<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 5, 1995
REGISTRATION NO. 33-57827
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-1*
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FORD CREDIT AUTO LEASE TRUST 1995-1
(Issuer of the Notes)
<TABLE>
<CAPTION>
RCL TRUST 1995-1
(Originator of the Trust described herein)
(Exact name of registrant as specified in
its charter)
<S> <C> <C>
FORD MOTOR CREDIT A Delaware Trust FORD CREDIT LEASING
COMPANY Primary Standard Industrial Classification COMPANY, INC.
(Originator of the Registrant; issuer of Code Number (Originator of the Registrant)
a corporate Limited RV Guaranty) IRS Employer No. [Application Pending]
A Delaware Corporation The American Road A Delaware Corporation
Primary Standard Industrial Classification Dearborn, Michigan 48121 Primary Standard Industrial Classification
Code Number (313) 594-9876 Code Number
IRS Employer No. 38-1612444 IRS Employer No. [Application Pending]
The American Road _____________ The American Road
Dearborn, Michigan 48121 Dearborn, Michigan 48121
(313) 322-3000 (313) 845-4072
</TABLE>
J. D. BRINGARD, ESQ.
Ford Motor Credit Company
The American Road
Dearborn, Michigan 48121
(313) 594-7742
(Name and Address of Agent for Service
for each of the above named entities)
Copy to:
SUSAN M. CURTIS, ESQ.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
(212) 735-3000
Approximate date of commencement of proposed sale to the public: As soon
as practicable on or after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Securities Amount Being Offering Price Aggregate Amount of (3)
Being Registered Registered Per Unit (1) Offering Price (1) Registration Fee
<S> <C> <C> <C> <C>
Class A-1 Asset Backed Notes . . . . $ 333,333.00 100% $ $ 114.94
Class A-2 Asset Backed Notes . . . . $ 333,333.00 100% $ $ 114.94
Class A-3 Asset Backed Notes . . . . $ 333,334.00 100% $ $ 114.95
Limited RV Guaranty . . . . . . . . . (2) (2) (2) (2)
--------------- ----------------- ------------
TOTAL . . . . . . . . . . . . . . $ 1,000,000.00 $ $ 344.83
=============== ================= ============
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Not applicable.
(3) 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.
- ----------------
* 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.
2
<PAGE> 2
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Items and Caption in Form S-1 Caption in Prospectus
----------------------------- ---------------------
<S> <C> <C>
1. Forepart of Registration Statement and Outside Forepart of Registration Statement; Outside Front
Front Cover Page of Prospectus . . . . . . Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Inside Front Cover Page of Prospectus
Prospectus . . . . . . . . . . . . . . . .
3. Summary Information, Risk Factors and Ratio of Summary; Special Considerations; Management's Dis-
Earnings to Fixed Charges . . . . . . . . cussion 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 Issu-
er; Property of the Issuer; The Leases and Leased
Vehicles; Maturity, Prepayment and Yield Consider-
ations; Pool Factors and Trading Information; De-
scription of the Notes; Description of the Adminis-
trative Agency Agreement; Additional Document Pro-
visions; Ratings of the Notes
10. Interest of Named Experts and Counsel . . . . . *
11. Information with Respect to the Registrant . . Outside Front Cover Page of Prospectus; Inside Font
Cover Page of Prospectus; Summary; Ford Credit; The
Issuer; Property of the Issuer; The Transferor; The
Series 1995-1 Certificates; The Leases and the
Leased Vehicles; Management's Discussion and Analy-
sis of Financial Condition and Results of Opera-
tions; Additional Document Provisions
12. Disclosure of Commission Position on Indemnifi-
cation 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>
_______________________
---------- COMPARISON OF FOOTERS
* Answer negative or Item inapplicable ----------
<PAGE> 3
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 _______ __, 1995
$ __________________________
FORD CREDIT AUTO LEASE TRUST 1995-1
ISSUER
___% CLASS A-1 ASSET BACKED NOTES
___% CLASS A-2 ASSET BACKED NOTES
___% CLASS A-3 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 _________ __, 1995 between [Name
of RCL Trustee] (the "RCL Trustee") in its capacity as trustee of the RCL Trust
1995-1 (the "Transferor") and [Name of Lease Trustee] (the "Lease Trustee") in
its capacity as trustee of the Issuer. Pursuant to an Indenture to be dated
as of _________ ___, 1995 between the Lease Trustee, on behalf of the Issuer,
and _________, as Indenture Trustee, the Issuer will issue notes secured by
interests in certain retail automotive leases and leased vehicles, including
$_________ initial principal balance of ___% Class A-1 Asset Backed Notes (the
"Class A-1 Notes"), $_________ initial principal balance of ___% Class A-2
Asset Backed Notes (the "Class A-2 Notes") and $_________ initial principal
balance of ___% Class A-3 Asset Backed Notes (the "Class A-3 Notes" and,
together with the Class A-1 Notes and the Class A-2 Notes, the "Notes"). The
Issuer also will issue $_______
(cover continued on following pages)
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.
<TABLE>
<CAPTION>
INITIAL PRICE TO UNDERWRITING PROCEEDS TO
PRINCIPAL BALANCE PUBLIC (1) DISCOUNT THE ISSUER (1)(2)
<S> <C> <C> <C> <C>
Class A-1 Notes $ % % %
Class A-2 Notes $ % % %
Class A-3 Notes $ % % %
------------- --------- --------- ------------
Total $ $ $ $
============= ========= ========= ============
</TABLE>
(1) Plus accrued interest, if any, calculated from , 1995.
(2) Before deducting expenses payable by the Issuer estimated at $
.
The Notes are offered by the Underwriter when, as, and if issued and
accepted by the Underwriter and subject to its right to reject orders in whole
or in part. The Underwriter reserves 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 _________
__, 1995 against payment therefor in immediately available funds.
J.P. MORGAN SECURITIES INC.
<PAGE> 4
The date of this Prospectus is _____________, 1995
2
<PAGE> 5
initial principal balance of ___% Asset Backed Lease Trust Certificates (the
"Lease Trust Certificates"). The Lease Trust Certificates are not being
offered hereby.
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 (as defined 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 (as defined
herein) 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
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
____________ 15, ____________ 15, ____________ 15 and ____________ 15 of each
year, commencing ____________ 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 (i) on the Class A-2 Notes until
the Class A-1 Notes have been paid in full or (ii) on the Class A-3 Notes until
the Class A-1 Notes and the Class A-2 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 among 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 _____ 15, 199_
Payment Date. The Stated Maturity of the Class A-2 Notes and the Class A-3
Notes will be the ________ 15, 199_ Payment Date. However, payment in full of
any 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 UNDERWRITER EXPECTS, 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.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
AT
3
<PAGE> 6
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 UNDERWRITER. 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 ____________, 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 IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Reports to Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Special Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Ford Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Property of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
FCTT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Series 1995-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
The Leases and Leased Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Maturity, Prepayment and Yield Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Pool Factors and Trading Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . 41
Description of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Description of the Administrative Agency Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Additional Document Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Ratings of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Certain Legal Aspects of FCTT and the Series 1995-1 Certificates . . . . . . . . . . . . . . . . . . . . . 67
Certain Legal Aspects of the Leases and Leased Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Certain State Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
</TABLE>
4
<PAGE> 7
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, 1993, Ford
Credit's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1994,
June 30, 1994 and September 30, 1994 and Ford Credit's Current Reports on Form
8-K dated January 11, 1994, February 11, 1994, February 25, 1994, March 18,
1994, April 14, 1994, May 11, 1994, June 27, 1994, August 22, 1994, October 17,
1994, October 31, 1994, December 9, 1994, January 17, 1995, February 13, 1995,
February 17, 1995 and February 21, 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).
AVAILABLE INFORMATION
The Transferor, as originator of the Issuer, has filed a
Registration Statement under the Securities Act of 1933, as amended, with the
Securities and Exchange Commission (the "Commission") on behalf of the 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.
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.
5
<PAGE> 8
OVERVIEW -- TRANSFER OF SERIES 1995-1 CERTIFICATES
[FLOW CHART]
6
<PAGE> 9
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
____________, 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
"Summary--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 and principal on the Notes
and the Lease Trust Certificates in accordance
with their respective terms. On the Closing Date,
the Transferor will establish 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 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
7
<PAGE> 10
principal of the Notes. The Issuer has pledged
such amounts to the Indenture Trustee to secure
payment of the Notes.
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 $__________; Class
A-2 Notes in an initial principal balance of
$__________; and Class A-3 Notes in an initial
principal balance of $__________. Concurrently
with the issuance of the Notes, the Issuer will
issue Lease Trust Certificates in an initial
principal balance of $________. The Lease Trust
Certificates are not being offered hereby.
Interest . . . . . . . The Class A-1 Notes will bear interest at the
rate of ___% per annum, the Class A-2 Notes
will bear interest at the rate of __% per
annum and the Class A-3 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 2.0%. 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 and the Comerica 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 until
the principal balance of such Class is reduced to
zero. No principal payments will be made (i) on
the Class A-2 Notes until the principal balance of
the Class A-1 Notes has
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<PAGE> 11
been reduced to zero, (ii) on the Class A-3 Notes
until the principal balance of the Class A-1 Notes
and the Class A-2 Notes have each been reduced to
zero, and (iii) on the Lease Trust Certificates
until the principal balance of the Class A-3 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,
the Class A-2 Notes and Class A-3 Notes based on
their respective principal balances without any
distinction among 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 on any Payment Date will be
equal to the Collections deposited therein on each
of the two Distribution Dates preceding and 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 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. For a 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. The Initial Pool Balance will exceed the
initial aggregate principal balance of the Notes
by __%. 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. The FCTT Trustee
will hold the assets of FCTT in trust for the
benefit of the beneficiaries of FCTT. As of the
date of this Prospectus, the primary assets of
FCTT are Leases and Leased Vehicles assigned to it
by Dealers located in 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
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<PAGE> 12
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."
The Series 1995-1 Leases consist of ________
individual Leases. The aggregate Balance Subject
to Lease Charges of the Series 1995-1 Leases as of
their respective dates of origination was
$_________. As of the Series 1995-1 Cut-Off Date,
the Pool Balance was $_________ (the "Initial Pool
Balance") and the aggregate Residual Values of the
Series 1995-1 Leased Vehicles were $________. 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
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<PAGE> 13
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 and the
Transferor Lease Trust Certificate, to Ford Credit
Leasing. For convenience, however, these rights
and obligations are referred to herein as rights
and obligations of the Transferor. See "The
Transferor--Creation by Ford Credit and 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 the subsequent
sale of such Series 1995-1 Leased Vehicle), 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 and
principal on 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 Issuer's
rights to all funds on deposit from time to time
in the Collection Account and the Payahead Account
(including investment income on amounts on deposit
in the Collection Account) and proceeds thereof,
(iv) the Payment Account and proceeds thereof, (v)
the rights of the Transferor under the Asset
Contribution Agreement, (vi) the rights as
beneficiary of the Limited RV Guaranty, (vii) the
rights as holder of the Series 1995-1 Certificates
under the Administrative Agency Agreement and the
Series 1995-1 Supplement, (viii) the security
interest of the Issuer in amounts credited to the
Reserve Account and the right to make withdrawals
therefrom and (ix) 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."
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<PAGE> 14
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 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 or principal on 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 as described in "--Sale Proceeds
Advances."
Reserve Account . . . . Amounts on deposit in the Reserve Account from
time to time (the "Reserve Account Amount") 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 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 such Accrual Period. The
"Initial Reserve Account Deposit" is $________.
On each Payment Date on which the Reserve Account
Amount is less 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) __%
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
$__________. 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
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<PAGE> 15
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 Limited RV Guaranty will not exceed an
aggregate amount of $______ for all Series 1995-1
Leased Vehicles. 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 amounts are considered
to be Series 1995-1 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 ___% (per annum) of the
outstanding amount of such Limited RV Guaranty,
before giving effect to amounts drawn on the
Limited RV Guaranty on such Payment Date. 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 a
beneficial interest in Series 1995-1 Assets with
an Initial Pool Balance of $____. Because the
initial principal balance of the Notes and Lease
Trust Certificates constitutes __% of the Initial
Pool Balance as of the Closing Date, the remaining
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
Issuer will be dissolved and the remaining assets,
including the Series 1995-1 Certificates, will be
distributed to the Transferor. 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 additional
compensation forservicing the Series 1995-1 Assets
(including disposing of Series 1995- 1 Leased
Vehicles) and administering the
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<PAGE> 16
distribution of funds in respect thereof. The
Administrative Agent Fee as of any Payment Date
will be equal to the sum of the product of 1% per
annum and the Pool Balance as of the beginning of
each Collection Period in the related Accrual
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) an uncured breach
of certain covenants by the Administrative Agent
has occurred, (iii) the Administrative Agent has
granted a Term Extension or (iv) the Series 1995-1
Leased Vehicle is relocated to a jurisdiction in
which FCTT is not authorized to hold the related
certificate of title. Any such purchase shall be
effected by the deposit of the Administrative
Purchase Amount in the Collection Account on the
Distribution Date following discovery of such
occurrence. 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
characterized as debt and (ii) neither FCTT, the
Transferor nor the Issuer will be subject to
taxation at the entity level. In the opinion of
Michigan Tax Counsel, assuming the foregoing
characterizations for federal income tax purposes,
(i) the Notes will be characterized as debt for
Michigan income and single business tax purposes,
(ii) none of FCTT, the Transferor or the Issuer
will incur a liability under either the Michigan
single business tax or the Michigan income tax at
the entity level and (iii) Holders not otherwise
subject to tax in Michigan would not become
subject to tax in Michigan solely because of a
Holder's ownership of the Notes. See "Certain
Federal Income Tax Consequences" and "Certain
State Tax Consequences" for additional information
concerning the application of federal income tax
and Michigan tax laws, respectively.
ERISA
Considerations . . . . Subject to the considerations discussed under
"ERISA Considerations," the Notes are eligible for
purchase by employee benefit plans.
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<PAGE> 17
Ratings of
the Notes . . . . . . . It is a condition of the issuance of the Class A-1
Notes that the Class A-1 Notes be rated "AAA" or
its equivalent by at least one Rating Agency. It
is a condition of the issuance of the Class A-2
Notes that the Class A-2 Notes be rated "AAA" or
its equivalent by at least one Rating Agency. It
is a condition of the issuance of the Class A- 3
Notes that the Class A-3 Notes be rated no lower
than "A" or its equivalent by at least one Rating
Agency. The rating of the Class A-3 Notes is
based in part on the rating of Ford Credit as the
provider of the Limited RV Guaranty. 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," "Special
Considerations--ERISA Liabilities; Effect on
Ratings" and "--Rating of Class A-3 Notes
Dependent on Ford Credit Performance Under Limited
RV Guaranty."
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<PAGE> 18
SPECIAL CONSIDERATIONS
LIMITED LIQUIDITY
There is currently no secondary market for the Notes offered hereby.
The Underwriter expects, 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 and principal on 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 and principal on 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 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 or Ford Credit Leasing 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 total amount of the Limited RV Guaranty. Because the
Limited RV Guaranty is not reinstated, the aggregate amount of the Limited RV
Guaranty will be reduced by the amount, if any, paid under the Limited RV
Guaranty on any Payment Date. If the aggregate amount of the Limited RV
Guaranty 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 Purchase Option Price (the Residual Value of such Series 1995-1
Leased Vehicle minus Uncollected Excess Wear
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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. Noteholders
will not be subject to delays in the receipt of principal payments due to
delays in the sale of Series 1995-1 Leased Vehicles by the Administrative Agent
to the extent that the Administrative Agent makes Sale Proceeds Advances as
described in "Description of the Administrative Agency Agreement--Sale of
Leased Vehicles" and "--Advances of Sale Proceeds." 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.
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
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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 Value of a Series 1995-1 Lease Vehicle 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. Instead, 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 are responsible for liabilities to third parties or to the FCTT
Trustee incurred in connection with any Series 1995-1 Assets and 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, Ford Credit and Ford
Credit Leasing have agreed to indemnify the Issuer and each will be liable 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
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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 assets of FCTT, 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 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 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 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
because 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 or the Transferor, the FCTT Agreement provides that FCTT will be
terminated, and if a bankruptcy or insolvency occurs with respect to the
Issuer, if the Transferor is terminated upon the bankruptcy or insolvency of
Ford Credit Leasing, or if the Issuer becomes bankrupt or insolvent or is
terminated as a result of the bankruptcy, insolvency or termination of RCL
Trust 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 re-titling
the Series 1995-1 Leased Vehicles. The cost of such re-titling 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.
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INSOLVENCY OF FORD CREDIT; SUBSTANTIVE CONSOLIDATION WITH FORD CREDIT; TRUE
SALE; PREFERENCE RISK
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 either 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 (that is,
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. Special
counsel to Ford Credit will deliver a legal opinion 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 payment 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.
If Ford Credit were to become the subject of a case under the
Bankruptcy Code, certain payments made by Ford Credit pursuant to the
Administrative Agency Agreement and the Limited RV Guaranty within a year
preceding the commencement of such case might be recoverable as preferential
transfers from Ford Credit. 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 the Transferor is
terminated (which could occur upon the bankruptcy or insolvency of Ford Credit
Leasing (which is intended to be a special purpose corporation), the Lease
Trust Agreement provides that the Issuer will be dissolved 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 will be distributed to Noteholders and holders of Lease
Trust Certificates in the priority set forth in the Indenture, and if such
proceeds 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."
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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 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 increases substantially in _____ 1997 when Series 1995-1
Leases begin to reach their Scheduled Lease End Dates. 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 Purchases,
will have the effect of increasing the rate of payment of principal on the
Notes. In addition, no principal will be paid on any Class of Notes until each
prior Class has 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, the Class A-2 Notes and the Class A-3 Notes based on their
respective principal balances without any distinction among 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 Monthly Payments, 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 Monthly Payments 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 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
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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 the Series 1995-1
Certificates" and "Certain Legal Aspects of the Leases and Leased
Vehicles--Vicarious Liability."
RATING OF THE CLASS A-3 NOTES DEPENDENT ON FORD CREDIT PERFORMANCE UNDER
LIMITED RV GUARANTY
Principal on the Class A-3 Notes is paid only after the principal
amount of the Class A-1 Notes and the Class A-2 Notes have each been reduced to
zero (except when an Event of Default has occurred, in which instance principal
is paid to all Classes pro rata). Consequently, repayment of such principal to
the Class A-3 Noteholders depends largely on proceeds from the disposition of
Series 1995-1 Leased Vehicles and, to the extent that such amounts are less
than the aggregate Residual Values of such Series 1995-1 Leases with respect to
any Payment Date, amounts paid by Ford Credit under the Limited RV Guaranty to
make up such shortfall. Because the obligation under the Limited RV Guaranty
is an unsecured obligation of Ford Credit, in the event of a downgrade in the
rating or ratings assigned to Ford Credit, the rating assigned to the Class A-3
Notes could be reduced. See "Ratings of the Notes" and "Description of the
Notes--Limited RV Guaranty."
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 (including the Indenture Trustee,
as secured party for the Issuer, as holder of the Series 1995-1 Certificates
and any other holder of a Series, but excluding 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
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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 participating organizations. 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 Motor Company ("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, Inc. ("Ford Holdings"). Ford Credit also
manages the insurance businesses of The American Road Insurance Company, a
wholly owned subsidiary of Ford Holdings. Ford Credit also is a significant
equity participant in Ford Holdings whose primary activities are consumer and
commercial financing operations, insurance underwriting and equipment leasing.
The mailing address of Ford Credit's executive offices is The
American Road, Dearborn, Michigan 48121. The telephone number of such offices
is (313) 322-3000.
THE 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) entering into and performing its obligations
under the Basic Documents to which it is a party and (v) engaging in other
transactions, including entering into agreements, that are necessary, suitable
or convenient to accomplish the foregoing or are incidental thereto or
connected therewith.
CAPITALIZATION OF THE ISSUER
On the Closing Date, the Issuer will be capitalized with $__________
of Notes and $________ of Lease Trust Certificates. Transferor Lease Trust
Certificates with an aggregate initial principal balance of
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$________ will be sold to the Transferor and Ford Credit Leasing and the
remaining Lease Trust Certificates will be sold to third party investors that
are expected to be unaffiliated with the Transferor, the Administrative Agent,
their respective affiliates or the Issuer. The proceeds from the sale of the
Notes and the Lease Trust Certificates will be used to pay the cash portion of
the acquisition price paid to the Transferor for the Series 1995-1 Certificates
pursuant to the Transfer Agreement. The remaining portion of the acquisition
price (the "Deferred Amount") will be paid by the Issuer to the holders of the
Transferor Lease Trust Certificates after the principal balance of the Notes
and the Lease Trust Certificates have each been reduced to zero, and then only
to the extent of any remaining payments or proceeds from the Series 1995-1
Certificates.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . $__________
Class A-2 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . $__________
Class A-3 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . $__________
Lease Trust Certificates . . . . . . . . . . . . . . . . . . . . . . $__________
Deferred Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . $__________
</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, acting
on behalf of the holders of the EBCs.
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 Vehicle expires with respect to such
Series 1995-1 Leased Vehicle on the day immediately preceding the sale of such
Series 1995-1 Leased Vehicle, but only if such sale occurs on or after the
related Scheduled Lease End Date. 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 Issuer's rights to all
funds on deposit from time to time in the Collection Account and the Payahead
Account (including investment income of amounts on deposit in the Collection
Account) and proceeds thereof, (iv) the Payment Account and proceeds thereof,
(v) the rights of the Transferor under the Asset Contribution Agreement, (vi)
the rights as beneficiary of the Limited RV Guaranty, (vii) the rights as
holder of the Series 1995-1 Certificates under the Administrative Agency
Agreement and the Series 1995-1 Supplement, (viii) the security interest of the
Issuer in amounts credited to the Reserve Account and the right to make
withdrawals therefrom and (ix) 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
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<PAGE> 27
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 RCL 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 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
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<PAGE> 28
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 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."
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 (except in exchange for a Specified Beneficial
Certificate). 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
26
<PAGE> 29
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. 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 the FCTT
Trustee, Ford Credit and Ford Credit Leasing expect from time to time to
designate other FCTT Assets as Series Specified Assets and 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. 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 activities of the Transferor are limited to
(i) acquiring and transferring the Series 1995-1 Certificates and entering into
and performing its obligations under the Program Operating Lease; (ii) acting
as depositor to the Issuer and entering into the Lease Trust Agreement and
acquiring 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 liabilities 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 the
Administrative Agent, acting on behalf of the holders of EBCs.
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
liabilities to Ford Credit Leasing on the Closing Date, the beneficial interest
in the Transferor held by Ford Credit and Ford Credit Leasing will be
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<PAGE> 30
changed by the amount so assigned. After 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 the right as a beneficiary of the Transferor to receive
distributions of the assets of the Transferor (and be required to pay
obligations of the Transferor) in an amount equal to 1/99 of such distributions
(and such obligations) after giving effect to the assignment to Ford Credit
Leasing. Ford Credit as a beneficiary of the Transferor will retain the
right to receive distributions of the assets of the Transferor (and be required
to pay obligations of the Transferor) in an amount equal to 98/99 of such
distributions (and such obligations) after giving effect to the assignment to
Ford Credit Leasing. 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 Fund, and the 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 its respective Series 1995-1 Certificate 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."
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
in the Series 1995-1 Supplement and under 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 and warranties 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 of a breach of any representation and warranty, or if any
representation and warranty proves to have not been true when made, and such
breach or failure has not been cured by the end of the second Collection Period
following discovery or receipt of notice, Ford Credit and Ford Credit Leasing,
or the Administrative Agent on behalf of Ford Credit and Ford Credit Leasing,
will repurchase the beneficial interest in the Series 1995-1 Asset to which
such breach or failure relates for an amount
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<PAGE> 31
equal to the Administrative Purchase Amount on the next Distribution Date. 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 agree to pay to the
Transferor an amount equal to the Initial Pool Balance. The portion of such
acquisition price paid to the Transferor on the Closing Date in cash will equal
the net proceeds from the sale of the Notes and Lease Trust Certificates. The
remaining portion of such acquisition price constitutes the Deferred Amount and
will be payable by the Issuer to the Transferor and Ford Credit Leasing as
holders of the Transferor Lease Trust Certificates after the principal balance
of the Notes and the Lease Trust Certificates have each been reduced to zero,
and then only to the extent of any remaining payments or proceeds from the
Series 1995-1 Certificates.
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."
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 on the day 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, 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 out- standing. 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
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<PAGE> 32
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 make a drawing 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 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 failure by the
Transferor to pay the Required Interest Payment portion of the Basic Payment to
the Issuer, or breach of a representation and warranty, or the failure to
observe or perform certain covenants. Upon the occurrence of an event of
default under the Program Operating Lease, (i) the Indenture Trustee as
assignee of the rights of the Issuer in the Program Operating Lease pursuant to
the pledge of the Lease Trust Estate would be entitled to terminate the Program
Operating Lease and obtain the right to receive directly all distributions with
respect to the Series 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 exceed 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 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
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<PAGE> 33
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 and accept or reject such applications based on the information
set forth therein and the proprietary credit scoring model or in some cases
based on additional information obtained from the relevant Dealer. 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 a limited
number of 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
the __ 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 __ regional lockboxes
dedicated to the collection of payments for Leases and retail installment
contracts. If an Obligor does not make the payment within 10 days of its due
date, a late fee is assessed. At that time, Ford Credit initiates collection
procedures by mailing a past due notice to the Obligor. In cases such as
chronic delinquency, payment default, multiple returned checks or bankruptcy, a
Lease generally is assigned to a Ford Credit customer service representative
after it has become 15 days delinquent. In other cases, collection assignments
are issued when a Lease becomes 22 days delinquent. The Obligor will be
contacted to determine the cause of the delinquency and to help the Obligor
develop plans to resolve it. If the Obligor cannot make the past due payment,
Ford Credit will either grant a Payment Extension or repossess the Leased
Vehicle. If a Payment Extension is granted, the Obligor is assessed a fee and
the Lease Term is extended one month (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 to Ford Credit or the 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, and (iii) pays a fee of $200. The
Dealer is required to pay an amount equal to such agreed fair market wholesale
value 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 Collections
31
<PAGE> 34
Account and used to pay interest and principal on 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. Because the
Obligors on the Series 1995-1 Leases will reside in and have entered into a
Lease with a Dealer located in either California, New York or Pennsylvania,
actual loss experience with respect to the Series 1995-1 Leases in the future
may be different from the loss experience for 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.
32
<PAGE> 35
RED CARPET LEASE PORTFOLIO
(California, New York and Pennsylvania1)
Historical Loss Experience2
<TABLE>
<CAPTION>
Calendar Year
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
AVERAGE CONTRACTS OUTSTANDING (000)
California 41 47 52 73 118
New York 33 38 46 60 78
Pennsylvania 14 16 16 18 26
Total-Three State3 88 101 113 151 222
AVERAGE NET RCL ASSETS (BILLIONS)
California 0.5 0.6 0.7 1.1 1.8
New York 0.4 0.5 0.7 0.9 1.2
Pennsylvania 0.2 0.2 0.2 0.3 0.4
Total-Three State 1.1 1.3 1.6 2.3 3.5
NET CREDIT LOSSES (MILLIONS)3
California 8.2 12.8 9.7 8.9 11.4
New York 3.9 3.4 3.0 2.4 2.7
Pennsylvania 1.0 0.8 0.5 0.5 0.4
Total-Three State 13.1 17.0 13.2 11.8 14.5
NET CREDIT LOSSES AS PCT. OF
AVERAGE RCL ASSETS3
California 1.59% 2.01% 1.33% 0.81% 0.62%
New York 0.99 0.66 0.47 0.26 0.22
Pennsylvania 0.66 0.44 0.25 0.21 0.09
Total-Three State 1.23% 1.26% 0.84% 0.52% 0.41%
REPOSSESSIONS - UNITS (000)
California 2.1 3.0 3.0 3.4 4.7
New York 0.9 0.9 1.0 1.0 1.3
Pennsylvania 0.4 0.3 0.3 0.2 0.4
Total-Three State 3.4 4.2 4.3 4.6 6.4
% of Avg. Contracts - Three State 3.86% 4.17% 3.80% 3.04% 2.86%
Average Gross Loss per Repossession 3,795 3,374 2,401 3,474 3,137
AVERAGE DELINQUENCY RATIOS
THREE STATES
31-60 Days Past Due 2.81% 2.39% 2.11% 1.74% 1.63%
61-90 Days Past Due 0.41 0.32 0.25 0.16 0.17
Over 90 Days Past Due 0.16 0.13 0.08 0.05 0.04
Total 3.38% 2.84% 2.44% 1.95% 1.84%
AVERAGE DAILY UNITS OVER
60 DAYS PAST DUE (000) 0.5 0.5 0.4 0.3 0.5
</TABLE>
- ------------------
(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 and finance (original terms greater than 36 month)
leases. Only operating leases (original terms less than or equal to 36
months) are part of this securitization structure. Totals may not equal
the sum of the respective columns due to rounding.
(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 monthly payments received 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.
33
<PAGE> 36
The reduction in Net Credit Losses 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.
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 PORTFOLIO1
(California, New York and Pennsylvania Only(2)
Residual Value Analysis
<TABLE>
<CAPTION>
Calendar Year
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
Residual value of all vehicles the relat-
ed lease of which terminated in the peri-
od ($000) 27,878 100,810 248,922 339,094 576,191
Residual value as a percentage of MSRP
of all vehicles the related lease of
which terminated in the period3 44.0% 43.0% 42.5% 42.1% 47.5%
Aggregate Residual Losses4 ($000) 1,175 5,831 6,777 4,128 6,889
Aggregate Residual Losses as a percentage
of residual value of all vehicles the re-
lated lease of which terminated in the
period 4.2% 5.8% 2.7% 1.2% 1.2%
Vehicles returned with a Residual Loss as
a percentage of all
vehicles the related lease of which ter-
minated in the period 19.2% 29.2% 15.3% 7.3% 7.6%
</TABLE>
______________
(1) 24-month and 36-month Leases only.
(2) Regional Data based on results on leases for which the related obligor
resides in California, New York, or Pennsylvania.
(3) MSRP is the Manufacturer's Suggested Retail Price, which will generally
exceed the balance subject to lease charges at inception of a lease.
(4) A Residual Loss is 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.
During the period 1990-1994, a total of 15.9% 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, 59.4% were
sold for a loss versus 40.6% 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 1990-1994, 538,382 Leased Vehicles with a residual
exposure of $5.0 billion experienced gross residual losses of $75.0 million.
For all Leased Vehicles with 24- and 36-month Leases which
34
<PAGE> 37
terminated between 1990 and 1994, gross residual losses as a percent of
residual exposure ranged from 0.6% to 4.6%, with a cumulative average of 1.5%.
In 1993 and the first nine months of 1994, gross residual losses as a percent
of residual exposure were less than 1%.
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 a new automobile
or light-duty truck at the inception of the related Series 1995-1 Lease 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 _%; (g) was not originated under the Advance
Payment Program; (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
and the other 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 $
Number of Series 1995-1 Leases leases
Average Adjusted Balance Subject to Lease Charges $
Average Balance Subject to Lease Charges $
Weighted Average Original Lease Term(1) months
Weighted Average Remaining Lease Term(1) months
Average Retail Operating Lease Charge(2) %
Aggregate Residual Value as a Percent of Aggregate MSRP %
Residual Value as a Percent of the Initial Pool Balance %
</TABLE>
(1) Weighted by Adjusted Balance Subject to Lease Charges as of the Series
1995-1 Cut-Off Date.
(2) Excluding a fixed additional fee included in the determination of the
amount of the Monthly Payment (0.11% of the Balance Subject to Lease
Charges). Including such fee would have the effect of increasing the
yield of Series 1995-1 Assets.
35
<PAGE> 38
The following tables provide the geographic, lease charge, lease term
and vehicle line distribution of the Series 1995-1 Assets.
GEOGRAPHIC DISTRIBUTION OF THE SERIES 1995-1 ASSETS
<TABLE>
<S> <C>
California %
New York %
Pennsylvania %
Total 100%
</TABLE>
DISTRIBUTION OF THE SERIES 1995-1 ASSETS BY LEASE CHARGE
<TABLE>
<CAPTION>
Percentage of
Number of Aggregate Adjusted Balance Initial
Range Leases Subject to Lease Charges Pool Balance
<S> <C> <C> <C>
3.00 to 3.50 $ %
3.51 to 4.00
4.01 to 4.50
4.51 to 5.00
5.01 to 5.50
5.51 to 6.00
6.01 to 6.50
6.51 to 7.00
7.01 to 7.50
7.51 to 8.00
8.01 to 8.50
8.51 to 9.00
9.01 to 9.50
9.51 to 10.00
10.01 to 10.50
10.51 to 11.00
11.01 to 11.50
</TABLE>
DISTRIBUTION BY LEASE TERM
<TABLE>
<CAPTION>
Percentage of
Number of Aggregate Adjusted Balance Subject Initial
Lease Term Leases to Lease Charges Pool Balance
<S> <C> <C> <C>
24 Months $ %
36 Months
Total
</TABLE>
36
<PAGE> 39
DISTRIBUTION BY VEHICLE LINE
<TABLE>
<CAPTION>
Percentage of
Number of Aggregate Adjusted Balance Subject Initial
Leases to Lease Charges Pool Balance
<S> <C> <C> <C>
Ford Automobile $ %
Ford Light-Duty Truck
Lincoln-Mercury
Other
Total
</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 AT 0% ABS, ASSUMING NO DEFAULTS
<TABLE>
<CAPTION>
Adjusted Balance
Subject to Lease Monthly Principal Portion Non-Principal Portion of
Months Charges Payments of Monthly Payment Monthly Payment Weighted Average Yield
<S> <C> <C> <C> <C> <C>
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
</TABLE>
37
<PAGE> 40
<TABLE>
<CAPTION>
Adjusted Balance Non-Principal
Subject to Lease Monthly Principal Portion Portion of Weighted Average
Months Charges Payments of Monthly Payment Monthly Payment Yield
<S> <C> <C> <C> <C> <C>
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
</TABLE>
The Percentage of Note Balance Outstanding table was prepared on the
basis of certain assumptions, including the assumptions that (i) all Monthly
Payments and Scheduled Termination 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 credit
losses on the Series 1995-1 Leases, (iv) the Administrative Agent does not
exercise its optional redemption as described herein, (v) distribution of
principal and interest on the Notes and Lease Trust Certificates is made on
[____, 15, _____ 15, _____, 15 and _____15] of each year starting on _____ 15,
1995, (vi) the Administrative Agent Fee is 1% per annum, (vii) all prepayments
are prepayments in full, (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, and (x) as
of the Cut-off Date, the Series 1995-1 Leases have the characteristics set
forth below.
The Series 1995-1 Leases are treated, for cash-flow analysis
purposes, as eight discrete sub-pools, each corresponding to lease originations
in the months of December, 1994 through March, 1995. Originations in each
month are divided further into groups having the same original terms.
<TABLE>
<CAPTION>
Weighted Weighted
Average Average Weighted Weighted Weighted Average
Principal Original Remaining Average Average Residual
Balance Term Term(1) Lease Age Lease Factor Value
<S> <C> <C> <C> <C> <C>
$ 24 Months 21 Months 3 Months % $
$ 24 22 2 % $
$ 24 23 1 % $
$ 24 24 0 % $
$ 36 33 3 % $
$ 36 34 2 % $
$ 36 35 1 % $
</TABLE>
38
<PAGE> 41
<TABLE>
<CAPTION>
Weighted Weighted
Average Average Weighted Weighted Weighted Average
Principal Original Remaining Average Average Residual
Balance Term Term(1) Lease Age Lease Factor Value
<S> <C> <C> <C> <C> <C>
$ 36 36 0 % $
</TABLE>
1. Includes payment of the Residual Value one month after the Scheduled Lease
End Date.
Each of the subpools is treated as a level-payment lease, which
amortizes the Adjusted Balance Subject to Lease Charges outstanding to the
Residual Value by the Scheduled Lease End Date. Monthly Payments are assumed
to be made in advance. The Residual Value is assumed to be collected one month
after the Scheduled Lease End Date.
Analysis of unaudited data from Ford Credit's Red Carpet Lease
portfolio indicates a temporal pattern of prepayments, with prepayment activity
generally at lower levels in the early months of the lease, followed by a rapid
rise in prepayment activity in the later months.
For the purpose of generating the Percentage of Note Balance
Outstanding table shown below, a standard prepayment assumption (the
"Prepayment Assumption") was used for each of the subpools which in the
aggregate represent the Series 1995-1 Leases. The prepayment model used in the
Prepayment Assumption is based on the "ABS" model, in which a constant number
of leases are assumed to prepay in full in each month. Unlike the standard ABS
model, the Prepayment Assumption incorporates varying monthly ABS rates over
the life of the leases. The ABS Rates assumed by the Prepayment Assumption are
set forth below:
<TABLE>
<CAPTION>
24-Month Leases
Month of Lease Life Monthly ABS Rate (%)
<S> <C>
Month 1 through 15 0.40%
Month 16 0.75%
Month 17 0.90%
Month 18 1.00%
Month 19 2.20%
Month 20 3.40%
Month 21 4.60%
Month 22 5.80%
Month 23 7.00%
Month 24 1.20%
</TABLE>
<TABLE>
<CAPTION>
36-Month Leases
Month of Lease Life Monthly ABS Rate (%)
<S> <C>
Month 1 through 20 0.50%
Month 21 through 30 1.25%
Month 31 1.30%
Month 32 2.50%
Month 33 3.70%
Month 34 4.90%
Month 35 6.10%
</TABLE>
39
<PAGE> 42
<TABLE>
<S> <C>
Month 36 1.35%
</TABLE>
The Prepayment Assumption is expressed in terms of months of lease
life, not in terms of months of projected cash flow. For example, a 24-month
lease with two months' seasoning as of the Cut-off Date will reach 0.75% ABS at
the 14th month of the projection at 100% of the Prepayment Assumption (as
opposed to the 16th month for a lease with 0 months' seasoning).
In the Percentage of Note Balance Outstanding table, multiples of
the Prepayment Assumption are calculated as follows. For a 24-month lease
with 0 months seasoning, 50% Prepayment Assumption means 0.2% ABS for 15
months, followed by ABS rates of 0.375%, 0.45%, 0.5%, 1.1%, 1.7%, 2.3%, 2.6%,
3.5%, and 0.6%.
Although the Prepayment Assumption is based on analysis of Ford
Credit's unaudited prepayment data, there can be no assurance to investors that
such experience will provide a reliable basis to predict the amount or the
timing of receipt of prepayments on the Series 1995-1 Leases.
Percentage of Note Balance Outstanding
at the Following Percentages of the Prepayment Assumption
<TABLE>
<CAPTION>
Class A-1 Notes Class A-2 Notes Class A-3 Notes
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Payment Date 0% 50% 100% 125% 0% 50% 100% 125% 0% 50% 100% 125%
Initial
Weighted Avg. Life
(years)(1)
</TABLE>
_______________
1 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).
40
<PAGE> 43
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
table "Percentage of Note Balance Outstanding" in "The Leases and Leased
Vehicles"). 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 Agent 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 expected 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 expected 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 _____ 1997 when Series 1995-1 Leases begin to reach their
Scheduled Lease End Dates. 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) and thereby reducing the yield to maturity on the
Notes. Additionally, holders of some Classes will not receive any principal
payments until other Classes 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, Class A-2 Notes and Class A-3 Notes without distinction
among 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.
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 Monthly Payments
41
<PAGE> 44
not used to reduce the Pool Balance or to pay certain fees 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 Monthly Payments available to pay principal of the Notes will be
reduced. See "Description of the Notes--The Indenture Cash Flows."
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 any 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--Statement 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 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.
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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 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. (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
any Class of Notes is 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 Underwriter), 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.
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DTC's practice is to credit Participants' accounts on each
Payment Date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on such
Payment Date. Payments by Participants and Indirect Participants to 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 Issuer, 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.
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, 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 7.7).
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
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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; interest on the principal balance of the
Class A-2 Notes will accrue at the rate of ___% per annum; and interest on the
principal balance of the Class A-3 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 amount (to the extent lawful) at a rate per annum equal to the
interest rate for the applicable Class plus 2.0%. Interest will be calculated
on the basis of a 360-day year consisting of twelve 30-day months. (Indenture,
Section 1.1). Interest accrued as of any Payment Date but not paid on such
Payment Date will be due on the next Payment Date together with interest on
such amount at the interest rate with respect to such Class as set forth above.
(Indenture, Section 2.7). 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, the principal balance of the Class A-2 Notes and the principal
balance of the Class A-3 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 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 and no principal payments will
be made to the Class A-3 Noteholders until the principal balance of the Class
A-1 Notes and the Class A-2 Notes each have 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, the Class A-2 Notes and the
Class A-3 Notes on a pro rata basis based on their respective principal
balances without any distinction among 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 entitling them to the
Deferred Amount 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."
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 25 days' prior
notice of the redemption of the Notes to the Indenture Trustee (who will
provide notice to the Noteholders). On such Payment Date the aggregate
principal balance of the Notes
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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 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 ____________. 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 Transferor, subject to the security interest of the Issuer and the
Indenture Trustee. Amounts deposited therein will be invested in Permitted
Investments, upon instructions from the RCL Trustee, with a maturity no later
than the next Payment Date. Income (or losses, if any) on such investments, if
any, will be credited (or charged) to the 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 within 30 days. (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 Transferor, subject to the security interest of the Issuer and Indenture
Trustee. Payaheads deposited therein will be invested in Permitted
Investments, upon instructions from the RCL Trustee, with a maturity no later
than the next Collection Period Settlement 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 within 30 days. 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 will be under the sole dominion
and control of the Indenture Trustee, and will be invested (to the extent not
distributed on the day of deposit) by the Indenture Trustee, upon instructions
from the Lease Trustee, in Permitted Investments with a maturity no later than
the immediately following Payment Date. Income (or losses, if any) on such
investments will be credited (or charged) to the Payment Account and will be
available to make payments on the Notes and Lease Trust Certificates.
(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, the Payment Account will be moved
within 30 days.
The Reserve Account. The Reserve Account will be an account
established at an Eligible Institution in the name of the Transferor, subject
to the security interest of the Issuer and the Indenture Trustee. Amounts
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deposited therein will be invested in Reserve Account Investments and will be
credited (or any losses will be charged) to the Reserve Account. 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 within 30 days. 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 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 or
the re-titling 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 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 is equal to the Adjusted Balance Subject to Lease
Charges at the time of termination plus all unpaid 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. A
"Liquidated Lease" means a Lease which
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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.
"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 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 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 each Payment Date, based on the instructions of the
Administrative Agent delivered on the preceding business day, 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
such Payment Date and the deposit or withdrawal of the Aggregate Net Monthly
Payment Advances and the Aggregate Net Sale Proceeds Advances on such Payment
Date).
The "Available Funds" on deposit in the Collection Account on
any Payment Date will be equal to the Collections deposited
therein on each of the two preceding Distribution Dates
(including earnings on investments of such amounts) and
Collections deposited therein on 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 total Aggregate Net
Sale Proceeds Advances and Aggregate Net Monthly Payment
Advances deposited on such Payment Date.
On 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 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.
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(Indenture, Sections 8.3 and 8.4).
Deposits to the Payment Account. On 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 Fee;
(ii) to the Noteholders, pro rata without any
priority among Classes, to pay interest due on the outstanding Notes on
such Payment Date (plus, but only to the extent permitted under applicable
law, interest on any overdue interest at the interest rate of or the
applicable Class plus 2.0%);
(iii) to an account held by the Lease Trustee for
distribution to Lease Trust Certificateholders, to pay interest (and
interest on any overdue interest) due on the Lease Trust Certificates on
such Payment Date;
(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, the Class A-2 Notes and the Class A-3 Notes based on their
respective principal balances, without distinction among Classes.
Any Total Available Funds remaining in the Payment Account
after the Class A-3 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 $________, and the "Available RV Guaranty Amount"
as of any Payment Date will equal the Initial RV Guaranty Amount minus the
aggregate RV Guaranty Draw Amounts made on each preceding 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
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be a component of the Reserve Account Draw Amount. On 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 such Payment Date. The "RV Guaranty Draw Shortfall" for
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" on
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 ___% (per annum) of the outstanding amount of the Limited RV
Guaranty as of such Payment Date, before giving effect to any draw on such
Payment Date on the Limited RV Guaranty. 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") are available to cover shortfalls in amounts
available to make Program Operating Lease Payments in an amount equal to (i)
for Liquidated Leases, the difference between (x) the aggregate amounts
received from Obligors and from the disposition of the related Series 1995-1
Leased Vehicles and (y) the aggregate Adjusted Balance Subject to Lease Charges
of such Liquidated Leases and the related uncollected Monthly Payments from
Obligors of such Liquidated Leases, (ii) for Series 1995-1 Leases which
terminate on or after their respective Scheduled Lease End Dates, the sum of
(x) the aggregate uncollected Monthly Payments from the related Obligors and
(y) the aggregate Uncollected Excess Wear and Tear and Excess Mileage for such
Series 1995-1 Leases. See "--Limited RV Guaranty." The initial amount
deposited in the Reserve Account on the Closing Date will be $____________ (the
"Initial Reserve Account Deposit"). The Reserve Account Amount will be
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 on each Payment Date. The "Required Reserve Account Amount" as
of any Payment Date will be the lesser of (i) __% 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 $___________________.
Reserve Account Draw Amount. If, on 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 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 interest
on the Notes, interest on the Lease Trust Certificates and the
Limited RV Guaranty Fee. The "Reserve Account Deposit
Amount," if any,
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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 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 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" on each 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 as of such
Payment Date.
ADVANCES
The Administrative Agent will make a Monthly Payment Advance
on 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
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, net of amounts payable in
respect of the Administrative Agent Fee. However, so long as each Monthly
Remittance Condition is satisfied, the Administrative Agent may retain such
amounts until the related Distribution 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 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 Draw 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
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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) the sum of (x) the aggregate principal balance of the Notes and
(y) the principal balance of the Lease Trust Certificates is equal to or in
excess of the Pool Balance; (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).
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 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), (ii) 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 shall be distributed first to the
Indenture Trustee for amounts due as compensation or
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indemnity payments pursuant to the terms of the Indenture; second to the
Noteholders for interest which is due and unpaid, ratably, without preference
or priority among the Classes; and third to the Noteholders for principal
which is due and unpaid, ratably, without any distinction among Classes. Any
remaining amounts shall 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).
Subject to the provisions of the Indenture relating to the
duties of the Indenture Trustee, in case an Event of Default shall occur and be
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 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, Section 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 may not consolidate with or
merge into any other entity, unless (i) the entity formed by or surviving such
consolidation or merger is organized under the laws of the United States, any
state or the District of Columbia, (ii) such entity expressly assumes the
Issuer's obligation to make due and punctual payments upon the Notes and the
performance or observance of every agreement and covenant of the Issuer under
the Indenture, (iii) no Event of Default shall have occurred and be continuing
immediately after such merger or consolidation, (iv) the Issuer has been
advised that the then outstanding rating or ratings of each Class of the Notes
would not be reduced or withdrawn by the Rating Agencies as a result of such
merger or consolidation, (v) any action that is necessary to maintain the lien
and security created by the Indenture shall have been taken and (vi) the Lease
Trustee has received an Opinion of Counsel to the effect that such
consolidation or merger would have no material adverse tax consequences to the
Issuer, FCTT, the Transferor or to any Noteholder or Lease Trust
Certificateholder. (Indenture, Section 3.10).
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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 holder of Notes 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 thereof. (Indenture, Section 3.8).
The Issuer may not engage in any activities other than
financing, acquiring, owning, pledging, leasing (subject to the lien of the
Indenture) 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).
The Issuer will or will cause the Administrative Agent to
deliver to the Indenture Trustee on the 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) 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 such certificates and
opinions 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 Issuer will (i) pay to the
Indenture Trustee from time to time reasonable compensation for its services,
(ii) reimburse the Indenture Trustee for all expenses reasonably incurred and
(iii) indemnify the Indenture Trustee 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 wilful
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
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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).
Indenture Trustee's Annual Report. The Indenture Trustee will
be required to mail each year to all Noteholders a brief report relating to its
eligibility and qualification to continue as the Indenture Trustee under the
Indenture, any amounts advanced by it under the Indenture, the amount, interest
rate and maturity date of certain indebtedness owing by the Issuer to the
Indenture Trustee in its individual capacity, the property and funds physically
held by the Indenture Trustee as such and any action taken by it that
materially affects the Notes and that has not been previously reported.
(Indenture, Section 3.17).
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. (Indenture, Section 4.1).
Modification of Indenture. With the consent of the holders of
not less than a majority of the aggregate principal balance of the Notes, the
Lease Trustee, on behalf of the Issuer, and the Indenture Trustee may execute a
supplemental indenture to add provisions to, or change in any manner or
eliminate any provisions of, the Indenture with respect to the Notes, or to
modify (except as provided below) in any manner the rights of the Noteholders,
provided that certain opinions with respect to tax matters are obtained.
(Indenture, Section 9.2).
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.
The Lease Trustee, on behalf of the Issuer, and the Indenture
Trustee may also enter into supplemental indentures, without obtaining the
consent of Noteholders but 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 such action will
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not, (i) as evidenced by an Opinion of Counsel, materially and adversely affect
the interests of any Noteholder, (ii) as confirmed by each Rating Agency rating
the Notes, cause the then current rating assigned to any Class of Notes to be
withdrawn or reduced or (iii) as evidenced by an Opinion of Counsel (x) affect
that treatment of the Notes as debt for federal income tax purposes, (y) be
deemed to cause a taxable exchange of the Notes for federal income tax purposes
or (z) cause the Issuer to be taxable as an "association" or publicly traded
partnership taxable as a corporation for federal income tax purposes.
(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."
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 and 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."
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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.
The Administrative Agent may not grant Payment Extensions in excess of, in the
aggregate, three months beyond the Scheduled Lease End Date of the related
Series 1995-1 Lease. (Administrative Agency Agreement, Section 4.2).
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. 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 are 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, 5.1, 5.2 and 5.).
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
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Administrative Agent will grant the Obligor a one-month Term Extension to
permit the Obligor to effect such repairs at its own expense. The
Administrative Agent will purchase the beneficial interest in the Series 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 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 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 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,
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 amount so applied. Payaheads received from an Obligor in
any Collection Period will be credited to such Obligor. (Administrative Agency
Agreement, Section 6.1).
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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 such Series 1995-1 Leased Vehicle 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).
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; (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 aggregate Administrative Purchase Amounts
paid; (iv) the aggregate Available Scheduled Termination Sale Proceeds,
Voluntary Early Termination Proceeds, Liquidation Proceeds and Recoveries
received by the Administrative Agent (separately stated); (vi) the aggregate
amount of Payaheads credited to Obligors as of the beginning and end of the
related Collection Period; (v) the outstanding Sale Proceeds Advances as of the
beginning and end of the related Collection Period, the aggregate Residual
Values of related Series 1995-1 Leased Vehicles the related Series 1995-1
Leases of which have expired on or after their respective Scheduled Lease End
Dates, which are unsold as of the beginning and end of the related Collection
Period; and (vi) 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
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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
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
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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).
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.
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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,
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 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 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).
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 Lease Trust Certificateholders may, by written
instruction, direct the Lease Trustee in the administration of the Issuer.
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).
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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 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. In general, Lease Trust Certificateholders holding not less
than a majority of the principal balance of the Lease Trust Certificates may
take, or direct the Lease Trustee to take, any action permitted under the Lease
Trust Agreement; 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; and
provided further, that 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 at least 66-2/3% of the aggregate principal balance
of the Lease Trust Certificates, (i) remove the Administrative Agent with
respect to Series 1995-1 Assets, (ii) appoint a successor Administrative Agent
with respect thereto, or (iii) other than following a bankruptcy and
dissolution of the Issuer or Ford Credit Leasing, sell the Series 1995-1
Certificates. (Lease Trust Agreement, Section 4.2, 4.4 and 4.5).
The right of the 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 or (ii) 90 days following the occurrence of certain events of
bankruptcy, insolvency, receivership or liquidation with respect to the
Transferor or Ford Credit Leasing. 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
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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 and principal on the Notes and Lease Trust
Certificates in accordance with the terms of the Indenture. See "Description of
the Notes--Indenture--Remedies."
Indemnification. The Transferor will indemnify the Lease
Trustee for any expenses incurred by the Lease Trustee in the performance of
its duties under the Lease Trust Agreement. The Transferor 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 Transferor will
not indemnify the Lease Trustee for expenses resulting from the willful
misconduct, bad faith or negligence of the Lease Trustee, or for the inaccuracy
of any representation or warranty of the Lease Trustee in the Lease Trust
Agreement. The Lease Trustee will not be liable for (i) any error of judgment
made by an officer of the Lease Trustee, (ii) any action taken or omitted to be
taken in accordance with the instructions of any Lease Trust Certificateholder,
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, 1995, 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
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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; and (xviii) there is
only one original of each Series 1995-1 Lease, which is held by the
Administrative Agent on behalf of FCTT. (Series 1995-1 Supplement, Section 3.1;
Asset Contribution Agreement, Section 3.2). See "Description of Administrative
Agency Agreement--Administrative Purchases" for circumstances in which a breach
of the foregoing representations will cause a purchase of the beneficial
interest in the Series 1995-1 Leases and Series 1995-1 Leased Vehicles.
AMENDMENT PROVISIONS
General. So long as any of the Notes are outstanding, the
Issuer's rights as holder of the Series 1995-1 Certificates will be subject to
the Indenture, and after the Notes have been paid in full will be subject to
the Program Operating Lease. The Indenture Trustee's consent will be required
in each case where the consent of the holder of the Series 1995-1 Certificates
is required to amend the FCTT Agreement, the Administrative Agency Agreement,
the Series 1995-1 Supplement, the Asset Contribution Agreement, the Program
Operating Lease and the Lease Trust Agreement. The Indenture Trustee will be
the holder of the Series 1995-1 Certificates for purposes of determining
whether any proposed amendment to such agreements will materially and adversely
affect the interests of the holder of the Series 1995-1 Certificates.
The FCTT Agreement, the RCL Trust Agreement, the Asset
Contribution Agreement, the Program Operating Lease, 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 to (i) cure any
ambiguity therein, (ii) correct or supplement any provision which may be
inconsistent with any other provision therein, (iii) add, change or eliminate
any other provisions therein with respect to matters or questions arising
thereunder (in the case of the FCTT Agreement and the Administrative Agency
Agreement, only with respect to the Non-Specified Assets or the EBCs, and in
the case of the RCL Trust Agreement, only with respect to amounts available for
distribution to the beneficiaries of the Transferor); provided, however, (x)
that such amendment may not, as evidenced by an Opinion of Counsel, materially
and 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 any 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 FCTT Agreement, the Program Operating Lease and the
Administrative Agency Agreement may be amended at any time, with the consent of
the holder of the Series 1995-1 Certificates and, in the case of the FCTT
Agreement, the unanimous consent of the holders of the EBCs (initially Ford
Credit and Ford Credit Leasing) to add any provisions thereto or change in any
manner or eliminate any of the provisions therein, provided however, that (i)
such amendment may not materially and adversely affect the interests of the
holders of the Series 1995-1 Certificates or of any other Series, without the
unanimous consent of the holders of all Series affected thereby, and (ii) an
Opinion of Counsel as to certain tax matters is delivered. (FCTT Agreement,
Section 8.1; RCL Trust Agreement, Section 8.1; Asset Contribution Agreement,
Section 6.3; Program Operating Lease, Section 13.4; Administrative Agency
Agreement, Section 8.1).
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, that no such amendment may, (i) as
evidenced by an Opinion of Counsel, materially adversely affect the interests
of the Indenture Trustee, any Noteholder or Lease Trust Certificateholder, (ii)
as confirmed by each Rating Agency, cause the then current rating of any Class
of Notes or the Lease Trust Certificates to be withdrawn or reduced or (iii) as
evidenced by an Opinion of Counsel, cause the Issuer to be taxed as an
"association" or publicly traded partnership for federal income or state income
or franchise tax purposes. (Lease Trust Agreement, Section 12.1).
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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 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, (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 (other than the Transferor Lease Trust Certificates) or
(iii) as evidenced by an Opinion of Counsel (x) affect the treatment of the
Notes as debt for federal income tax purposes, (y) be deemed to cause a taxable
exchange of the Notes for federal income tax purposes or (z) cause the Issuer
to be taxable as an "association" or publicly traded partnership taxable as a
corporation for federal income or state income or franchise tax purposes.
(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, each holder of an EBC and each holder of an SBC will
covenant, and each Lease Trust Certificateholder 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 each
holder of an EBC and 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. (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 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 that it reasonably
believes that FCTT is insolvent. (FCTT Agreement, Section 9.8). The
Administrative Agent will not have authority to commence a voluntary bankruptcy
proceeding with respect to FCTT. (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 EBC and 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.
(FCTT Agreement, Section 9.8; Administrative Agency Agreement, Section 8.9).
The Transferor. The RCL Trustee will not have the power to
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 proceedings, against the Transferor and the RCL Trustee for a
period of one year and a day after the Notes have been paid in full. (Lease
Trust Agreement, Section 12.8; Indenture, Section 11.16).
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The Issuer. The Lease Trustee will not have the power to
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).
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 proceedings, against the Issuer for a period of one year and a day
after the Notes have been paid in full; provided that 100% of the Noteholders
may institute, or join in instituting any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings. (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 (the
"Comerica Fee"), 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 4.2).
The Administrative Agent. Each Accrual Period, 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 of the product of 1% per annum
and the Pool Balance as of the beginning of each Collection Period in the
related Accrual Period) from the Total Available Funds distributed on the
related 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. The Administrative Agent will be
entitled at all times to retain the amount of Administrative Agent Fees such
fees from Collections for so long as each Monthly Remittance Condition is
satisfied; otherwise it will be paid such amounts on each Distribution Date.
(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 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 Transferor will pay the RCL Trustee such
fees as Ford Credit, Ford Credit Leasing and the RCL Trustee from time to time
agree. The RCL Trustee will be reimbursed for all reasonable expenses incurred
either directly by Ford Credit and Ford Credit Leasing or from amounts
available for distribution to the beneficiaries of the Transferor. (RCL Trust
Agreement, Section 6.9).
The Lease Trustee. The Transferor will pay the Lease Trustee
such fees as have been agreed between the Transferor and the Lease Trustee and
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).
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GOVERNING LAW
The FCTT Agreement will be governed by the laws of the State
of Michigan.
The Administrative Agency Agreement, the Series 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 of the issuance of the Class A-1 Notes that
the Class A-1 Notes be rated "AAA" or its equivalent by at least one Rating
Agency. It is a condition of the issuance of the Class A-2 Notes that the Class
A-2 Notes be rated "AAA" or its equivalent by at least one Rating Agency. It
is a condition of the issuance of the Class A-3 Notes that the Class A-3 Notes
be rated no lower than "A" or its equivalent 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. Further, the payment of principal on
the Class A-3 Notes will be based primarily on the proceeds received from the
sale of Series 1995-1 Leased Vehicles and, to the extent that such amounts are
less than the aggregate Residual Values of the Series 1995-1 Leased Vehicles,
on payments under the Limited RV Guaranty provided by Ford Credit. Because the
Limited RV Guaranty is an unsecured obligation of Ford Credit, a downgrade in
the rating of Ford Credit may cause the rating assigned to the Class A-3 Notes
to be downgraded. See "Special Considerations--Rating of the Class A-3 Notes
Dependent on Ford Credit Performance Under Limited RV Guaranty."
The rating assigned to any 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 any 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. 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
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Bankruptcy Code or similar applicable state laws ("Insolvency Laws") will not
result in the commencement of a similar case or proceeding under such
Insolvency Laws with respect to any of Ford Credit Leasing, FCTT or the
Transferor, and that the separate legal existence of each of Ford Credit
Leasing, FCTT and the Transferor will be respected such that none of their
respective assets and liabilities will be consolidated with the assets and
liabilities of Ford Credit.
Ford Credit Leasing has been formed as a separate,
limited-purpose corporate subsidiary of Ford Credit pursuant to a certificate
of incorporation containing certain limitations (including restrictions on the
nature of Ford Credit Leasing's business and its ability to incur indebtedness,
a requirement that, under certain circumstances, 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 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, special counsel to Ford Credit, 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
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its capacity as Administrative Agent acting under and in accordance with the
Administrative Agency Agreement. Each of Ford Credit, Ford Credit Leasing,
FCTT and the Transferor intends to follow and has represented to such counsel
that it will follow these and other procedures related to maintaining the
separate identity and legal existences of each of Ford Credit Leasing, FCTT and
the Transferor. Such a legal opinion, however, is not binding on any court.
If a case or proceeding under any Insolvency Law were to be
commenced by or against any of Ford Credit Leasing, FCTT or the Transferor, or
if a court were to conclude in favor of the consolidation of the assets and
liabilities of any thereof with those of Ford Credit, or if an attempt were
made to litigate any of the foregoing issues, delays in distributions on the
Series 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 or the
Transferor, the FCTT Agreement provides that FCTT will be terminated, and if
the Issue 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 re-titling 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 reductions in distributions under the Series 1995-1 Certificates
as indicated above notwithstanding such perfected security interest.
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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 "--Additional Administrative Agency Agreement
Provisions--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"). To the extent the Contingent and
Excess Liability Insurance is insufficient to cover the full amount of any such
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 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.
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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 as in effect in the State of
Michigan. 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 with the Michigan Secretary of State to perfect its interest in such
Series 1995-1 Certificates. The Transferor has assigned its perfected security
interest to the Issuer which in turn has assigned such 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 has been assigned to the
Indenture Trustee and (ii) 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). In the event that the Series 1995-1 Certificates
are viewed as representing a transfer of the assets of the FCTT, the Series
1995-1 Leases are "chattel paper" as defined in the UCC as in effect in the
State of Michigan. Pursuant to the Michigan UCC, when the debtor's chief
executive offices are located in Michigan, a non-possessory security interest
in chattel paper may be perfected by filing a UCC-1 financing statement with
the Michigan Secretary of State. Accordingly, 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 and (iv) 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.
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
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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. 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 1995-1 Lease became a Liquidated
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 Administrative Agent may seek a deficiency judgment for the
amount of any 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
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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.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a summary of the anticipated material
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 and (ii) neither FCTT, the Transferor nor the
Issuer will not be subject to taxation at the entity level.
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Stated Interest. Stated interest on each Class of 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 OID if the excess of the Note's "stated redemption price at maturity" over
its issue price equals or exceeds 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 will equal the
principal amount 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.
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 (the "Prepayment
Assumption"). It is unclear whether this provision will apply to the Notes,
the payments on which are secured by payments on the Series 1995-1 Leases,
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. If, however, 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 (i.e., a discount from 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
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in gross income as it accrues and, if such Note Owner makes such an election,
is exempt from this rule. 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 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 (i.e., 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
Service. 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.
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 and a statement that the Holder is not
subject to backup withholding. Should a non-exempt Note Owner fail to provide
the required certification, 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.
(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
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.
In general, state tax laws conform to federal income tax
principles, and partnerships, grantor trusts and mere security devices are not
subject to tax at the entity level. The State of Michigan, however, imposes a
single business tax on corporations, partnerships and other entities doing
business in Michigan. Because the Administrative Agent is headquartered in
Michigan, tax authorities in Michigan may attempt to assert that FCTT, the
Transferor or the Issuer is subject to an entity level tax.
In the opinion of the General Counsel of Ford Credit
("Michigan Tax Counsel"), assuming that the Notes will be treated as debt for
federal income tax purposes, the Notes will be treated as debt for Michigan
income and single business 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
either the Michigan single business tax or the Michigan income tax at the
entity level. Further, in the opinion of Michigan Tax Counsel, 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 Notes. The foregoing
opinions are based
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upon present provisions of Michigan statutes and the regulations promulgated
thereunder, and applicable judicial or ruling authority, all of which are
subject to change, which change may be retroactive. No ruling on any of the
issues discussed below will be sought from the Michigan Department of Treasury.
* * *
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE
INCLUDED FOR GENERAL INFORMATION ONLY 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.
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 the
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.
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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 J.P. Morgan Securities Inc. (the
"Underwriter") and the Underwriter has agreed to purchase the $____________
principal amount of the Class A-1 Notes, the $____________ principal amount of
the Class A-2 Notes and the $__________ principal amount of the Class A-3
Notes.
The Transferor has been advised by the Underwriter that it
proposes initially to offer the Class A-1 Notes, Class A-2 Notes and the Class
A-3 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,__% per Class A-2 Note and
___% per Class A-3 Note. The Underwriter may allow and such dealers may
reallow a concession not in excess of ___% per Class A-1 Note, ___% per Class
A-2 Note and ___% per Class A-3 Note to certain other dealers. After the
initial public offering of the Notes, the public offering prices and such
concessions may be changed.
In the ordinary course of business, the Underwriter and its
affiliates have engaged and may engage in investment banking and commercial
banking transactions with Ford and its affiliates.
The Transferor has agreed to indemnify the Underwriter against
certain liabilities, including civil liabilities under the Securities Act of
1933, or to contribute to payments which the Underwriter 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.
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<PAGE> 82
GLOSSARY OF TERMS
"Accepted Servicing Practices" is defined on page 55 in
"Description of the Administrative Agency Agreement--Duties of the
Administrative Agent."
"Accrual Available Scheduled Termination Sale Proceeds" is
defined on page 49 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 Closing 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" means a fixed amount included in each Monthly
Payment made by Obligors.
"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 of the product of 1%
per annum and the Pool Balance as of the beginning of each Collection Period in
the related Accrual Period.
"Administrative Agent Event of Default" is defined on page 59
in "Description of the Administrative Agency Agreement-- Administrative Agent
Events of Default."
"Administrative Purchase Amount" is defined on page 46 in
"Description of the Notes--The Indenture Cash Flows."
"Advanced Payment Program" 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 47
in "Description of the Notes--The Indenture Cash Flows."
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<PAGE> 83
"Aggregate Net Sale Proceeds Advances" is defined on page 47
in "Description of the Notes--The Indenture Cash Flows."
"Asset Contribution Agreement" means the agreement dated as of
______ __, 1995 among Ford Credit, as a contributor, Ford Credit Leasing, as a
contributor and the Transferor, as contributee.
"Available Funds" is defined on page 47 in "Description of the
Notes--The Indenture Cash Flows" and page 8 in "Summary-- Principal."
"Available RV Guaranty Amount" is defined on page 48 in
"Description of the Notes--Limited RV Guaranty."
"Available Scheduled Termination Sale Proceeds" is defined on
page 46 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. Section Section 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 11 in "Summary--Reserve
Account" and on page 29 in "Series 1995-1 Certificates--Lease of the Series
1995-1 Certificates to the Transferor."
"Benefit Plan" is defined on page 77 in "ERISA Considerations."
"Cede" means Cede & Co.
"Class" means a class of Notes; as the case may be, the Class
A-1 Notes, the Class A-2 Notes or the Class A-3 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.
"Class A-3 Notes" means the Class A-3 __% Asset Backed Notes
of the Issuer.
"Closing Date" means _______ __, 1995.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collections" is defined on page 46 in "Description of the
Notes--The Indenture Cash Flows."
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<PAGE> 84
"Collection Account" means the Series 1995-1 Collection
Account established pursuant to the Series 1995-1 Supplement.
"Collection Period" means any calendar month.
"Collection Period Settlement Date" means, with respect to any
Collection Period, the business day preceding the related Distribution Date.
"Comerica Fee" is defined on page 66 in "Additional Document
Provisions--Fees and Expenses--FCTT Trustee."
"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
70 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 23 in "The
Issuer--Capitalization of the Issuer."
"Definitive Notes" is defined on page 42 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.
"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 by
Moody's Investors Service, Inc. and 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.
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<PAGE> 85
"Events of Default" means any of the events of default under
the Indenture as set forth on page 51 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 76 in "Certain Federal
Income Tax Consequences--Tax Consequences to Foreign Investors."
"General Eligibility Criteria" is defined on page 63 in
"Additional Document Provisions--Representations, Warranties and Covenants."
83
<PAGE> 86
"Indenture" means the Indenture dated as of _____________ __,
1995 between the Issuer and the Indenture Trustee.
"Indenture Trustee" is Chemical Bank.
"Indirect Participants" is defined on page 42 in "Description
of the Notes--Book-Entry Registration."
"Initial Pool Balance" is defined on page 9 in "Summary--The
Series 1995-1 Assets."
"Initial Reserve Account Deposit" is defined on page 11 in
"Summary--Reserve Account" and on page 49 in "Description of the Notes--Reserve
Account Withdrawals and Deposits."
"Initial RV Guaranty Amount" is defined on page 48 in
"Description of the Notes--Limited RV Guaranty."
"Insolvency Laws" is defined on page 67 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 30 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 ___________ __, 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 23 in "Property of the
Issuer" and on page 10 in "Summary--Property of the Issuer; Pledge to the
Indenture Trustee."
"Leased Vehicle" means any automobile or light-duty truck
which is subject to a Lease.
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<PAGE> 87
"Lemon Law" is defined on page 73 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 48 in "Description of
the Notes--Limited RV Guaranty."
"Limited RV Guaranty Fee" is defined on page 49 in
"Description of the Notes--Limited RV Guaranty."
"Liquidated Lease" is defined on page 46 in "Description of
the Notes--The Indenture Cash Flows."
"Liquidation Proceeds" is defined on page 46 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 46 in "Description of the
Notes--The Indenture Cash Flows."
"Monthly Payment Advance" is defined on page 58 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.
"Non-Specified Assets" is defined on page 26 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 42 in "Description of the
Notes--General."
"Note Pool Factor" is defined on page 41 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, the Class A-2 Notes and the
Class A-3 Notes.
"Obligor" means the lessee under a Lease.
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<PAGE> 88
"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 42 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 46 in "Description of
the Notes--The Indenture Cash Flows."
"Payment Account" means the Series 1995-1 Payments Account
established pursuant to the Indenture.
"Payment Date" means _______ 15, ________ 15, ________ 15, and
________ 15, of each year, commencing __________ 15, 1995 or if any such day is
not a business day, the next succeeding business day.
"Payment Extension" is defined on page 56 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; (iii) any money-market fund or other overnight money fund customarily
used by ________ for the investment of amounts on deposit in "sweep account" or
other short-term asset management accounts maintained on behalf of clients
whose funds are under the management of the ________ or similar department of
_________ or the parent of ________; or (iv) any other investment otherwise
approved by any Rating Agency.
"Plan Asset Regulations" is defined on page 77 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.
"Prepayment Assumption" is defined on page 74 in "Certain
Federal Income Taxes--General."
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<PAGE> 89
"Program Operating Lease" means the agreement dated as of
_____ __, 1995 between the Issuer as lessor and the Transferor as lessee.
"Program Operating Lease Payments" is defined on page 6 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 ________ __, 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 47 in "Description of the
Notes--The Indenture Cash Flows."
"Red Carpet Lease Plan" is defined on page 30 in "The Leases
and Leased Vehicles--Origination Procedures."
"Red Carpet Lease Portfolio" is defined on page 31 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.
"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
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 11 in
"Summary--Reserve Account" and on page 48 in "Description of the Notes--Reserve
Account Withdrawals and Deposits."
"Required Scheduled Termination Sale Proceeds" is defined on
page 49 in "Description of the Notes--Limited RV Guaranty."
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<PAGE> 90
"Reserve Account" means the Reserve Account established
pursuant to the Program Operating Lease.
"Reserve Account Amount" is defined on page 11 in
"Summary--Reserve Account" and on page 49 in "Description of the Notes--
Reserve Account Withdrawals and Deposits."
"Reserve Account Deposit Amount" is defined on page 49 in
"Description of the Notes--Reserve Account Withdrawals and Deposits."
"Reserve Account Draw Amount" is defined on page 49 in
"Description of the Notes--Reserve Account Withdrawals and Deposits."
"Reserve Account Investments" means ________.
"Reserve Account Release Amount" is defined on page 50 in
"Description of the Notes--Reserve Account Withdrawals and Deposits."
"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 48 in
"Description of the Notes--Limited RV Guaranty."
"RV Guaranty Draw Shortfall" is defined on page 49 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 57 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.
"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.
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<PAGE> 91
"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 ____________ __, 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 26 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 34 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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<PAGE> 92
"Stated Maturity" means with respect to the Class A-1 Notes,
the ___________ 15, 199_ Payment Date and with respect to the Class A-2 Notes
and the Class A-3 Notes, the _______ 15, 199_ 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.
"Term Extension" is defined on page 55 in "Description of the
Administrative Agency Agreement--Collection of Total Monthly Payments;
Extension of Leases."
"Total Available Funds" is defined on page 47 in "Description
of the Notes--The Indenture Cash Flows" and on page 8 in "Summary--Principal."
"Total Monthly Payment" is defined on page 9 in "Summary--The
Series 1995-1 Assets."
"Transfer Agreement" means the Transfer Agreement dated as of
______ __, 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 11 in
"Summary--Transferor Leased Vehicle Purchase Option" and on page 29 in "Series
1995-1 Certificates--Lease of 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 78 in
"Underwriting."
"Underwriter" is J.P. Morgan Securities Inc.
"Use and Lease Tax Amounts" is defined on page 30 in "The
Leases and the Leased Vehicles--Origination Procedures."
"VCR" is defined on page 31 in "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.
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<PAGE> 93
"Voluntary Early Termination" is defined on page 31 in "Leases
and Leased Vehicles--Servicing Procedures."
"Voluntary Early Termination Proceeds" is defined on page 46
in "Description of the Notes--The Indenture Cash Flows."
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<PAGE> 94
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with the
offering described in this Registration Statement.
<TABLE>
<S> <C>
Securities and Exchange Commission . . . . . . . . . . . . . . . . . . . . . . . $______
Rating agency fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $______
Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $______
Accountants' fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $______
Fees and expenses of the RCL Trustee . . . . . . . . . . . . . . . . . . . . . . $______
Fees and expenses of the Lease Trustee . . . . . . . . . . . . . . . . . . . . . $______
Fees and expenses of the Indenture Trustee . . . . . . . . . . . . . . . . . . . $______
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $______
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 3803 of the Delaware Business Trust Statute provides
as follows:
3803. Liability of Beneficial Owners and Trustees.
(a) Except to the extent otherwise provided in the governing
instrument of the business trust, the beneficial owners shall be entitled to
the same limitation of personal liability extended to stockholders of private
corporations for profit.
(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.
<PAGE> 95
Section 2.7 of the Amended and Restated Trust Agreement of RCL
Trust 1995-1 provides as follows:
Section 2.7 Indemnification. 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, employees and agents, for all losses, claims, damages, liabilities
and expenses ("Liabilities") incurred in connection with the assets of RCL
Trust 1995-1 or the performance of its trusts and duties contained in this
Agreement to the extent that Ford Credit Leasing would be liable if RCL Trust
1995-1 was 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; 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 malfeasance,
bad faith or negligence or (ii) incurred by reason of the RCL Trustee's breach
of its representations and warranties set forth in this Agreement.
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.
II-2
<PAGE> 96
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending a civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and 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
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<PAGE> 97
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement, vote
of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance expenses
(including attorneys' fees).
Article Ninth, Section 5 of the Certificate of Incorporation
of Ford Motor Credit Company provides as follows:
SECTION 5.
Indemnification
5.1. Directors, Officers and Employees of the Corporation. Every
person now or hereafter serving as a director, officer or employee of the
corporation shall be indemnified and held harmless by the corporation from and
against any and all loss, cost, liability and expense that may be imposed upon
or incurred by him in connection with or resulting from any claim, action,
suit, or proceeding, civil or criminal, in which he may become involved, as a
party or otherwise, by reason of his being or having been a director, officer
or employee of the corporation, whether or not he continues to be such at the
time such loss, cost, liability or expense shall have been imposed or incurred.
As used herein, the term "loss, cost, liability and expense" shall include, but
shall not be limited to, counsel fees and disbursements and amounts of
judgments, fines or penalties against, and amounts paid in settlement by, any
such director, officer or employee; provided, however, that no such director,
officer or employee shall be entitled to claim such indemnity: (1) with
respect to any matter as to which there shall have been a final adjudication
that he has committed or allowed some act or omission, (a) otherwise than in
good faith in what he considered to be the best interests of the corporation,
and (b) without reasonable 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
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<PAGE> 98
creditor shall be indemnified to the same extent and subject to the same
conditions that the directors, officers and employees of the corporation are
indemnified under the preceding paragraph, except that the amounts of such
loss, cost, liability or expense paid to any such director, officer or employee
shall be reduced by and to the extent of any amounts which may be collected by
him from such other corporation.
5.3. Miscellaneous. The provisions of this Section 5 of Article
NINTH shall cover claims, actions, suits and proceedings, civil or criminal,
whether now pending or hereafter commenced and shall be retroactive to cover
acts or omissions or alleged acts or omissions which heretofore have taken
place. In the event of death of any person having a right of indemnification
under the provisions of this Section 5 of Article NINTH, such right shall inure
to the benefit of his heirs, executors, administrators and personal
representatives. If any part of this Section 5 of Article NINTH should be
found to be invalid or ineffective in any proceeding, the validity and effect
of the remaining provisions shall not be affected.
5.4. Indemnification Not Exclusive. The foregoing right of
indemnification shall not be deemed exclusive of any other right to which those
indemnified may be entitled, and the corporation may provide additional
indemnity and rights to its directors, officers or employees.
Article V of the Certificate of Incorporation of Ford Credit
Leasing Company, Inc. provides as follows:
ARTICLE V
(a) A director of the corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the
corporation or its stockholders,
(ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation
Law or
(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
II-5
<PAGE> 99
serving at the request of the corporation as a director, officer or employee of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer or employee or in any other capacity while serving as a
director, officer or employee, shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment), against all expense,
liability and loss (including penalties, fines, judgments, attorneys' fees,
amounts paid or to he paid in settlement and excise taxes imposed on
fiduciaries with respect to (i) employee benefit plans, (ii) charitable
organizations or (iii) similar matters) reasonably incurred or suffered by such
person in connection therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer or employee and shall inure to
the benefit of his or her heirs, executors and administrators; provided,
however, that the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person (other than pursuant to subparagraph (c)(ii) of this Article V)
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the corporation. The right to indemnification conferred in this
subparagraph (c)(i) of Article V shall be a contract right and shall include
the right to be paid by the corporation the expenses incurred in defending any
such proceeding in advance of its final disposition; provided, however, that,
if the Delaware General Corporation Law so requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered
by such person while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition of a
proceeding shall be made only upon delivery to the corporation of an
undertaking, by or on behalf of such director or officer, to repay all amounts
so advanced if it shall ultimately be determined that such director or officer
is not entitled to be indemnified under this subparagraph (c)(i) of Article V
or otherwise.
(ii) If a claim which the corporation is
obligated to pay under subparagraph (c)(i) of this Article V is not
paid in full by the corporation within 60 days after a written claim
has been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of prosecuting
such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation)
that 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
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<PAGE> 100
found to be invalid or ineffective in any proceeding, the validity and
effect of the remaining provisions shall not be affected.
(iv) The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of
its final disposition conferred in this paragraph (c) of Article V
shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise.
(v) The corporation may maintain insurance,
at its expense, to protect itself and any director, officer, employee
or agent of the corporation or another corporation, partnership, joint
venture, trust or other enterprise against any such expense, liability
or loss, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under
the Delaware General Corporation Law.
(vi) The corporation may, to the extent
authorized from time to time by the Board of Directors, grant rights
to indemnification, and rights to be paid by the corporation the
expenses incurred in defending any proceeding in advance of its final
disposition, to any agent of the corporation to the fullest extent of
the provisions of this paragraph (c) of Article V with respect to the
indemnification and advancement of expenses of director, officers and
employees of the corporation.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not Applicable
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(a) EXHIBITS:
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 Class A-3 Note (included as part of Exhibit 4.2).*
4.6 - 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.*
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<PAGE> 101
10.2 - Form of Administrative Agency Agreement, among Comerica, Ford
Credit, as the Administrative Agent and Ford Credit and Ford
Credit Leasing, as initial Beneficiaries of FCTT.*
10.3 - Form of Series 1995-1 Supplement, among Comerica, Ford Credit,
as the Administrative Agent and Ford Credit and Ford Credit
Leasing, as initial Beneficiaries of FCTT.*
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.*
15.1 - Letter from Coopers & Lybrand regarding Unaudited Interim
Financial Information.*
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 Ford Credit Leasing
Company, Inc.**
25.1 - Form T-1 of [name of Indenture Trustee].*
25.2 - Form T-2 of [name of officer of Indenture Trustee].*
* To be filed by amendment
** Previously filed
(b) FINANCIAL STATEMENTS:
[Not Applicable]
ITEM 17. UNDERTAKINGS.
(a) To provide to the Underwriter at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriter to permit prompt delivery to each
purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 14
above, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the 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.
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<PAGE> 102
(2) For the purpose of determining any liability under
the Securities Act of 1933 each post-effective amendment that contains
a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
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<PAGE> 103
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Detroit and the State of Michigan on the 4th day of
April, 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. 1 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 4th day of April, 1995.
FORD MOTOR CREDIT COMPANY
By WILLIAM E. ODOM *
--------------------------------
(William E. Odom, Chairman
of the Board of Directors of
Ford Motor Credit Company)
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<PAGE> 104
Pursuant to the requirements of the Securities Act of 1933,
this 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 April 4, 1995
- ----------------------------------- Board of Directors
(William E. Odom) and Director (princi-
pal executive officer)
KENNETH J. COATES * Director and Executive April 4, 1995
- ----------------------------------- Vice President-Finance
(Kenneth J. Coates) (principal financial
officer)
TERRENCE F. MARRS * Controller (principal April 4, 1995
- ----------------------------------- accounting officer)
(Terrence F. Marrs)
JOHN G. CLISSOLD * Director April 4, 1995
- -----------------------------------
(John G. Clissold)
EDSEL B. FORD II * Director April 4, 1995
- -----------------------------------
(Edsel B. Ford II)
DAVID N. MCCAMMON * Director April 4, 1995
- -----------------------------------
(David N. McCammon)
ROBERT D. WARNER * Director April 4, 1995
- -----------------------------------
(Robert D. Warner)
KENNETH WHIPPLE * Director April 4, 1995
- -----------------------------------
(Kenneth Whipple)
* By /s/ R. P. CONRAD
-----------------------------
(R. P. Conrad, Attorney in Fact)
</TABLE>
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<PAGE> 105
Pursuant to the requirements of the Securities Act of 1933,
this 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 April 4, 1995
- ------------------------------------ Directors and Director
(Hurley D. Smith) (principal executive
officer)
TERRENCE F. MARRS * Controller (principal April 4, 1995
- ------------------------------------ financial officer)
(Terrence F. Marrs)
RICHARD P. CONRAD * Director April 4, 1995
- ------------------------------------
(Richard P. Conrad)
KEVIN F. KELLY * Director April 4, 1995
- ------------------------------------
(Kevin F. Kelly)
MARIO SPIVAK * Director April 4, 1995
- ------------------------------------
(Mario Spivak)
* By /s/ R. P. CONRAD
-------------------------------
(R. P. Conrad, Attorney in Fact)
</TABLE>
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<PAGE> 106
EXHIBIT LIST
Exhibits Description Page
- -------- ------------ ----
1.1 - Form of Underwriting Agreement.*
3.1 - Form of 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 Amended and Restated 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 Class A-3 Note (included as part of
Exhibit 4.2).*
4.6 - 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, as the
Administrative Agent and Ford Credit and
Ford Credit Leasing, as initial
Beneficiaries of FCTT.*
10.3 - Form of Series 1995-1 Supplement, among
Comerica, Ford Credit, as the Administrative
Agent and Ford Credit and Ford Credit
Leasing, as initial Beneficiaries of FCTT.*
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.*
15.1 - Letter from Coopers & Lybrand regarding
Unaudited Interim Financial Information.*
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 [name of Indenture Trustee].*
25.2 - Form T-2 of [name of officer of Indenture
Trustee].*
* To be filed by amendment
** Previously filed
