Sale of Leased Vehicle; Like-Kind Exchange Program. The parties acknowledge that Ford Credit and each Titling Company engage in a like-kind exchange program for their portfolios of Leased Vehicles. The like-kind exchange program is designed to permit Ford Credit to defer recognition of taxable gain on the sale of a returned or repossessed Leased Vehicle, and requires that net sale proceeds be assigned to, and deposited directly with, a qualified intermediary rather than being paid directly to Ford Credit or the applicable Titling Company. The qualified intermediary uses the net sale proceeds to purchase additional Leased Vehicles on behalf of Ford Credit and the applicable Titling Company. Under Section 3.3(b) the Credit and Security Agreement, the Lien Granted to the Collateral Agent in a Leased Vehicle and the net sale proceeds under Section 3.2 of the Credit and Security Agreement will be deemed to be released immediately before sale or other disposition, without further action by the parties. The Servicer will deposit an amount equal to the net sale proceeds in the Revolving Facility Collection Account or the related Exchange Note Collection Account, as applicable, under Section 5.3.
