general affairs,
financial position, net worth or results of operations (on an
annual basis) of Ford Credit Leasing and will not materially
and adversely affect the performance by Ford Credit Leasing of
its obligations
24
<PAGE> 25
under, or the validity and enforceability of, the Basic
Documents.
(viii) Ford Credit Leasing has full power and authority
to contribute and assign its interest in the Series 1995-1
Certificates to the Seller pursuant to the Asset Contribution
Agreement and has duly authorized such contribution and
assignment to the Seller by all necessary corporate action.
(ix) Immediately prior to the transfer of its interest
in the Series 1995-1 Certificates to the Seller, Ford Credit
Leasing owned its interest in the Series 1995-1 Certificates
free and clear of any lien, security interest or charge.
(x) Such counsel does not know of any legal or
governmental proceedings pending to which Ford Credit Leasing
is a party or of which any property of Ford Credit Leasing is
the subject, and no such proceedings are known by such
counsel to be threatened or contemplated by governmental
authorities or threatened by others (1) seeking to prevent the
issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement and the Basic
Documents or (2) seeking adversely to affect the federal
income tax attributes of the Notes as described in the
Prospectus under the heading "Certain Federal Income Tax
Consequences."
(xi) Neither the issuance or sale of the Notes, nor the
execution and delivery of the Notes, this Agreement or the
Basic Documents, nor the consummation of any of the other
transactions contemplated herein or in the Basic Documents by
Ford Credit Leasing will contravene the terms of any material
provision of any statute, order, or regulation applicable to
Ford Credit Leasing, the failure with which to comply could
have a material adverse effect on Ford Credit Leasing.
25
<PAGE> 26
(i) Skadden, Arps, Slate, Meagher & Flom shall have furnished
their written opinion, dated the Closing Date, with respect to the
characterization of the transfer of the Series 1995-1 Certificates by Ford
Credit and Ford Credit Leasing to the Seller as an absolute transfer (a "true
sale"), and with respect to the characterization under the Uniform Commercial
Code of the transfer of the Series 1995-1 Certificates from the Seller to the
Issuer (which opinion shall state that it may be relied upon by the Indenture
Trustee) to the Representative, the Rating Agency, Ford Credit and Ford Credit
Leasing, and such opinion shall be in substantially the form previously
discussed with the Representative and in any event satisfactory in form and in
substance to the Representative.
(j) Skadden, Arps, Slate, Meagher & Flom, special counsel to
Ford Credit, shall have furnished their written opinion, dated the Closing
Date, with respect to the nonconsolidation under the Bankruptcy Code of the
assets and liabilities of any of Ford Credit Leasing, FCTT or the Seller with
the assets and liabilities of Ford Credit in the event that Ford Credit were to
become the subject of a case under the Bankruptcy Code to the Representative,
the Rating Agency, Ford Credit and Ford Credit Leasing, and such opinion shall
be in substantially the form previously discussed with the Representative and
in any event satisfactory in form and in substance to the Representative.
(k) Skadden, Arps, Slate, Meagher & Flom, special tax counsel
to Ford Credit, shall have furnished to the Representative their written
opinion, dated as of the Closing Date, in form and in substance satisfactory to
the Representative in its reasonable judgment, to the effect that:
(i) FCTT, the Seller and the Issuer will each not be
classified as an association taxable as a corporation for
federal income tax purposes and the Notes will be
characterized as debt for federal income tax purposes.
(ii) The statements in the Registration Statement and
Prospectus under the heading "Certain Federal Income Tax
Consequenc-
26
<PAGE> 27
es," to the extent that they constitute matters of law or
legal conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material
respects.
(l) J.D. Bringard, Esq., Vice President-General Counsel of Ford
Credit and Ford Credit Leasing, shall have furnished to the Representative his
written opinion, dated as of the Closing Date, in form satisfactory to the
Representative in its reasonable judgment, to the effect that, assuming FCTT,
the Seller and the Issuer will each not be classified as an association
taxable as a corporation for federal income tax purposes and the Notes will be
characterized as debt for federal income tax purposes:
(i) None of FCTT, the Seller or the Issuer will be
classified as a separate entity subject to Michigan single
business tax or the Michigan income tax.
(ii) The Notes will be characterized as debt for
Michigan income and single business tax purposes.
(iii) Holders of Notes who would not otherwise be
subject to tax in Michigan will not be subject to tax
in Michigan solely because of a Holder's ownership of the
Notes.
(iv) The statements in the Registration Statement and
Prospectus under the headings "Certain State Tax
Consequences," to the extent that they constitute matters of
law or legal conclusions with respect thereto, have been
prepared or reviewed by such counsel and are correct in all
material respects.
(m) The Representative shall have received an opinion addressed
to the Representative of Skadden, Arps, Slate, Meagher & Flom, dated the
Closing Date, with respect to the validity of the Notes and such other related
matters as the Representative shall require and the Seller, Ford Credit and
Ford Credit Leasing shall have furnished or caused to be furnished to such
27
<PAGE> 28
counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(n) The Representative shall have received an opinion addressed
to the Representative, the Seller, Ford Credit and Ford Credit Leasing of
Bayard Handelman & Murdoch, P.A., counsel to the Lease Trustee, dated the
Closing Date and satisfactory in form and substance to the Representative and
to counsel to the Representative, to the effect that:
(i) The Lease Trustee has been duly incorporated and
is validly existing as a banking corporation in good standing
under the laws of the State of Delaware with full corporate
trust power and authority to enter into and perform its
obligations under the Lease Trust Agreement and, on behalf of
the Issuer, under the Indenture, the Transfer Agreement and
the Program Operating Lease.
(ii) The Lease Trust Agreement duly creates for the
benefit of the Seller and the Lease Trust Certificateholders
the interests in the Lease Trust Estate which the Lease Trust
Agreement purports to create, and the trust purported to be
created by the Lease Trust Agreement is validly formed and is
validly existing.
(iii) The Lease Trust Agreement authorizes the Issuer
to execute and deliver the Indenture, the Transfer Agreement,
the Program Operating Lease and the Limited RV Guaranty, to
issue the Notes and to grant the Lease Trust Estate to the
Indenture Trustee as security for the Notes.
(iv) The execution and delivery of the Lease Trust
Agreement and, on behalf of the Issuer, the Indenture, the
Transfer Agreement, the Program Operating Lease and the
Limited RV Guaranty and the performance by the Lease Trustee
of its obligations under the Lease Trust Agreement, the
Indenture, the Transfer Agreement and the Program Operating
Lease have been duly authorized by all neces-
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sary corporate action of the Lease Trustee and each has been
duly executed and delivered by the Lease Trustee.
(v) Assuming due authorization, execution and
delivery thereof by the parties thereto, the Lease Trust
Agreement, the Indenture, the Transfer Agreement and the
Program Operating Lease each constitutes a legal, valid and
binding obligation of the Lease Trustee, enforceable against
the Lease Trustee in accordance with its terms, except (1) the
enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights, and
(2) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(vi) Neither the execution nor delivery by the Lease
Trustee of the Indenture and, on behalf of the Issuer, the
Indenture, the Transfer Agreement, the Program Operating Lease
and the Limited RV Guaranty, nor the consummation of any of
the transactions by the Lease Trustee contemplated thereby
required the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action
with respect to, any governmental authority or agency under
any existing federal or Delaware State law governing the trust
powers of the Lease Trustee, except such as have been
obtained, made or taken.
(vii) The Lease Trustee has duly authorized, issued,
executed and delivered each of the Notes pursuant to the terms
and provisions of the Indenture; each of such Notes is a
legal, valid and binding obligation of the Lease Trustee,
enforceable against the Lease Trustee in accordance with its
terms and the terms of the Indenture; and each of such Notes
is entitled to the benefits and security af-
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<PAGE> 30
forded by the Indenture in accordance with the terms of the
Indenture.
(viii) The execution and delivery by the Lease Trustee
of the Lease Trust Agreement and, on behalf of the Issuer, the
Indenture, the Transfer Agreement, the Program Operating Lease
and the Limited RV Guaranty, and the performance by the Lease
Trustee of its obligations thereunder do not conflict with or
result in a breach or violation of any of the terms,
conditions or provisions of any law, governmental rule or
regulation of the United States or the State of Delaware
governing the banking or trust powers of the Lease Trustee or
the Certificate of Incorporation or By-Laws of the Lease
Trustee or, to such counsel's knowledge, any order writ,
injunction or decree of any court or governmental authority
against the Lease Trustee or by which it or any of its
properties is bound or, to such counsel's knowledge, any
indenture, mortgage or contract or other agreement or
instrument to which the Lease Trustee is a party or by which
it or any of its properties is bound, or constitute a default
thereunder.
(ix) The Lease Trustee has acquired such title to the
Series 1995-1 Certificates as has been conveyed to the Lease
Trustee on the date hereof, subject to the rights of the
Seller under the Program Operating Lease and the security
interest created pursuant to the Indenture; and, to such
counsel's knowledge, there exist no liens, security interests
or charges affecting the title of the Lease Trustee to the
Series 1995-1 Certificates resulting from acts of or claims
against the Lease Trustee except liens, security interests or
charges contemplated by the Basic Documents.
(o) The Representative shall have received an opinion addressed
to the Representative, the Seller and Ford Credit of Kelley Drye & Warren,
counsel to the Indenture Trustee, dated the Closing Date and satisfactory in
form and substance to the Representa-
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<PAGE> 31
tive and to counsel to the Representative, to the effect that:
(i) The Indenture Trustee has been duly incorporated
and is validly existing as a banking corporation in good
standing under the laws of the State of New York with
full corporate trust power and authority to enter into and
perform its obligations under the Indenture.
(ii) The Indenture has been duly executed and
delivered by the Indenture Trustee, and, insofar as the laws
governing the trust powers of the Indenture Trustee are
concerned and assuming due authorization, execution and
delivery thereof by the Lease Trustee, the Indenture
constitutes a legal, valid and binding obligation of the
Indenture Trustee, enforceable against the Indenture Trustee
in accordance with its terms, except (1) the enforceability
thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights, and (2) the
remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding
therefor may be brought.
(iii) The Notes have been duly authenticated and
delivered by the Indenture Trustee.
(iv) Neither the execution nor delivery by the
Indenture Trustee of the Indenture nor the consummation of any
of the transactions by the Indenture Trustee contemplated
thereby required the consent or approval of, the giving of
notice to, the registration with, or the taking of any other
action with respect to, any governmental authority or agency
under any existing federal or New York State law governing
the trust powers of the Indenture Trustee, except such as
have been obtained, made or taken.
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<PAGE> 32
(v) The execution and delivery by the Indenture
Trustee of the Indenture and the performance by the Indenture
Trustee of its obligations thereunder do not conflict with or
result in a breach or violation of any of the terms,
conditions or provisions of any law, governmental rule or
regulation of the United States or the State of New York
governing the banking or trust powers of the Indenture Trustee
or the Certificate of Incorporation or By-Laws of the
Indenture Trustee or, to such counsel's knowledge, any order
writ, injunction or decree of any court or governmental
authority against the Indenture Trustee or by which it or any
of its properties is bound or, to such counsel's knowledge,
any indenture, mortgage or contract or other agreement or
instrument to which the Indenture Trustee is a party or by
which it or any of its properties is bound, or constitute a
default thereunder.
(p) The Representative shall have received an opinion addressed
to the Representative, the Seller, Ford Credit and Ford Credit Leasing of
Richards, Layton & Finger, counsel to the RCL Trustee, dated the Closing Date
and satisfactory in form and substance to the Representative and to counsel to
the Representative, to the effect that:
(i) The RCL Trustee has been duly incorporated and is
validly existing as a banking corporation in good standing
under the laws of the State of Delaware with full corporate
trust power and authority to enter into and perform its
obligations under the RCL Trust Agreement and, on behalf of
the Seller, under this Agreement, the Transfer Agreement, the
Program Operating Lease, the Asset Contribution Agreement, the
RCL Assignment and the Lease Trust Agreement.
(ii) The RCL Trust Agreement duly creates for the
benefit of Ford Credit and Ford Credit Leasing the interests
in the Seller's assets which the RCL Trust Agreement purports
to create, and the trust purported to be created by the RCL
Trust Agreement is valid-
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<PAGE> 33
ly formed and is validly existing as a business trust in good
standing under the laws of the State of Delaware.
(iii) The RCL Trust Agreement authorizes the Seller to
execute and deliver this Agreement, the Transfer Agreement,
the Program Operating Lease, the Asset Contribution Agreement,
the RCL Assignment and the Lease Trust Agreement.
(iv) The execution and delivery of the RCL Trust
Agreement and, on behalf of the Seller, this Agreement,
the Transfer Agreement, the Program Operating Lease, the
Asset Contribution Agreement, the RCL Assignment and the Lease
Trust Agreement and the performance by the RCL Trustee of
its obligations under the RCL Trust Agreement, this Agreement,
the Transfer Agreement, the Program Operating Lease, the Asset
Contribution Agreement, the RCL Assignment and the Lease Trust
Agreement have been duly authorized by all necessary corporate
action of the RCL Trustee and each has been duly executed and
delivered by the RCL Trustee.
(v) Assuming due authorization, execution and delivery
thereof by the parties thereto, the RCL Trust Agreement, this
Agreement, the Transfer Agreement, the Program Operating
Lease, the Asset Contribution Agreement, the RCL Assignment
and the Lease Trust Agreement each constitutes a legal, valid
and binding obligation of the RCL Trustee, enforceable against
the RCL Trustee in accordance with its terms, except (1) the
enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights, and
(2) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought.
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<PAGE> 34
(vi) Neither the execution nor delivery by the RCL
Trustee of the RCL Trust Agreement and, on behalf of the
Seller, this Agreement, the Transfer Agreement, the Program
Operating Lease, the Asset Contribution Agreement, the RCL
Assignment and the Lease Trust Agreement, nor the consummation
of any of the transactions by the RCL Trustee contemplated
thereby required the consent or approval of, the giving of
notice to, the registration with, or the taking of any other
action with respect to, any governmental authority or agency
under any existing federal or Delaware State law governing the
trust powers of the RCL Trustee, except such as have been
obtained, made or taken.
(vii) The execution and delivery by the RCL Trustee of
the RCL Trust Agreement and, on behalf of the Seller, this
Agreement, the Transfer Agreement, the Program Operating
Lease, the Asset Contribution Agreement, the RCL Assignment
and the Lease Trust Agreement, and the performance by the RCL
Trustee of its obligations thereunder do not conflict with or
result in a breach or violation of any of the terms,
conditions or provisions of any law, governmental rule or
regulation of the United States or the State of Delaware
governing the banking or trust powers of the RCL Trustee or
the Certificate of Incorporation or By-Laws of the RCL Trustee
or, to such counsel's knowledge, any order writ, injunction
or decree of any court or governmental authority against the
RCL Trustee or by which it or any of its properties is bound
or, to such counsel's knowledge, any indenture, mortgage or
contract or other agreement or instrument to which the RCL
Trustee is a party or by which it or any of its properties is
bound, or constitute a default thereunder.
(q) The Representative shall have received an opinion addressed
to the Representative, the Seller, Ford Credit and Ford Credit Leasing of
Bodman, Longley & Dahling, L.L.P., counsel to the FCTT Trustee, dated the
Closing Date and satisfactory in form and
34
<PAGE> 35
substance to the Representative and to counsel to the Representative, to
the effect that:
(i) The FCTT Trustee has been duly incorporated and is
validly existing as a banking corporation in good standing
under the laws of the State of Michigan with full corporate
trust power and authority to enter into and perform its
obligations under the FCTT Agreement and, on behalf of FCTT,
under the Administrative Agency Agreement and the Series
1995-1 Supplement.
(ii) The FCTT Agreement duly creates for the benefit of
Ford Credit and Ford Credit Leasing the interests in the
assets of FCTT which the FCTT Agreement purports to create,
and the trust purported to be created by the FCTT Agreement is
validly formed and is validly existing.
(iii) The FCTT Agreement authorizes FCTT to execute and
deliver the Administrative Agency Agreement and the Series
1995-1 Supplement.
(iv) The execution and delivery of the FCTT Agreement
and, on behalf of FCTT, the Administrative Agency Agreement
and the Series 1995-1 Supplement and the performance by the
FCTT Trustee of its obligations under the FCTT Agreement, the
Administrative Agency Agreement and the Series 1995-1
Supplement have been duly authorized by all necessary
corporate action of the FCTT Trustee and each has been duly
executed and delivered by the FCTT Trustee.
(v) Assuming due authorization, execution and
delivery thereof by the parties thereto, the FCTT Agreement,
the Administrative Agency Agreement and the Series 1995-1
Supplement each constitutes a legal, valid and binding
obligation of the FCTT Trustee, enforceable against the FCTT
Trustee in accordance with its terms, except (1) the
enforceability thereof may be subject to bankruptcy,
insolven-
35
<PAGE> 36
cy, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights, and (2) the
remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding
therefor may be brought.
(vi) Neither the execution nor delivery by the FCTT
Trustee of the FCTT Agreement and, on behalf of FCTT, the
Administrative Agency Agreement and the Series 1995-1
Supplement, nor the consummation of any of the transactions by
the FCTT Trustee contemplated thereby required the consent
or approval of, the giving of notice to, the registration
with, or the taking of any other action with respect to, any
governmental authority or agency under any existing federal
or Michigan State law governing the trust powers of the FCTT
Trustee, except such as have been obtained, made or taken.
(vii) The execution and delivery by the
FCTT Trustee of the FCTT Agreement and, on behalf of FCTT, the
Administrative Agency Agreement and the Series 1995-1
Supplement, and the performance by the FCTT Trustee of its
obligations thereunder do not conflict with or result in a
breach or violation of any of the terms, conditions or
provisions of any law, governmental rule or regulation of
the United States or the State of Michigan governing the
banking or trust powers of the FCTT Trustee or the Certificate
of Incorporation or By-Laws of the FCTT Trustee or, to such
counsel's knowledge, any order writ, injunction or decree of
any court or governmental authority against the FCTT Trustee
or by which it or any of its properties is bound or, to such
counsel's knowledge, any indenture, mortgage or contract or
other agreement or instrument to which the FCTT Trustee is a
party or by which it or any of its properties is bound, or
constitute a default thereunder.
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<PAGE> 37
(r) The Representative shall have received an officer's
certificate dated the Closing Date of the Chairman of the Board, the President,
the Executive Vice President-Finance or the Treasurer of:
(i) Ford Credit, in which such officer shall state
that, to the best of such officer's knowledge after reasonable
investigation, the representations and warranties of Ford
Credit contained in the FCTT Agreement, the RCL Trust
Agreement, the Administrative Agency Agreement, the Series
1995-1 Supplement and the Asset Contribution Agreement are
true and correct in all material respects, and that Ford
Credit has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under such
agreements at or prior to the Closing Date in all material
respects; and
(ii) Ford Credit Leasing, in which such officer shall
state that, to the best of such officer's knowledge after
reasonable investigation, the representations and warranties
of Ford Credit Leasing contained in the FCTT Agreement, the
RCL Trust Agreement, the Series 1995-1 Supplement and the
Asset Contribution Agreement are true and correct in all
material respects, and that Ford Credit Leasing has complied
with all agreements and satisfied all conditions on its part
to be performed or satisfied under such agreements at or prior
to the Closing Date in all material respects.
(s) The Notes shall have been rated in the highest investment
rating category by at least one Rating Agency.
(t) The Representative shall have received a letter or letters
from each counsel delivering any written opinion to any Rating Agency in
connection with the transaction described herein which is not otherwise
described in this Agreement allowing the Representative to rely on such opinion
as if it were addressed to the Representative.
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<PAGE> 38
(u) Any taxes, fees and other governmental charges which are
due and payable in connection with the execution, delivery and performance of
this Agreement, the Indenture and the Notes shall have been paid by the Seller
at or prior to the Closing Date.
(v) At the Closing Date, the Lease Trust Certificates shall
have been purchased and paid for by J.P. Morgan Securities Inc. in accordance
with the Lease Trust Certificate Purchase Agreement of even date.
(w) On or prior to the Closing Date, the Seller, Ford Credit or
Ford Credit Leasing, as the case may be, shall have furnished to the
Representative such further certificates and documents as the Representative
shall reasonably request.
8. Indemnification and Contribution. (a) The Seller, Ford Credit and
Ford Credit Leasing will jointly and severally indemnify and hold each
Underwriter harmless against any losses, claims, damages, or liabilities, joint
or several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Seller,
Ford Credit and Ford Credit Leasing will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with written information furnished to the Seller, Ford Credit or Ford Credit
Leasing by any Underwriter through the Representative specifically for use
therein; and provided further, that the Seller, Ford Credit and Ford Credit
38
<PAGE> 39
Leasing shall not be liable to any Underwriter or any person controlling any
Underwriter under the indemnity agreement in this subsection (a) with respect
to any of such documents to the extent that any such loss, claim, damage or
liability of the Underwriters or such controlling person results from the fact
that such Underwriter sold the Notes to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Prospectus or of the Prospectus as then amended or supplemented (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, Ford Credit or Ford Credit Leasing 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, Ford Credit and Ford Credit Leasing against any losses, claims,
damages or liabilities to which the Seller, Ford Credit or Ford Credit Leasing
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus or any amendment
or supplement thereto, or any related preliminary prospectus, or arise out of
or are based upon the omission or the alleged omissions to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Seller, Ford Credit or Ford Credit Leasing by such Underwriter
through the Representative specifically for use therein, and will reimburse any
legal or other expenses reasonably incurred by the Seller, Ford Credit or
Ford Credit Leasing in connection with investigating or defending any such
action or claim.
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<PAGE> 40
The indemnity agreement in this subsection (b) shall be in addition to
any liability which each Underwriter may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls the Seller,
Ford Credit or Ford Credit Leasing within the meaning of the Act.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) of written notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under subsection (a) or (b) above, notify the
indemnifying party of the commencement thereof, and in the event that such
indemnified party shall not so notify the indemnifying party within 30 days
following receipt of any such notice by such indemnified party, the
indemnifying party shall have no further liability under such subsection to
such indemnified party unless the indemnifying party shall have received other
notice addressed and delivered in the manner provided in Section 11 hereof of
the commencement of such action; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under such subsection. In case any such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party in its reasonable
judgment, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under such subsection for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a
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<PAGE> 41
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Seller, Ford Credit and Ford Credit Leasing on the one hand and
the Underwriters on the other from the offering of the Notes. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Seller, Ford Credit and Ford Credit Leasing on the one hand and the
Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative benefits received by the Seller, Ford Credit and Ford Credit Leasing
on the one hand and the Underwriters on the other 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 Notes. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Seller, Ford Credit or Ford Credit
Leasing or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission, including, with respect to any Underwriter, the extent
to which such losses, claims, damages or liabilities (or actions in respect
thereof) result from the fact that such Underwriter sold such Notes to a person
to whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus or the Prospectus as then supplemented or
amended (excluding documents incorporated by reference), whichever is more
recent, if the Seller has previously furnished copies thereof to such
Underwriter. The Seller, Ford Credit and Ford Credit Leasing and the
Underwriters, severally and not jointly, agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were
41
<PAGE> 42
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 contrib-
ute any amount in excess of the amount by which the total price at which the
Notes underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrep-
resentation (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.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements (including, without limitation, Section 6(k)) of the Seller, Ford
Credit and Ford Credit Leasing or their respective officers and of the
Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation or statement as to the
results thereof, made by or on behalf of any Underwriter, the Seller, Ford
Credit or Ford Credit Leasing or any of their respective representatives,
officers, directors or controlling persons, and will survive delivery of and
payment for the Notes.
10. Failure to Purchase the Notes. If the purchase of the Notes shall
not be consummated because the circumstances described in Section 7(e) shall
have occurred, then neither the Seller, Ford Credit nor Ford Credit Leasing
shall have any liability to the Underwriters except as set forth in Section
6(h) and Section 8 hereof; but if for any other reason the Notes are not
delivered to the Underwriters as provided herein, the Seller, Ford Credit and
Ford Credit Leasing will be liable to reimburse the Underwriters, through the
Representative, for all out-of-pocket expenses, including
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<PAGE> 43
counsel fees and disbursements reasonably incurred by the Underwriters
in making preparations for the offering of the Notes, but neither the Seller,
Ford Credit nor Ford Credit Leasing shall then have any further liability to
any Underwriter with respect to the Notes except as provided in Section 6(h)
and Section 8 hereof. If any Underwriter or Underwriters default on their
obligations to purchase Notes hereunder and the aggregate principal balance of
the Notes that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total principal balance of such Notes, the
Representative may make arrangements satisfactory to the Seller, Ford Credit
and Ford Credit Leasing for the purchase of such Notes by other persons,
including the non-defaulting Underwriter or Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriter or
Underwriters shall be obligated, in proportion to their commitments hereunder,
to purchase the Notes that such defaulting Underwriter or Underwriters agreed
but failed to purchase. If any Underwriter or Underwriters so default and
the aggregate principal balance of the Notes with respect to which such default
or defaults occur exceeds 10% of the total principal balance of such Notes and
arrangements satisfactory to the non-defaulting Underwriter or Underwriters,
the Seller, Ford Credit and Ford Credit Leasing for the purchase of such Notes
by other persons are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter, the Seller, Ford Credit and Ford Credit Leasing except as provided
in Section 6(h) and Section 8 hereof. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter or Underwriters
from liability for its default.
11. Notices. All communications hereunder will be in writing and will
be mailed, delivered or sent by facsimile transmission and confirmed.
Communications to the Underwriter shall be given to J.P. Morgan Securities
Inc., 60 Wall Street, New York, New York 10260 (Facsimile No.: 212-648-5909),
Attention: Syndicate Desk. Communications to the Seller shall be given to
it at The American Road, FMCC Building, Dearborn, Michigan 48121 (Facsimile
No.: 313-594-____), Attention: President. Communications to Ford Credit
shall be given to it at The American Road, FMCC Building, Dearborn, Michigan
43
<PAGE> 44
48121 (Facsimile No.: 313-337-1160), Attention: Secretary. Communications to
Ford Credit Leasing shall be given to it at The American Road, FMCC Building,
Dearborn, Michigan 48121 (Facsimile No.: 313-594-0735), Attention: Treasurer.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the Underwriters, the Seller, Ford Credit, Ford Credit Leasing and
their respective successors and the officers and directors and controlling
persons referred to in Section 8, and no other person will have any right or
obligations hereunder.
13. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
14. 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.
44
<PAGE> 45
If the foregoing is in accordance with your understanding, please
sign and return to us a counterpart hereof, whereupon this letter and your
acceptance hereof shall constitute a binding agreement.
Very truly yours,
THE CHASE MANHATTAN BANK (USA),
as trustee of RCL Trust, as Seller
By: _______________________________________
Name:
Title:
FORD MOTOR CREDIT COMPANY
By: ________________________________________
Name:
Title:
FORD CREDIT LEASING COMPANY, INC.
By: ________________________________________
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
J.P. MORGAN SECURITIES INC.
Acting on behalf of itself
and as the Representative
of the several Underwriters
By:_______________________
Name:
Title:
45
<PAGE> 46
SCHEDULE I
Initial Initial
Principal Principal
Balance of Balance of
Class A-1 Notes Class A-2 Notes
--------------- ---------------
J.P. Morgan Securities Inc. $ $
Goldman Sachs & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Total $ $
=============== ===============
46
<PAGE> 1
EXHIBIT 5.1
(FORD LOGO)
FORD MOTOR CREDIT COMPANY
Jerry D. Bringard The American Road
Vice President-General Counsel Dearborn, Michigan 48121-6044
May 8, 1995
Ford Credit Leasing Company, Inc.
The American Road
Dearborn, Michigan 48121
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Dear Sirs:
The undersigned, Vice President-General Counsel of Ford Credit Leasing
Company, Inc. ("Ford Credit Leasing") and Ford Motor Credit Company ("Ford
Credit"), has acted as counsel for Ford Credit Leasing and Ford Credit in
connection with registration statement No. 33-57827, as amended by Amendment
No. 1, Amendment No. 2, Amendment No. 3 and Amendment No. 4 thereto (the
"Registration Statement"), filed on behalf of Ford Credit Auto Lease Trust
1995-1 (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, respecting the issuance by the Trust of
Class A-1 and Class A-2 Asset Backed Notes. The Notes are to be issued pursuant
to an Indenture to be entered into between the Trust and Chemical Bank,
Indenture Trustee (the "Trustee").
In that connection, I have examined, or caused to be examined,
originals, or copies certified or otherwise identified to my satisfaction, of
such documents, corporate records and other instruments as I have deemed
necessary or appropriate for the purposes of this opinion. Based upon the
foregoing, I am of the opinion that the Notes, when duly executed and
authenticated by the Indenture Trustee in accordance with the terms of the
Indenture and issued and delivered against payment therefor, will be legally
issued, fully paid and nonassessable.
I hereby consent to the use of this opinion as 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,
Jerry D. Bringard
<PAGE> 1
EXHIBIT 8.1
May 8, 1995
Ford Credit Leasing Company, Inc.
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
Re: Registration Statement on Form S-1
Registration Statement No. 33-57827
Ladies and Gentlemen:
In connection with the filing of Amendment No. 4 to the registration
statement on Form S-1 (the "Registration Statement") of RCL Trust 1995-1, as
originator of the trust, Ford Credit Leasing Company, Inc., as originator of
the registrant, and Ford Motor Credit Company, as originator of the registrant,
relating to the Ford Motor Credit Auto Lease Trust 1995-1 (the "Registration
Statement") with the Securities and Exchange Commission contemporaneously
herewith, you have requested our opinion regarding certain descriptions of tax
consequences contained in the form of prospectus (the "Prospectus") included in
the Registration Statement.
Our opinion is based on an examination of the Prospectus, the Basic
Documents(1), certain calculations provided to us by representatives of the
Underwriter and Ford Motor Credit Company, certain representations of Ford
Motor Credit Company, and such other documents, instruments and information as
we have considered necessary. Our opinion is also based upon the Internal
Revenue Code of 1986, as amended, administrative rulings, judicial decisions,
Treasury regulations, including proposed regulations, and other applicable
authorities.
- ---------------
(1) Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Prospectus.
<PAGE> 2
Ford Credit Leasing Company, Inc.
Ford Motor Credit Company
May 8, 1995
Page 2
The statutory provisions, regulations and interpretations on which
our opinion is based are subject to changes, and such changes could apply
retroactively. In addition, there can be no assurance that positions contrary
to those stated in our opinion may not be taken by the Internal Revenue
Service.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such latter
documents. As to any facts material to the opinions expressed herein which were
not independently established or verified, we have relied upon statements,
representations, and certifications of officers and other representatives of
the Underwriter, Ford Motor Credit Company, and others.
Based upon and subject to the foregoing, it is our opinion that the
statements in the Prospectus under the headings "Summary -- Tax Status" and
"Certain Federal Income Tax Consequences," to the extent that they constitute
matters of federal law or legal conclusions with respect thereto, are a fair
and accurate summary of the matters addressed therein, under existing law and
the assumptions stated therein.
We express no opinion with respect to the matters addressed in this
letter other than as set forth above.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
<PAGE> 1
EXHIBIT 8.2
(FORD LOGO)
FORD MOTOR CREDIT COMPANY
Jerry D. Bringard The American Road
Vice President-General Counsel Dearborn, Michigan 48121-6044
May 8, 1995
Ford Credit Leasing Company, Inc.
The American Road
Dearborn, Michigan 48121
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Dear Sirs:
The undersigned, Vice President-General Counsel of Ford Credit Leasing
Company, Inc. ("Ford Credit Leasing") and Ford Motor Credit Company ("Ford
Credit"), has acted as counsel for Ford Credit Leasing and Ford Credit in
connection with registration statement No. 33-57827, as amended by Amendment
No. 1, Amendment No. 2, Amendment No. 3 and Amendment No. 4 thereto (the
"Registration Statement"), filed on behalf of Ford Credit Auto Lease Trust
1995-1 (the "Trust") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, respecting the issuance by the Trust of
Class A-1 and Class A-2 Asset Backed Notes. The Notes are to be issued pursuant
to an Indenture to be entered into between the Trust and Chemical Bank,
Indenture Trustee (the "Trustee").
In that connection, I have examined, or caused to be examined,
originals, or copies certified or otherwise identified to my satisfaction, of
such documents, corporate records and other instruments as I have deemed
necessary or appropriate for the purposes of this opinion.
I hereby (i) confirm to you that the statements set forth under the
heading "Certain Tax Matters - State and Local Tax Consequences" in the
Prospectus contained in the Registration Statement to which this opinion
relates, to the extent that they constitute matters of law or legal conclusions
with respect thereto are correct in all material respects and (ii) consent to
the filing of this opinion as an exhibit to the Registration Statement and to
the reference to me under the caption "Legal Matters" in the Prospectus
included in the Registration Statement.
I am admitted to the State Bar of Michigan and I express no opinion as
to the laws of any other jurisdiction except the laws of the United States of
America to the extent specifically referred to herein.
Very truly yours,
Jerry D. Bringard
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Ford Credit Auto Lease
Trust 1995-1 registration statement on Form S-3 (No. 33-57827) of our report
dated January 27, 1995 on our audits of the consolidated financial statements
of Ford Motor Credit Company and Subsidiaries at December 31, 1994 and 1993 and
for each of the three years in the period ended December 31, 1994 included in
the Ford Motor Credit Company 1994 Annual Report on Form 10-K. We also consent
to the reference to our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
May 8, 1995
<PAGE> 1
EXHIBIT 25.1
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
________________________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____
________________________________________
CHEMICAL BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
________________________________________
FORD CREDIT AUTO LEASE TRUST 1995-1
(Exact name of obligor as specified in its charter)
DELAWARE TRUST N/A
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
C/O PNC BANK, DELAWARE
222 DELAWARE AVENUE
WILMINGTON, DE 19801
(Address of principal executive offices) (Zip Code)
________________________________________
CLASS A-1 ASSET BACKED NOTES
CLASS A-2 ASSET BACKED NOTES
(Title of the indenture securities)
________________________________________
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject. New York State Banking Department, State House,
Albany, New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551 and Federal Reserve Bank of New York, District No. 2, 33
Liberty Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985 and December 2, 1991 (see Exhibit 1 to Form T-1 filed in
connection with Registration Statement No. 33-50010, which is incorporated by
reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 33-84460, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Chemical Bank, a corporation organized and existing under the laws of
the State of New York, has duly caused this statement of eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of New York and State of New York, on the 5TH day of MAY, 1995.
CHEMICAL BANK
By Michael A. Smith
------------------------------
Michael A. Smith
Assistant Vice President
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
Chemical Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1994, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................. $ 6,291
Interest-bearing balances ......................... 5,484
Securities: ..........................................
Held to maturity securities............................ 6,313
Available for sale securities.......................... 16,699
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ................................ 1,922
Securities purchased under agreements to resell ... 0
Loans and lease financing receivables:
Loans and leases, net of unearned income $66,724
Less: Allowance for loan and lease losses 1,909
Less: Allocated transfer risk reserve ... 113
------
Loans and leases, net of unearned income,
allowance, and reserve ............................ 64,702
Assets held in trading accounts ....................... 25,685
Premises and fixed assets (including capitalized
leases)............................................ 1,409
Other real estate owned ............................... 248
Investments in unconsolidated subsidiaries and
associated companies............................... 150
Customer's liability to this bank on acceptance
outstanding ....................................... 1,064
Intangible assets ..................................... 535
Other assets .......................................... 5,240
-----
TOTAL ASSETS .......................................... $135,742
========
</TABLE>
- 4 -
<PAGE> 5
LIABILITIES
<TABLE>
<S> <C>
Deposits
In domestic offices ................................ $47,044
Noninterest-bearing .........................$16,782
Interest-bearing ............................ 30,262
------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's .......................................... 31,227
Noninterest-bearing .........................$ 124
Interest-bearing ............................ 31,103
------
Federal funds purchased and securities sold under agree-
ments to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ............................ 12,222
Securities sold under agreements to repurchase ..... 1,428
Demand notes issued to the U.S. Treasury .............. 1,105
Trading liabilities ................................... 17,412
Other Borrowed money:
With original maturity of one year or less ......... 7,500
With original maturity of more than one year ....... 916
Mortgage indebtedness and obligations under capitalized
leases ............................................. 22
Bank's liability on acceptances executed and outstanding 1,081
Subordinated notes and debentures ..................... 3,410
Other liabilities ..................................... 5,205
TOTAL LIABILITIES ..................................... 128,572
-------
EQUITY CAPITAL
Common stock .......................................... 620
Surplus ............................................... 4,501
Undivided profits and capital reserves ................ 2,461
Net unrealized holding gains (Losses)
on available-for-sale securities ...................... (410)
Cumulative foreign currency translation adjustments ... (2)
TOTAL EQUITY CAPITAL .................................. 7,170
------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .......................... $135,742
==========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the
above-named bank, do hereby declare that this Report of
Condition has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true to the best of my knowledge and
belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
WILLIAM B. HARRISON )
- 5 -
