EXHIBIT 99.1
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SALE AND SERVICING AGREEMENT
among
FORD CREDIT AUTO OWNER TRUST 2006-X,
as Issuer,
FORD CREDIT AUTO RECEIVABLES TWO LLC,
as Depositor
and
FORD MOTOR CREDIT COMPANY,
as Servicer
Dated as of [______], 2006
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TABLE OF CONTENTS
Page
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ARTICLE I USAGE AND DEFINITIONS.......................................... 1
ARTICLE II TRUST PROPERTY; REPRESENTATIONS AND WARRANTIES OF THE
DEPOSITOR; CUSTODIAN.................................................. 1
Section 2.1 Sale of Trust Property.................................... 1
Section 2.2 Savings Clause............................................ 1
Section 2.3 Representations and Warranties of the Depositor
About the Receivables..................................... 2
Section 2.4 Repurchase of Receivables Upon Breach of
Representations or Warranties by the Depositor............ 2
Section 2.5 Custodian................................................. 3
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES AND
OTHER TRUST PROPERTY.................................................. 5
Section 3.1 Appointment; Duties of the Servicer with
Respect to the Servicing of the Receivables............... 5
Section 3.2 Purchase of Receivables Upon Breach by the Servicer....... 7
Section 3.3 Sales of Charged off Receivables.......................... 8
Section 3.4 Duties of the Servicer with Respect to the Servicing
of the Transaction; Annual Reports and Notices............ 8
Section 3.5 Servicer's Fees........................................... 10
Section 3.6 Servicer's Expenses....................................... 10
ARTICLE IV TRUST ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO
NOTEHOLDERS AND THE DEPOSITOR......................................... 10
Section 4.1 Accounts.................................................. 10
Section 4.2 Investment of Funds on Deposit in the Bank Accounts....... 12
Section 4.3 Remittances............................................... 13
Section 4.4 Calculations and Distributions; Withdrawals
from the Reserve Account.................................. 14
ARTICLE V THE DEPOSITOR.................................................. 14
Section 5.1 Representations and Warranties of the Depositor........... 14
Section 5.2 Liability of the Depositor................................ 16
Section 5.3 Merger or Consolidation of, or Assumption of the
Obligations of, the Depositor............................. 16
Section 5.4 Depositor May Own Notes................................... 17
Section 5.5 Depositor's Designation of the Rating Agencies............ 17
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ARTICLE VI THE SERVICER.................................................. 17
Section 6.1 Representations and Warranties of the Servicer........... 17
Section 6.2 Liability of the Servicer................................ 18
Section 6.3 Indemnities of the Servicer.............................. 19
Section 6.4 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer; Assignment to Affiliate.... 20
Section 6.5 Delegation of Duties..................................... 20
Section 6.6 Ford Credit Not to Resign as Servicer.................... 21
Section 6.7 Servicer May Own Notes................................... 21
ARTICLE VII SERVICING TERMINATION........................................ 21
Section 7.1 Events of Servicing Termination.......................... 21
Section 7.2 Appointment of Successor Servicer........................ 23
Section 7.3 Notification to Noteholders and the Holder of the
Residual Interest........................................ 24
Section 7.4 Waiver of Events of Servicing Termination................ 24
ARTICLE VIII TERMINATION................................................. 24
Section 8.1 Clean-Up Call............................................ 24
ARTICLE IX MISCELLANEOUS PROVISIONS...................................... 25
Section 9.1 Amendment................................................ 25
Section 9.2 Protection of Right, Title and Interest to the Trust
Property................................................. 26
Section 9.3 Notices.................................................. 28
Section 9.4 Assignment by the Depositor or the Servicer.............. 28
Section 9.5 Third-Party Beneficiaries................................ 28
Section 9.6 GOVERNING LAW............................................ 28
Section 9.7 Submission to Jurisdiction............................... 28
Section 9.8 WAIVER OF JURY TRIAL..................................... 29
Section 9.9 Severability............................................. 29
Section 9.10 Counterparts............................................. 29
Section 9.11 Headings................................................. 29
Section 9.12 No Waiver; Cumulative Remedies........................... 29
Section 9.13 Agent for Service........................................ 29
Section 9.14 No Petition.............................................. 30
Section 9.15 Limitation of Liability of Owner Trustee and Indenture
Trustee.................................................. 30
Schedule A Schedule of Receivables....................................... SA-1
Schedule B Notice Addresses.............................................. SB-1
Appendix A Usage and Definitions......................................... AA-1
Exhibit A Form of Monthly Investor Report............................... EA-1
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SALE AND SERVICING AGREEMENT, dated as of [______], 2006 (this
"Agreement"), among FORD CREDIT AUTO OWNER TRUST 2006-X, a Delaware statutory
trust, as Issuer, FORD CREDIT AUTO RECEIVABLES TWO LLC, a Delaware limited
liability company, as Depositor, and FORD MOTOR CREDIT COMPANY, a Delaware
corporation, as Servicer.
BACKGROUND
The Depositor has purchased a pool of retail installment sale
contracts secured by new and used cars and light trucks from Ford Credit.
The Depositor wishes to sell and the Issuer wishes to purchase from
the Depositor such contracts and related property on the terms and conditions in
this Agreement.
The Issuer wishes to appoint the Servicer to service the contracts and
the Servicer is willing to service the contracts for the Issuer.
ARTICLE I
USAGE AND DEFINITIONS
Capitalized terms used but not otherwise defined in this Agreement are
defined in Appendix A. Appendix A also contains rules as to usage applicable to
this Agreement. Appendix A is incorporated by reference into this Agreement.
ARTICLE II
TRUST PROPERTY; REPRESENTATIONS AND WARRANTIES
OF THE DEPOSITOR; CUSTODIAN
Section 2.1 Sale of Trust Property. In consideration of the Issuer's
delivery to the Depositor of Notes with an aggregate Note Balance of $[_______]
and the rights to distributions under Section 8.2 of the Indenture, the
Depositor irrevocably sells to the Issuer, without recourse (subject to the
obligations of the Depositor under this Agreement), all right, title and
interest of the Depositor, whether now owned or hereafter acquired, in and to
the Receivables and the other Trust Property. The sale made under this Agreement
does not constitute and is not intended to result in an assumption by the Issuer
of any obligation of the Depositor or Ford Credit to the Obligors, the Dealers
or any other Person in connection with the Receivables and the other Trust
Property.
Section 2.2 Savings Clause. It is the intention of the Depositor and the
Issuer that (i) the sale pursuant to Section 2.1 constitutes an absolute sale of
the Trust Property, conveying good title free and clear of any Lien other than
Permitted Liens, from the Depositor to the Issuer and (ii) the Trust Property
not be a part of the Depositor's estate in the event of a bankruptcy or
insolvency of the Depositor. If, notwithstanding the intention of the Depositor
and the Issuer, such transfer is deemed to be a pledge in connection with a
financing or is otherwise deemed not to be a sale, the Depositor grants, and the
parties intend that the Depositor grant, to the Issuer a first priority
perfected security interest in all of the Depositor's right, title and interest
in the Trust Property to secure a loan in an amount equal to all amounts payable
by the Depositor under
this Agreement, all amounts payable as principal and interest on the Notes and
all amounts payable as servicing fees under this Agreement and all fees and
expenses of the Indenture Trustee or the Owner Trustee, and in such event, this
Agreement will constitute a security agreement under applicable law and the
Issuer will have all of the rights and remedies of a secured party and creditor
under the UCC.
Section 2.3 Representations and Warranties of the Depositor About the
Receivables.
(a) Representations and Warranties from the Purchase Agreement. Ford
Credit made the representations and warranties set forth in Section 3.2 of the
Purchase Agreement to the Depositor, and has consented to the transfer by the
Depositor to the Issuer of the Depositor's rights with respect to such
representations and warranties on which the Issuer is relying in acquiring the
Receivables. Pursuant to Section 2.1, the Depositor has transferred to the
Issuer all of the Depositor's rights under the Purchase Agreement, including the
right to require Ford Credit to repurchase Receivables in accordance with the
Purchase Agreement if there is a breach of Ford Credit's representations and
warranties. In addition, the Depositor represents and warrants as of the Closing
Date, which representations and warranties the Issuer has relied on in
purchasing the Receivables and will survive the sale of the Receivables to the
Issuer and the pledge of the Receivables to the Indenture Trustee pursuant to
the Indenture, that the representations and warranties set forth in Section 3.2
of the Purchase Agreement are true and correct in all material respects.
(b) Representations and Warranties of the Depositor. The Depositor
represents and warrants as of the Closing Date, which representations and
warranties the Issuer has relied on in purchasing the Receivables and will
survive the sale of the Receivables to the Issuer and the pledge of the
Receivables to the Indenture Trustee pursuant to the Indenture, that:
(i) the Depositor has not previously sold, assigned, pledged or
granted a security interest in the Receivables or other Trust Property to
any Person other than the Issuer,
(ii) immediately before the sale under this Agreement, the
Depositor had good and marketable title to the Receivables and other Trust
Property free and clear of any Lien other than Permitted Liens, and
(iii) immediately upon the sale under this Agreement, the Issuer
will have good and marketable title to the Receivables and other Trust
Property, free and clear of any Lien other than Permitted Liens.
Section 2.4 Repurchase of Receivables Upon Breach of Representations or
Warranties by the Depositor.
(a) If a Responsible Person of the Depositor has actual knowledge, or
receives notice from the Issuer, the Owner Trustee or the Indenture Trustee, of
a breach of the representations or warranties made by the Depositor pursuant to
Section 2.3 that materially and adversely affects any Receivable and such breach
has not been cured in all material respects by the last day of the second full
Collection Period after the Responsible Person obtains actual knowledge or is
notified of such breach, the Depositor will repurchase such Receivable as of
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such last day (or, at the Depositor's option, the last day of the first full
Collection Period after the Responsible Person obtains actual knowledge or is
notified of such breach) at a price equal to the Purchase Amount. The Depositor
will deposit or cause to be deposited into the Collection Account the Purchase
Amount for any Receivable that it is repurchasing on the Business Day
immediately preceding the Payment Date (or, with Rating Agency Confirmation, on
such Payment Date) related to the Collection Period as of which such repurchase
occurs.
(b) The sole remedy for a breach of the representations and warranties
of the Depositor contained in Section 2.3 and Section 5.1 is (i) to require the
Depositor to repurchase such materially and adversely affected Receivable or
(ii) to require the Depositor or the Indenture Trustee to enforce the obligation
of Ford Credit to repurchase such materially and adversely affected Receivable
pursuant to Section 3.3(a) of the Purchase Agreement. None of the Servicer, the
Owner Trustee, the Indenture Trustee, the Depositor or the Administrator will
have any duty to conduct an investigation as to the occurrence of any condition
requiring the repurchase of any Receivable pursuant to Section 2.4(a).
(c) Upon the Depositor's payment of the Purchase Amount, the Issuer
will, without further action, be deemed to have sold and assigned to the
Depositor all of the Issuer's right, title and interest in and to the Receivable
repurchased by the Depositor pursuant to Section 2.4(a). Such sale will not
require any action by the Issuer and will be without recourse, representation or
warranty by the Issuer except the representation that the Issuer owns the
Receivable free and clear of any Liens other than Permitted Liens. Upon such
sale, the Servicer may xxxx its computer records to indicate that such
receivable is no longer a Receivable, file UCC termination or amendment
statements or take any other action necessary or appropriate to evidence the
sale of such receivable, free from any Lien of the Depositor, the Issuer or the
Indenture Trustee.
Section 2.5 Custodian.
(a) Appointment of Custodian. To reduce administrative costs and
facilitate the servicing of the Receivables by the Servicer, the Issuer appoints
Ford Credit, in its capacity as the Servicer, to act as the custodian of the
Receivables for the Issuer and the Indenture Trustee. Ford Credit accepts such
appointment and agrees to perform the custodial duties set forth in this Section
2.5. Ford Credit in its capacity as custodian under this Agreement is referred
to as the "Custodian."
(b) Custody of Receivables Files. The Custodian will hold and maintain
in safekeeping the following documents and instruments for each Receivable (the
"Receivables Files") for the benefit of the Issuer and the Indenture Trustee:
(i) the original Receivable;
(ii) the credit application executed by the Obligor;
(iii) the original certificate of title or such other documents
evidencing the security interest of Ford Credit in the Financed Vehicle;
and
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(iv) all other documents, notices and correspondence that the
Servicer generates relating to the Receivable, the Obligor or the Financed
Vehicle.
Unless otherwise indicated above, any document or instrument in the Receivables
Files may be a photocopy or in electronic format. The Receivables Files are
constructively delivered to the Indenture Trustee, as pledgee of the Issuer
pursuant to the Indenture, and the Custodian confirms to the Issuer and the
Indenture Trustee that it has received the Receivables Files. No initial review
or any periodic review of the Receivables Files by the Issuer, the Owner Trustee
or the Indenture Trustee is required.
(c) Maintenance and Safekeeping of the Receivables Files. The
Custodian will accurately maintain and keep current the Receivables Files,
including any computer systems on which the Receivables Files are electronically
stored, all in a manner that will permit the Servicer and the Issuer to comply
with this Agreement and the Indenture Trustee to comply with the Indenture. The
Custodian will act with reasonable care and in accordance with the Credit and
Collection Policy in performing its duties as custodian. The Custodian will
promptly take appropriate action to remedy any material failure on its part to
hold the Receivables Files and maintain its computer systems as provided in this
Agreement and will report to the Issuer and the Indenture Trustee any such
material failure that it is unable to remedy within a reasonable time. The
Custodian may destroy any document (other than the original Receivable or
certificate of title) in any Receivable File and store such document in an
electronic format in accordance with the Credit and Collection Policy.
(d) Location of Receivables Files. The Custodian will maintain the
Receivables Files (or access to any Receivables Files stored in an electronic
format) at one of its offices or the offices of one of its custodians in the
United States. Upon request, the Custodian will provide a list of locations of
the Receivables Files to the Depositor, the Issuer and the Indenture Trustee, or
their representatives, attorneys or auditors.
(e) Access to Receivables Files. The Custodian will provide the
Depositor, the Issuer and the Indenture Trustee with access to the Receivables
Files and the related computer systems at offices designated by the Custodian
without charge, but only upon reasonable request, during normal business hours.
Such access will subject to the Custodian's security and confidentiality
procedures and the terms and conditions of a confidentiality agreement
satisfactory to the Custodian. Nothing in this Section 2.5(e) will affect the
obligation of the Indenture Trustee or the Custodian to observe any applicable
privacy and confidentiality law prohibiting disclosures of information regarding
the Obligors and the failure of the Custodian to provide access as a result of
such obligations will not constitute a breach of this Section 2.5(e).
(f) Effective Period and Termination of Custodian. Ford Credit's
appointment as custodian is effective as of the Cutoff Date and will continue
until terminated pursuant to this Section 2.5(f). If Ford Credit resigns as
Servicer in accordance with Section 6.6 or the Servicer is terminated pursuant
to Section 7.1, the appointment of Ford Credit as custodian under this Agreement
may be terminated in the same manner as the Servicer may be terminated under
Section 7.1. As soon as practicable after any termination of its appointment as
custodian, the Custodian will deliver to the Indenture Trustee or its agent or
designee the Receivables Files
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maintained by the Custodian at such place as the Indenture Trustee may
reasonably designate. All reasonable costs and expenses incurred in connection
with transferring the Receivables Files to the successor custodian and amending
this Agreement to reflect such successor as custodian will be paid by the
predecessor custodian upon presentation of documentation of such costs and
expenses.
(g) Servicer's Access to Receivables Files; Indemnity. Notwithstanding
any termination of the Custodian pursuant to Section 2.5(f), the Servicer will
be entitled to access the Receivables Files and, upon request from the Servicer,
the successor custodian will promptly release any document in the Receivables
Files to the Servicer. The Issuer will indemnify, defend and hold harmless the
Servicer against any and all costs, expenses, losses, claims and liabilities
resulting from the failure by a successor custodian to release Receivables Files
to the Servicer in a timely manner.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES AND OTHER TRUST PROPERTY
Section 3.1 Appointment; Duties of the Servicer with Respect to the
Servicing of the Receivables.
(a) Appointment and General Duties. The Issuer appoints Ford Credit to
act as the Servicer of the Receivables for the Issuer and the Indenture Trustee.
The Servicer will manage, service, administer and collect on the Receivables
with reasonable care using that degree of skill and attention that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others and in accordance with the Credit and Collection Policy.
The Servicer's duties will include:
(i) collecting and applying all payments made on the Receivables,
(ii) investigating delinquencies,
(iii) sending invoices and responding to inquiries of Obligors,
(iv) processing requests for extensions and modifications,
(v) administering payoffs, defaults and delinquencies,
(vi) reporting tax information to Obligors,
(vii) repossessing and then selling the Financed Vehicle securing
any Receivable that the Servicer determines is unlikely to eventually be
paid in full,
(viii) maintaining accurate and complete accounts and computer
systems pertaining to servicing the Receivables,
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(ix) providing to the Custodian copies, or access to, any
documents, instruments, notices and correspondence that modify information
contained in the Receivables Files, and
(x) furnishing Monthly Investor Reports and any other
periodic reports required by the Canadian documents.
In performing its duties as servicer of the Receivables, the Servicer will
comply with all material requirements of federal and State laws and regulations.
(b) Collection of Receivable Payments; Extensions, Rebates and
Adjustments on Receivables. The Servicer will make reasonable efforts to
collect all payments due under the terms of the Receivables. The Servicer may
waive any late payment charge or any other fees that may be collected in the
ordinary course of servicing a Receivable and may grant extensions, refunds,
rebates or adjustments with respect to any Receivable or amend any Receivable,
in each case in accordance with the Credit and Collection Policy, except that
if the Servicer (i) grants payment extensions on a Receivable that extend the
final payment date of the Receivable more than six months past the last
original scheduled payment date of any Receivable in the securitized pool, (ii)
modifies the Amount Financed under a Receivable, (iii) modifies the APR of a
Receivable, or (iv) increases the number of originally scheduled due dates of
the Receivable, it will purchase the Receivable in the manner provided in
Section 3.2 unless it is required to take such action under law or pursuant to
a court order.
(c) Maintenance of Security Interests in Financed Vehicles. The
Servicer will take all necessary steps to maintain perfection of the security
interest created by each Receivable in the related Financed Vehicle. The Issuer
authorizes the Servicer to take all actions necessary to continue perfection of
such security interest on behalf of the Issuer and the Indenture Trustee if a
Financed Vehicle is relocated to another State or for any other reason. Unless
required by law or court order, the Servicer will not release any Financed
Vehicle from the security interest granted by the related Receivable, except (i)
upon payment in full of the Receivable, (ii) in order to receive proceeds from
insurance covering such Financed Vehicle, (iii) upon repossession, (iv) upon
discounted settlement of the Receivable, or (v) upon abandonment, in each case
in accordance with the Credit and Collection Policy.
(d) No Impairment. The Servicer will not impair in any material
respect the rights of the Issuer or the Indenture Trustee in the Receivables
except in accordance with the Credit and Collection Policy and as otherwise
permitted by this Agreement.
(e) Other Action.
(i) Effective as of the date of this Agreement, all Receivables
are assigned to the Servicer solely for the purpose of fulfilling the
Servicer's duties under this Agreement, including commencement of or
participation in legal proceedings to enforce a Receivable or otherwise
related to a Receivable. If in any enforcement suit or legal proceeding it
is held that the Servicer may not enforce a Receivable on the ground that
it is not a real party in interest or a holder entitled to enforce the
Receivable, the Owner Trustee, on behalf of the Issuer, will, at the
Servicer's expense and direction, take steps to enforce the Receivable,
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including bringing suit in the names of the Indenture Trustee, the
Noteholders, the Issuer or any of them. On request of the Servicer, the
Owner Trustee will furnish the Servicer with any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties under this Agreement.
(ii) The Servicer is authorized to execute and deliver, on behalf
of itself, the Issuer, the Owner Trustee, the Indenture Trustee, the
Noteholders, or any of them, any instruments of satisfaction, cancellation,
partial or full release or discharge, and any other comparable instruments,
with respect to the Receivables and the Financed Vehicles.
Section 3.2 Purchase of Receivables Upon Breach by the Servicer.
(a) (i) If a Responsible Person of the Servicer has actual knowledge,
or receives notice from the Depositor, the Issuer, the Owner Trustee or the
Indenture Trustee, of a breach of the covenants set forth in Sections 3.1
(c) or (d) and such breach is not cured in all material respects by the end
of the second full Collection Period after the Responsible Person obtained
actual knowledge or was notified of such breach, the Servicer will purchase
each Receivable materially and adversely affected by such breach as of such
last day (or, at the Servicer's option, the end of the first full
Collection Period after the Responsible Person obtained actual knowledge or
was notified of such breach).
(ii) Upon the occurrence of any of the conditions requiring the
purchase of a Receivable set forth in Section 3.1(b), the Servicer will
repurchase the Receivable affected by such occurrence as of the last day of
the Collection Period in which such modification is made.
(iii) The Servicer may purchase any Receivable if the Servicer
determines, in its sole discretion, that, as a result of a computer systems
error or computer systems limitation or for any other reason, the Servicer
is unable to service such Receivable in accordance with the Credit and
Collection Policy and the terms of this Agreement.
(iv) The purchase price for each Receivable purchased by the
Servicer pursuant to this Section 3.2(a) will be the Purchase Amount for
such Receivable as of such last day. The Servicer will deposit such
Purchase Amount into the Collection Account on the Business Day preceding
the Payment Date (or, with Rating Agency Confirmation, on the Payment Date)
related to the Collection Period during which such purchase occurs.
(b) The sole remedy (except as provided in Section 6.3) of the Issuer,
the Indenture Trustee, the Owner Trustee and the Noteholders with respect to a
breach of the covenants made by the Servicer in Section 3.1(c) or (d) or the
occurrence of a condition specified in Section 3.1(b) is to require the Servicer
to purchase the Receivable as set forth in 3.2(a). None of the Owner Trustee,
the Indenture Trustee, the Servicer, the Depositor or the Administrator will
have any duty to conduct an investigation as to
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the occurrence of any condition requiring the purchase of any Receivable
pursuant to Section 3.2(a).
(c) Upon Servicer's payment of the Purchase Amount, the Issuer will be
deemed to have sold and assigned all of the Issuer's right, title and interest
in and to any Receivable purchased by the Servicer pursuant to Section 3.2(a),
and all security and documents relating to such Receivable. Such sale will not
require any action by the Issuer and will be without recourse, representation or
warranty by the Issuer except the representation that the Issuer owns the
Receivable free and clear of any Liens other than Permitted Liens. Upon such
sale, the Servicer may xxxx its computer records indicating that any receivable
purchased pursuant to Section 3.2(a) is no longer a Receivable, file UCC
termination or amendment statements or take any other action necessary or
appropriate to evidence the transfer of ownership of the Purchased Receivable
free from any Lien of the Issuer or the Indenture Trustee.
Section 3.3 Sales of Charged off Receivables. The Servicer, in its sole
discretion, may sell a Receivable that has been charged off in accordance with
the Credit and Collection Policy. Proceeds of any such sale allocable to the
Receivable will constitute Recoveries. The sole right of the Issuer and the
Indenture Trustee with respect to any Receivables sold pursuant to this Section
3.3 will be to receive the Recoveries. Upon such sale, the Servicer may xxxx its
computer records indicating that any such receivable sold is no longer a
Receivable, file UCC termination or amendment statements or take any other
action necessary or appropriate to evidence the sale of the receivable free from
any Lien of the Issuer or the Indenture Trustee.
Section 3.4 Duties of the Servicer with Respect to the Servicing of the
Transaction; Annual Reports and Notices.
(a) Monthly Investor Report. On or about the 10th day of each calendar
month, the Servicer will deliver to the Owner Trustee, the Note Paying Agent,
the Indenture Trustee, the Depositor and the Rating Agencies, a servicing report
substantially in the form of Exhibit A (the "Monthly Investor Report") with
respect to the preceding Collection Period and the related Payment Date. A
Responsible Person of the Servicer will certify the accuracy of the information
in each Monthly Investor Report.
(b) Annual Statement as to Compliance. To the extent required by
Regulation AB, the Servicer will deliver to the Depositor, the Owner Trustee,
the Indenture Trustee and each Rating Agency within 90 days after the end of
each calendar year, an Officer's Certificate, dated as of December 31 of the
preceding calendar year, signed by a Responsible Person of the Servicer to the
effect that (i) a review of the Servicer's activities during the immediately
preceding calendar year (or, in the case of the first certificate, since the
Closing Date) and of its performance under this Agreement has been made under
such Responsible Person's supervision and (ii) to such Responsible Person's
knowledge, based on such review, the Servicer has fulfilled in all material
respects all of its obligations under this Agreement throughout such calendar
year (or applicable portion of such calendar year), or, if there has been a
failure to fulfill any such obligation in any material respect, specifically
identifying each such failure known to such Responsible Person and the nature
and status of such failure. If the Issuer is not required to file periodic
reports under the Exchange Act or otherwise required by law to file an Officer's
Certificate of the Servicer as to compliance, such Officer's Certificate may be
delivered on or
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before April 30 of each calendar year. A copy of the Officer's Certificate
referred to in this Section 3.4(b) may be obtained by any Noteholder or Person
certifying it is a Note Owner by a request in writing to the Indenture Trustee
at its Corporate Trust Office.
(c) Notice of Event of Servicing Termination. The Servicer will notify
the Depositor, the Owner Trustee, the Indenture Trustee and each Rating Agency
of any event that with the giving of notice or lapse of time, or both, would
become an Event of Servicing Termination under Section 7.1, no later than 5
Business Days after a Responsible Person of the Servicer obtains actual
knowledge of such event.
(d) Compliance with Obligations under Xxxxxxxx-Xxxxx Act. If directed
by the Administrator, the Servicer will prepare, execute and deliver all
certificates or other documents required to be delivered by the Issuer pursuant
to the Xxxxxxxx-Xxxxx Act of 2002.
(e) Report on Assessment of Compliance with Servicing Criteria and
Attestation. The Servicer will:
(i) deliver to the Depositor, the Owner Trustee, the Indenture
Trustee and each Rating Agency, a report, dated as of December 31 of the
preceding calendar year, on its assessment of compliance with the minimum
servicing criteria during the preceding calendar year, including disclosure
of any material instance of non-compliance identified by the Servicer, as
required by Rule 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB under the Securities Act.
(ii) cause a firm of registered public accountants that is
qualified and independent within the meaning of Rule 2-01 of Regulation S-X
under the Securities Act to deliver to the Depositor, Owner Trustee and the
Indenture Trustee an attestation report that satisfies the requirements of
Rule 13a-18 or Rule 15d-18 under the Exchange Act and Item 1122 of
Regulation AB, as applicable, on the assessment of compliance with
servicing criteria with respect to the prior calendar year. Such
attestation report will be addressed to the board of directors of the
Servicer and to the Issuer, the Owner Trustee, the Depositor and the
Indenture Trustee. Such attestation will be in accordance with Rules
1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the
Exchange Act. The firm may render other services to the Servicer, the
Depositor or Ford Credit, but the firm must indicate in each attestation
report that it is qualified and independent within the meaning of Rule 2-01
of Regulation S-X under the Securities Act.
(iii) The reports referred to in this Section 3.4(e) will be
delivered within 90 days after the end of each calendar year unless the
Issuer is not required to file periodic reports under the Exchange Act or
any other law, in which case the reports may be delivered on or before
April 30 of each calendar year, beginning April 30, 200[_]. A copy of the
reports referred to in this Section 3.4(e) may be obtained by any
Noteholder or Person certifying it is a Note Owner by a request in writing
to the Indenture Trustee at its Corporate Trust Office.
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(f) Delivery of Tax Related Information. To the extent required by
law, the Servicer will deliver to the Owner Trustee and the Indenture Trustee
for distribution to the holder of the Residual Interest and each Noteholder
information for the preparation of the holder of the Residual Interest's and
each Noteholder's federal and State income tax returns.
(g) Termination of Reporting Obligation. The Servicer's obligation to
deliver or cause the delivery of reports under this Section 3.4, other than tax
reports under 3.4(f) will terminate upon the payment in full of the Notes,
including by redemption in whole as contemplated by Section 8.1.
Section 3.5 Servicer's Fees. On each Payment Date, the Issuer will pay the
Servicing Fee to the Servicer in accordance with Section 8.2 of the Indenture.
In addition, the Servicer will be entitled to retain from Collections all
Supplemental Servicing Fees and receive investment earnings (net of investment
losses and expenses) on funds deposited into the Bank Accounts during each
Collection Period.
Section 3.6 Servicer's Expenses. Except as otherwise set forth in this
Agreement, the Servicer will pay all expenses incurred by it in connection with
its activities under this Agreement, including fees and disbursements of
independent accountants, taxes imposed on the Servicer and expenses incurred in
connection with distributions and reports. The Servicer may charge Obligors, and
be reimbursed, for collection, repossession, transportation and remarketing
expenses in accordance with the Credit and Collection Policy.
ARTICLE IV
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO NOTEHOLDERS AND THE DEPOSITOR
Section 4.1 Accounts.
(a) Collection Account. The Servicer will, before the Closing Date,
establish and maintain a segregated trust account in the name "The Bank of New
York as Indenture Trustee, as secured party for Ford Credit Auto Owner Trust
2006-X" at a Qualified Institution or Qualified Trust Institution (initially the
corporate trust department of The Bank of New York), that is designated as the
"Collection Account". The Collection Account will initially be account number
[________]. The Collection Account will be under the sole dominion and control
of the Indenture Trustee, except that the Servicer may make deposits to and
direct the Indenture Trustee to make withdrawals from the Collection Account in
accordance with this Agreement. The Servicer may direct the Indenture Trustee to
withdraw from the Collection Account and pay to the Indenture Trustee or the
Servicer, as applicable, amounts that do not constitute Available Funds for any
Collection Period or that were deposited into the Collection Account in error.
(b) Principal Payment Account. The Servicer will, before the Closing
Date, establish and maintain a segregated subaccount within the Collection
Account or a separate trust account that is designated as the "Principal Payment
Account". The Principal Payment Account will initially be subaccount or account
number [________]. The Principal Payment Account is established and maintained
solely for administrative purposes.
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(c) Reserve Account.
(i) The Depositor or the Servicer acting on behalf of the
Depositor will, before the Closing Date, establish and maintain a
segregated trust account in the name "The Bank of New York as Indenture
Trustee, as secured party for Ford Credit Auto Owner Trust 2006-X" at a
Qualified Institution or Qualified Trust Institution (initially the
corporate trust department of The Bank of New York), that is designated as
the "Reserve Account". The Reserve Account will initially be account number
[_______]. On the Closing Date, the Depositor will deposit or cause to be
deposited $[______] into the Reserve Account from the net proceeds of the
sale of the Notes. The Reserve Account will be under the sole dominion and
control of the Indenture Trustee, except that the Servicer may make
deposits to and direct the Indenture Trustee to make withdrawals from the
Reserve Account in accordance with this Agreement.
(ii) The Indenture Trustee will transfer all funds on deposit in
the Reserve Account to the Depositor, or if the Depositor has notified the
Indenture Trustee of the establishment of the Trust Distribution Account,
to the Trust Distribution Account, on the earlier of: (i) the first Payment
Date on or after which the Servicer has deposited into the Collection
Account the amount specified in Section 8.1(a) in connection with its
exercising its option to acquire the Trust Property pursuant to Section 8.1
and (ii) the date on which the Note Balance of the Notes and of all other
amounts owing or to be distributed to the Secured Parties under the
Indenture and this Agreement are paid in full.
(d) Benefit of Accounts; Deposits and Withdrawals. The Collection
Account and the Reserve Account and all amounts, securities, investments,
financial assets and other property deposited in or credited to them will be
held by the Indenture Trustee as secured party for the benefit of the Secured
Parties and, after payment in full of the Notes, as agent of the Issuer and as
part of the Trust Property. All deposits to and withdrawals from the Collection
Account, Principal Payment Account and the Reserve Account will be made in
accordance with the Basic Documents.
(e) Maintenance of Accounts. If an institution maintaining one of the
Bank Accounts ceases to be a Qualified Institution or Qualified Trust
Institution, the Servicer, with respect to the Collection Account and the
Principal Payment Account, or the Depositor, with respect to the Reserve
Account, will, with the Indenture Trustee's or Owner Trustee's assistance as
necessary, within 30 calendar days, move such Bank Account to a Qualified
Institution or Qualified Trust Institution.
(f) Compliance. Each Bank Account will be established and maintained
pursuant to the Control Agreement. The Servicer, with respect to the Collection
Account and the Principal Payment Account, and the Depositor, with respect to
the Reserve Account, will ensure that the Control Agreement establishing each
Bank Account requires the Qualified Institution or Qualified Trust Institution
maintaining each such account to comply with entitlement orders (as defined in
Article 8 of the UCC) originated by the Indenture Trustee without further
consent of
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the Issuer for so long as the Notes are Outstanding and to act as a securities
intermediary in accordance with the UCC.
(g) Trust Distribution Account. The Depositor may establish and
maintain a segregated trust account in the name "U.S. Bank Trust, National
Association as Owner Trustee," that is designated as the "Trust Distribution
Account" and will promptly notify the Indenture Trustee and the Owner Trustee
after the establishment of the Trust Distribution Account. The Trust
Distribution Account will be under the sole dominion and control of the Owner
Trustee, except that the Indenture Trustee may make deposits to the Trust
Distribution Account in accordance with the Basic Documents. All deposits to and
withdrawals from the Trust Distribution Account will be made in accordance with
the Indenture and the Trust Agreement.
Section 4.2 Investment of Funds on Deposit in the Bank Accounts.
(a) For so long as no Default or Event of Default has occurred and is
continuing, Collections on deposit in the Collection Account (but not amounts in
the Principal Payment Account) and funds on deposit in the Reserve Account will,
to the extent permitted by law, be invested in Permitted Investments by the
Qualified Institution or Qualified Trust Institution maintaining such accounts
as directed by the Servicer with respect to the Collection Account, and as
directed by the Depositor or by any Person appointed by the Depositor with
respect to the Reserve Account, in each case without requiring any action by the
Indenture Trustee. The Servicer and the Depositor, as applicable, may direct the
Indenture Trustee to consent, vote, waive or take any other action, or not to
take any such action, with respect to any matters available to the holder of
such Permitted Investments.
(b) If (i) the Servicer, with respect to the Collection Account and
the Principal Payment Account, or the Depositor, with respect to the Reserve
Account, fails to give investment directions for any funds on deposit in a Bank
Account to the Qualified Institution or Qualified Trust Institution maintaining
such Bank Account by 11:00 a.m. New York time (or such other time as may be
agreed by the Issuer and such Qualified Institution or Qualified Trust
Institution) on the Business Day preceding a Payment Date or (ii) a Default or
Event of Default has occurred and is continuing with respect to the Notes and
the Indenture Trustee has provided notice to the Qualified Institution or
Qualified Trust Institution maintaining such Bank Account, the Qualified
Institution or Qualified Trust Institution maintaining such Bank Account will,
pursuant to the Control Agreement, to the fullest extent practicable, invest and
reinvest funds on deposit in such Bank Account in one or more investments
described in clause (b) of the definition of Permitted Investments.
(c) Permitted Investments of Collections on deposit in the Collection
Account (or any reinvestments of such Permitted Investments) will mature no
later than the Business Day preceding the Payment Date or which such Collections
are required to be distributed under the Indenture. Permitted Investments of
funds on deposit in the Reserve Account will mature no later than the Business
Day preceding the first Payment Date following the date of investment, except
that such funds may be invested in Permitted Investments that will not mature
before the next Payment Date if Rating Agency Confirmation has been obtained
with respect to the investment. Permitted Investments will be held to their
maturity, except that Permitted Investments may be sold or disposed of before
their maturity in connection with the sale or liquidation of the Collateral
following an Event of Default as provided in Section 5.6 of the Indenture. All
interest and other income (net of losses and investment expenses) on funds on
deposit in the Bank Accounts will be paid to the Servicer on each Payment Date
pursuant to Section 3.5.
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(d) None of the Depositor, the Servicer or the Qualified Institution
or Qualified Trust Institution maintaining any Bank Account will be liable for
the selection of Permitted Investments or for investment losses incurred thereon
(other than in the capacity as obligor thereon, if applicable).
(e) Neither the Servicer, with respect to the Collection Account and
the Principal Payment Account, nor the Depositor, with respect to the Reserve
Account, will direct the Qualified Institution or Qualified Trust Institution
maintaining such account to make any investment of any funds or to sell any
investment held in such account unless the security interest Granted and
perfected in such account in favor of the Indenture Trustee will continue to be
perfected in such investment or the proceeds of such sale, in each case without
any further action by any Person.
(f) With respect to funds on deposit in the Bank Accounts:
(i) any such funds or property in such accounts that is a
"financial asset" as defined in Section 8-102(a)(9) of the UCC will be
physically delivered to, or credited to an account in the name of, the
Qualified Institution or Qualified Trust Institution maintaining the
applicable account in accordance with such institution's customary
procedures such that the institution establishes a "securities entitlement"
in favor of the Indenture Trustee with respect to such funds or property;
and
(ii) any funds or property that are held in deposit accounts will
be held solely in the name of the Indenture Trustee at one or more
depository institutions having the Required Ratings, each such deposit
account will be subject to the exclusive custody and control of the
Indenture Trustee and the Indenture Trustee will have sole signature
authority with respect to each such deposit account.
(g) The Servicer, with respect to the Collection Account and the
Principal Payment Account, and the Depositor, with respect to the Reserve
Account, will ensure that the Qualified Institution or Qualified Trust
Institution maintaining each such account, in its capacity as securities
intermediary, agrees in the Control Agreement that each item of property
credited to each such account will be treated as a "financial asset" within the
meaning of Section 8-102(a)(9) of the UCC.
Section 4.3 Remittances.
(a) If Ford Credit's short term unsecured debt is rated at least "P-1"
by Xxxxx'x, "A-1" by Standard & Poor's and "F1" by Fitch (this rating
requirement, the "Monthly Remittance Required Ratings"), Ford Credit may remit
Collections on the Business Day preceding each Payment Date or, with Rating
Agency Confirmation, on each Payment Date.
(b) If Ford Credit's short term unsecured debt is not rated at least
equal to the Monthly Remittance Required Ratings:
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(i) on the Closing Date, the Servicer will remit Collections to
the Collection Account that are received and applied to the Obligors'
accounts during the period from the Cutoff Date to two Business Days
preceding the Closing Date and
(ii) on and after the Closing Date, Ford Credit will remit
Collections to the Collection Account within two Business Days after the
receipt and application of such Collections to the Obligors' accounts in
accordance with the Credit and Collection Policy. For this purpose,
Collections does not include Recoveries and amounts that constitute the
Supplemental Servicing Fee. Ford Credit will remit Recoveries to the
Collection Account no later than the Business Day preceding each Payment
Date or, with Rating Agency Confirmation, each Payment Date.
(c) Ford Credit will remit Purchase Amounts on the Business Day
preceding each Payment Date or, with Rating Agency Confirmation, on each Payment
Date.
(d) Ford Credit may retain amounts constituting the Supplemental
Servicing Fee from Collections and make the remittances pursuant to this Section
4.3 net of Servicing Fees to be paid to Ford Credit. Nonetheless, the Servicer
will account for all of the above described remittances and distributions in the
Monthly Investor Report as if the amounts were deposited and/or transferred
separately.
(e) If Ford Credit (or a successor of Ford Credit pursuant to Section
6.4) is not the Servicer or an Event of Servicing Termination occurs, the
Servicer will be required to remit Collections to the Collection Account within
2 Business Days after receipt.
(f) Pending deposit into the Collection Account, amounts collected by
the Servicer may be used by the Servicer at its own risk and for its own benefit
and will not be segregated from its own funds.
Section 4.4 Calculations and Distributions; Withdrawals from the Reserve
Account.
(a) On or before each Determination Date, the Servicer will calculate
the Reserve Account Draw Amount for the following Payment Date and will instruct
the Indenture Trustee to withdraw from the Reserve Account and deposit the
Reserve Account Draw Amount into the Collection Account on such Payment Date.
(b) On or before each Determination Date, the Servicer will instruct
the Indenture Trustee (based on the most recent Monthly Investor Report) to make
the withdrawals, deposits, distributions and payments required to be made on the
following Payment Date pursuant to Section 8.2 of the Indenture.
ARTICLE V
THE DEPOSITOR
Section 5.1 Representations and Warranties of the Depositor. The Depositor
represents and warrants to the Issuer as of the date of this Agreement and as of
the Closing Date,
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on which the Issuer is relying in acquiring the Trust Property and which will
survive the sale of the Trust Property to the Issuer and the pledge of the Trust
Property by the Issuer to the Indenture Trustee pursuant to the Indenture:
(a) Organization and Qualification. The Depositor is duly organized
and validly existing as a limited liability company in good standing under the
laws of the State of Delaware. The Depositor is qualified as a foreign limited
liability company in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its properties
or the conduct of its activities requires such qualification, license or
approval, unless the failure to obtain such qualifications, licenses or
approvals could not reasonably be expected to have a material adverse effect on
the Depositor's ability to perform its obligations under this Agreement or the
other Basic Documents to which it is a party.
(b) Power, Authorization and Enforceability. The Depositor has the
power and authority to execute deliver and perform the terms of each of the
Basic Documents to which it is a party and to acquire, own and sell the
Receivables and the other Trust Property and has duly authorized the sale of the
Receivables and other Trust Property to the Issuer by all necessary action. The
Depositor has authorized the execution, delivery and performance of the terms of
each of the Basic Documents to which it is a party. Each of the Basic Documents
to which the Depositor is a party is the legal, valid and binding obligation of
the Depositor enforceable against the Depositor, except as may be limited by
insolvency, bankruptcy, reorganization or other laws relating to the enforcement
of creditors' rights or by general equitable principles.
(c) Valid Sale. This Agreement evidences a valid sale of the Trust
Property from the Depositor to the Issuer, enforceable against creditors of and
purchasers from the Depositor.
(d) No Conflicts and No Violation. The consummation of the
transactions contemplated by the Basic Documents to which the Depositor is a
party and the fulfillment of the terms of the Basic Documents to which the
Depositor is a party will not (i) conflict with or result in a breach of the
terms or provisions of, or constitute a default under any indenture, mortgage,
deed of trust, loan agreement, guarantee or similar agreement or instrument
under which the Depositor is a debtor or guarantor, (ii) result in the creation
or imposition of any lien, charge or encumbrance upon any of the properties or
assets of the Depositor pursuant to the terms of any such indenture, mortgage,
deed of trust, loan agreement, guarantee or similar agreement or instrument
(other than this Agreement), (iii) violate the Certificate of Formation or
Limited Liability Company Agreement, or (iv) violate any law or, to the
Depositor's knowledge, any order, rule or regulation applicable to the Depositor
of any court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Depositor or
its properties, in each case which conflict, breach, default, lien, or violation
would reasonably be expected to have a material adverse effect on the
Depositor's ability to perform its obligations under the Basic Documents.
(e) No Proceedings. To the Depositor's knowledge, there are no
proceedings or investigations pending or overtly threatened in writing, before
any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its properties: (i)
asserting the invalidity of any of the Basic Documents or the
15
Notes, (ii) seeking to prevent the issuance of the Notes or the consummation of
any of the transactions contemplated by any of the Basic Documents, (iii)
seeking any determination or ruling that would reasonably be expected to have a
material adverse effect on the Depositor's ability to perform its obligations
under, or the validity or enforceability of, any of the Basic Documents or the
Notes, or (iv) relating to Ford Credit or the Depositor that would reasonably be
expected to (A) affect the treatment of the Notes as indebtedness for U.S.
federal income or Applicable Tax State income or franchise tax purposes, (B) be
deemed to cause a taxable exchange of the Notes for U.S. federal income tax
purposes, (C) cause the Issuer to be treated as an association or publicly
traded partnership taxable as a corporation for U.S. federal income tax
purposes, or (D) cause the Issuer to incur Michigan Single Business Tax
liability other than such proceedings that would not reasonably be expected to
have a material adverse effect upon the Depositor or materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity and enforceability of, the Basic Documents or the Notes.
(f) Valid Security Interest. This Agreement creates a valid and
continuing security interest (as defined in the applicable UCC) in the Trust
Property in favor of the Issuer that is prior to all other Liens other than
Permitted Liens and is enforceable as such against all other creditors of and
purchasers from the Depositor.
Section 5.2 Liability of the Depositor. The Depositor will be liable in
accordance with this Agreement only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement.
(a) The Depositor will not be liable to the Issuer, the Owner Trustee,
the Indenture Trustee, the Noteholders, the Servicer or any other Person for any
action taken, or not taken, in good faith pursuant to this Agreement or for
errors in judgment. All such liability is expressly waived and released as a
condition of, and consideration for, the execution of this Agreement by the
Depositor and the issuance of the Notes. Notwithstanding the preceding two
sentences, this Section 5.2 will not protect the Depositor against any liability
that would otherwise be imposed by reason of Depositor's, willful misconduct,
bad faith or negligence in the performance of its duties under this Agreement.
(b) The Depositor will pay any and all taxes levied or assessed upon
the Issuer or upon all or any part of the Trust Property.
(c) The Depositor and any officer, director, employee or agent of the
Depositor may rely in good faith on the advice of counsel or on any document
believed to be genuine and to have been executed by the proper party in respect
of any matters arising under this Agreement.
(d) The Depositor will be under no obligation to appear in, prosecute
or defend any legal action that is unrelated to its obligations under this
Agreement and that, in its opinion, may cause it to incur any expense or
liability.
Section 5.3 Merger or Consolidation of, or Assumption of the Obligations
of, the Depositor. Any Person (a) into which the Depositor is merged or
consolidated, (b) resulting from any merger or consolidation to which the
Depositor is a party or (c) succeeding to the business of the Depositor, if more
than 50% of the voting stock or voting power and 50% or
16
more of the economic equity of such Person is owned, directly or indirectly, by
Ford Motor Company, will be the successor to the Depositor under this Agreement
without the execution or filing of any document or any further act except those
actions required under this Section 5.3. Within 15 Business Days after any such
merger, consolidation or succession such Person will (i) execute an agreement of
assumption to perform every obligation of the Depositor under this Agreement,
(ii) deliver to the Owner Trustee and the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such merger,
consolidation or succession and such agreement of assumption comply with this
Section 5.3, (iii) deliver to the Owner Trustee and the Indenture Trustee an
Opinion of Counsel to the effect that either (A) upon the later of the
attachment of the security interest and the filing of the necessary financing
statements, the security interest in favor of the Issuer in the Trust Property
and the Indenture Trustee in the Collateral will be perfected or (B) no such
action is necessary to preserve and protect such security interest, and (iv)
provide notice of such merger, consolidation or succession to the Rating
Agencies.
Section 5.4 Depositor May Own Notes. The Depositor and any Affiliate of the
Depositor, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights as it would have if it were not the
Depositor or an Affiliate of the Depositor except as otherwise provided in any
Basic Document. Notes owned by or pledged to the Depositor or any Affiliate of
the Depositor will have an equal and proportionate benefit under the Basic
Document, without preference, priority or distinction, except as otherwise
provided in any Basic Document.
Section 5.5 Depositor's Designation of the Rating Agencies. The Depositor
designates Fitch, Xxxxx'x and Standard & Poor's as the Rating Agencies rating
the Notes.
ARTICLE VI
THE SERVICER
Section 6.1 Representations and Warranties of the Servicer. The Servicer
represents and warrants to the Issuer as of the date of this Agreement, on which
the Issuer is relying in acquiring the Trust Property and which will survive the
sale of the Trust Property to the Issuer and the pledge of the Trust Property by
the Issuer to the Indenture Trustee pursuant to the Indenture:
(a) Organization and Qualification. The Servicer is duly incorporated
and validly existing as a corporation in good standing under the laws of the
State of Delaware. The Servicer is qualified as a foreign corporation in good
standing and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of its properties or the conduct
of its activities requires such qualification, license or approval, unless the
failure to obtain such qualifications, licenses or approvals would not
reasonably be expected to have a material adverse effect on the Servicer's
ability to perform its obligations under this Agreement or the other Basic
Documents to which it is a party.
(b) Power, Authorization and Enforceability. The Servicer has the
power and authority to execute deliver and perform the terms of each of the
Basic Documents to which it is a party and to acquire, own, hold, service and
sell the Receivables and to hold the Receivables
17
Files as custodian on behalf of the Issuer and the Indenture Trustee. The
Servicer has authorized the execution, delivery and performance of the terms of
each of the Basic Documents to which it is a party. Each of the Basic Documents
to which the Servicer is a party is the legal, valid and binding obligation of
the Servicer enforceable against the Servicer, except as may be limited by
insolvency, bankruptcy, reorganization or other laws relating to the enforcement
of creditors' rights or by general equitable principles.
(c) No Conflicts and No Violation. The consummation of the
transactions contemplated by the Basic Documents to which the Servicer is a
party and the fulfillment of the terms of the Basic Documents to which the
Servicer is a party will not (i) conflict with or result in a breach of the
terms or provision of, or constitute a default under any indenture, mortgage,
deed of trust, loan agreement, guarantee or similar agreement or instrument
under which the Servicer is a debtor or guarantor (other than this Agreement),
(ii) result in the creation or imposition of any lien, charge or encumbrance
upon any of the properties or assets of the Servicer pursuant to the terms of
any such indenture, mortgage, deed of trust, loan agreement, guarantee or
similar agreement, (iii) violate the Certificate of Incorporation or the Bylaws
of the Servicer, or (iv) violate any law or, to the Servicer's knowledge, any
order, rule or regulation applicable to the Servicer of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties; in each
case, which conflict, breach, default, lien, or violation would reasonably be
expected to have a material adverse effect on the Servicer's ability to perform
its obligations under the Basic Documents.
(d) No Proceedings. To the Servicer's knowledge, there are no
proceedings or investigations pending or overtly threatened in writing before
any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties: (i)
asserting the invalidity of any of the Basic Documents or the Notes, (ii)
seeking to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by any of the Basic Documents, (iii) seeking any
determination or ruling that would reasonably be expected to have a material
adverse effect on the Servicer's ability to perform its obligations under, or
the validity or enforceability of, any of the Basic Documents or the Notes, or
(iv) relating to the Servicer that would reasonably be expected to (A) affect
the treatment of the Notes as indebtedness for U.S. federal income or Applicable
Tax State income or franchise tax purposes, (B) be deemed to cause a taxable
exchange of the Notes for U.S. federal income tax purposes, (C) cause the Issuer
to be treated as an association or publicly traded partnership taxable as a
corporation for U.S. federal income tax purposes or (D) cause the Issuer to
incur Michigan Single Business Tax liability other than such proceedings that,
to the Servicer's knowledge, would not reasonably be expected to have a material
adverse effect upon the Servicer and its subsidiaries considered as a whole or
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity and enforceability of, any of the Basic
Documents or the Notes.
Section 6.2 Liability of the Servicer.
(a) The Servicer will be liable to the Issuer, the Owner Trustee, the
Indenture Trustee, the Noteholders and to the Depositor only to the extent of
the obligations specifically undertaken by the Servicer under this Agreement.
All other liability is expressly waived and
18
released as a condition of, and consideration for, the execution of this
Agreement by the Servicer. This Section 6.2 will not protect the Servicer
against any liability that would otherwise be imposed by reason of the
Servicer's willful misconduct, bad faith or negligence in the performance of its
duties under this Agreement. The Servicer and any subservicer may rely in good
faith on any document of any kind that appears on its face to be properly
executed and submitted by any Person with respect to any matters arising under
this Agreement.
(b) The obligations of the Servicer under this Agreement are solely
corporate obligations of the Servicer, and no recourse may be taken, directly or
indirectly, with respect to the obligations of the Servicer against any owner,
beneficiary, agent, officer, director, or employee of the Servicer in their
individual capacities except for any liability that would otherwise be imposed
by reason of such Person's willful misconduct, bad faith or negligence in the
performance of its duties.
(c) The Servicer will not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties to
service the Receivables in accordance with this Agreement and that in its
opinion may involve it in any expense or liability. The Servicer may in its sole
discretion (but will not be required to) undertake any legal action that it may
deem necessary or desirable to protect the interests of the Noteholders or the
Depositor under the Basic Documents. In such event, the legal expenses, costs
and liabilities of such action and any liability resulting from such action will
be expenses, costs and liabilities of the Servicer.
(d) The Servicer will not be in default under this Agreement if it is
unable to perform any of its obligations as a result of an act of God, act of
war, terrorism, fires, earthquake or other natural disaster. The Servicer will
make commercially reasonable efforts to resume the performance of its
obligations under this Agreement as soon as reasonably practicable after any
such event.
Section 6.3 Indemnities of the Servicer.
(a) The Servicer will indemnify, defend and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee, and their respective officers,
directors, employees and agents from and against any and all costs, losses,
claims and liabilities arising out of, or imposed upon any such Person through
the Servicer's willful misconduct, bad faith or negligence (except for errors in
judgment) in the performance of its duties under any Basic Document to which it
is a party.
(b) Promptly upon receipt by the Issuer, the Owner Trustee or the
Indenture Trustee or any of their respective officers, directors, employees and
agents (each, for purposes of this Section 6.3(b), an "Indemnified Person") of
notice of the commencement of any Proceeding against any such Indemnified
Person, such Indemnified Person will, if a claim in respect of Proceeding will
be made against the Servicer under this Section 6.3, notify the Servicer of the
commencement of such Proceeding. The Servicer may participate in and assume the
defense and settlement of any such Proceeding at the Servicer's expense. No
settlement of such Proceeding may be made without the approval of the Servicer
and such Indemnified Person, which approvals will not be unreasonably withheld,
delayed or conditioned. The Servicer's indemnification obligation will include
the reasonable fees and expenses of counsel and the expenses of
19
litigation. After notice from the Servicer to such Indemnified Person of the
Servicer's intention to assume the defense of such Proceeding with counsel
reasonably satisfactory to such Indemnified Person, and so long as the Servicer
so assumes the defense of such Proceeding in a manner reasonably satisfactory to
such Indemnified Person, the Servicer will not be liable for any legal expenses
of counsel to such Indemnified Person unless there is a conflict between the
interests of the Servicer and such Indemnified Person, in which case the
Servicer will pay for the separate counsel to such Indemnified Person.
(c) For purposes of this Section 6.3, if the Servicer is terminated
pursuant to Section 7.1 or if the Servicer resigns pursuant to Section 6.6, such
Servicer will be deemed to continue to be the Servicer until a Successor
Servicer (other than the Indenture Trustee) has assumed the obligations of the
Servicer in accordance with Section 7.2.
(d) The Servicer's obligations under this Section 6.3 with respect to
the period such Person was (or was deemed to be) the Servicer will survive the
termination of or resignation by such Person as Servicer, the termination of
this Agreement and the resignation or removal of the Owner Trustee or the
Indenture Trustee or the termination of the Issuer. If the Servicer makes any
indemnity payments pursuant to this Section 6.3 and the Person to or on behalf
of whom such payments are made thereafter collects any of such amounts from
others, such Person will promptly repay such amounts to the Servicer, without
interest.
Section 6.4 Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer; Assignment to Affiliate. Any Person (a) into which the
Servicer is merged or consolidated, (b) resulting from any merger or
consolidation to which the Servicer is a party, (c) succeeding to the business
of the Servicer or (d) that is an Affiliate of the Servicer to whom the Servicer
has assigned this Agreement, will be the successor to the Servicer under this
Agreement without the execution or filing of any document or any further act
except those actions required under this Section 6.4. Within 15 Business Days
after any such merger, consolidation, succession or assignment, such Person will
(i) execute an agreement of assumption to perform every obligation of the
Servicer under this Agreement, (ii) deliver to the Owner Trustee and the
Indenture Trustee an Officer's Certificate and an Opinion of Counsel each
stating that such merger, consolidation, succession or assignment and such
agreement of assumption comply with this Section 6.4, (iii) deliver to the Owner
Trustee and the Indenture Trustee an Opinion of Counsel to the effect that
either (A) upon the later of the attachment of the security interest and the
filing of the necessary financing statements, the security interest in favor of
the Issuer in the Trust Property and the Indenture Trustee in the Collateral
will be perfected or (B) no such action is necessary to preserve and protect
such security interest, and (iv) provide notice of such merger, consolidation,
succession or assignment to the Rating Agencies.
Section 6.5 Delegation of Duties. So long as Ford Credit acts as Servicer
or Custodian, the Servicer or Custodian may without notice or consent delegate
any or all of its duties under this Agreement to Ford Motor Company or any
company or other business entity of which Ford Motor Company owns, directly or
indirectly, more than 50% of the voting stock or voting power and 50% or more of
the economic equity. The Servicer or Custodian may perform any of its duties
through subcontractors. No such delegation or subcontracting will relieve the
Servicer or Custodian of its responsibilities with respect to such duties and
the Servicer will
20
remain primarily responsible with respect to such duties. The Servicer or
Custodian will be responsible for the fees of any such subcontractors.
Section 6.6 Ford Credit Not to Resign as Servicer. Neither Ford Credit nor
any successor Servicer will resign as Servicer under this Agreement except upon
determining that the performance of its duties under this Agreement is no longer
permissible under law. Notice of any determination permitting the resignation of
Ford Credit as Servicer or a successor Servicer will be delivered to the Owner
Trustee and the Indenture Trustee as soon as practicable (and, if not given in
writing, will be confirmed in writing as soon as practicable). Any determination
permitting the resignation of Ford Credit as Servicer or a successor Servicer
will be evidenced by an Opinion of Counsel to such effect delivered to the Owner
Trustee and the Indenture Trustee with or promptly following delivery of such
notice.
Section 6.7 Servicer May Own Notes. The Servicer and any Affiliate of the
Servicer, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights as it would have if it were not the
Servicer or an Affiliate of the Servicer, except as otherwise provided in any
Basic Document. Notes owned by or pledged to the Servicer or any Affiliate of
the Servicer will have an equal and proportionate benefit under the Basic
Document, without preference, priority or distinction, except as otherwise
provided in any Basic Document.
ARTICLE VII
SERVICING TERMINATION
Section 7.1 Events of Servicing Termination.
(a) The occurrence and continuation of any of the following events
will be an "Event of Servicing Termination":
(i) Any failure by the Servicer to deliver to the Owner Trustee
or the Indenture Trustee any proceeds or payment required to be delivered
under this Agreement that continues unremedied for a period of 5 Business
Days after the earlier of the date on which (x) notice of such failure is
given to the Servicer by the Owner Trustee or the Indenture Trustee or (y)
a Responsible Person of the Servicer learns of such failure, unless:
(1) (A) such failure is caused by an event outside the
control of the Servicer that the Servicer could not have avoided through
the exercise of due care, (B) such failure does not continue for more than
10 Business Days after the earlier of the date on which notice of such
failure is given to the Servicer by the Owner Trustee or the Indenture
Trustee or a Responsible Person of the Servicer learns of such failure, (C)
during such period the Servicer uses all commercially reasonable efforts to
perform its obligations under this Agreement and (D) the Servicer provides
the Owner Trustee, the Indenture Trustee, the Depositor and the Noteholders
with prompt notice of such failure that includes a description of the
Servicer's efforts to remedy such failure, or
(2) (A) such failure would not reasonably be expected
to, or upon investigation and quantification does not, result in the
failure
21
in paying or depositing an amount greater than 0.05% of the sum of the Note
Balances of all Notes and (B) such failure is remedied (i) if the
Servicer's long-term debt is rated investment grade by all Rating agencies
rating the Notes, not later than 90 days after a Responsible Person of the
Servicer learns of such failure or (ii) if the Servicer's long-term debt is
not so rated, then not later than 90 days after such failure,
(ii) Any failure by the Servicer to observe or to perform in any
material respect any other covenants or agreements of the Servicer set
forth in this Agreement, which failure materially and adversely affects the
rights of the Noteholders and continues unremedied for a period of 90 days
after the Servicer receives notice of such failure from the Owner Trustee,
the Indenture Trustee or the Noteholders of at least 25% of the Note
Balance of the Controlling Class, or
(iii) The occurrence of an Insolvency Event with respect to the
Servicer.
(b) If an Event of Servicing Termination occurs, the Indenture Trustee
will promptly notify each Rating Agency. So long as such Event of Servicing
Termination has not been remedied, either the Indenture Trustee or the
Noteholders of at least a majority of the Note Balance of the Controlling Class
(or, if no Notes are Outstanding, the Owner Trustee, at the direction of the
holder of the Residual Interest), by notice to the Servicer and the Rating
Agencies (and to the Indenture Trustee and the Owner Trustee if given by the
Noteholders), may terminate all of the rights and obligations (other than the
obligations set forth in Section 6.3 and the rights set forth in Section 6.2) of
the Servicer under this Agreement. Upon the receipt by the Servicer of such
notice (or such later date as may be specified in such notice of termination),
all authority and power of the Servicer under this Agreement will pass to and be
vested in the Indenture Trustee or such Successor Servicer as may be appointed
under Section 7.2. In such event, the Indenture Trustee and the Owner Trustee
are authorized to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the termination of the predecessor Servicer and to complete the transfer of the
Receivables Files and related documents to the Indenture Trustee or the
successor Servicer or the successor Custodian.
(c) Upon termination of the Servicer under this Section 7.1, the
predecessor Servicer will cooperate with the Indenture Trustee, the Owner
Trustee and the Successor Servicer in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including, as soon as practicable, the transfer to the Indenture Trustee or such
Successor Servicer of all cash amounts that are held by the predecessor Servicer
for deposit, or thereafter received with respect to a Receivable and the
delivery of the Receivables Files and the related accounts and records
maintained by the Servicer. In no event, however, will the Servicer be obligated
to provide, license or assign its processes, procedures, models, servicing
software or other applications to any Successor Servicer or any other third
party, or provide anything covered by a restriction on transfer or assignment or
a confidentiality agreement. All reasonable costs and expenses (including
attorneys' fees) incurred by the Indenture Trustee, the Owner Trustee and the
Successor Servicer associated with (i) the transition of servicing duties to
the Successor Servicer, and (ii) amending this Agreement to
22
reflect a succession of the Servicer pursuant to this Section 7.1 will be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses.
Section 7.2 Appointment of Successor Servicer.
(a) If the Servicer is terminated pursuant to Section 7.1, it will
continue to perform its functions as Servicer under this Agreement until the
date specified in the notice of termination. If the Servicer resigns pursuant to
Section 6.6, it will continue to perform its functions as Servicer under this
Agreement until (i) if the resigning Servicer is Ford Credit, the earlier to
occur of (A) the Indenture Trustee or a Successor Servicer assuming the
responsibilities and obligations of Ford Credit as Servicer in accordance with
this Section 7.2 and as the Administrator in accordance with Section 5.2 of the
Administration Agreement or (B) the date upon which any regulatory authority
requires such resignation and (ii) if the resigning Servicer is not Ford Credit,
the earlier to occur of (A) the date 45 days from the delivery to the Indenture
Trustee and the Owner Trustee of the notice of such resignation in accordance
with Section 6.6 or (B) the date upon which the Servicer is legally unable to
act as Servicer as specified in the notice of resignation and accompanying
Opinion of Counsel.
(b) If the Servicer resigns or is terminated under this Agreement, the
Indenture Trustee will (i) provide notice of such termination or resignation to
the Issuer and (ii) as promptly as possible, appoint an institution having a net
worth of not less than $50,000,000 whose business includes the servicing of
motor vehicle receivables, as the successor to the Servicer under this
Agreement. Such successor will accept its appointment (including its appointment
as Administrator under the Administration Agreement as set forth in Section
7.2(d)) by (x) entering into a servicing agreement with the Issuer having
substantially the same provisions as the provisions of this Agreement applicable
to the Servicer, in a form acceptable to the Owner Trustee and the Indenture
Trustee and (y) delivering a copy of such servicing agreement to the Indenture
Trustee and the Issuer (such a successor, a "Successor Servicer"). Promptly
following a Successor Servicer's acceptance of its appointment, the Indenture
Trustee will notify the Issuer of such appointment, specifying in such notice
the name and address of the Successor Servicer.
(c) If no Person has accepted its appointment as Successor Servicer
when the predecessor Servicer ceases to act as Servicer in accordance with this
Section 7.2, the Indenture Trustee, without further action, will be
automatically appointed the Successor Servicer. However, if the Indenture
Trustee is unwilling or legally unable to act as Successor Servicer, it will
appoint, or petition a court of competent jurisdiction to appoint, an
institution having a net worth of not less than $50,000,000 whose business
includes the servicing of motor vehicle receivables, as successor. The Indenture
Trustee will be released from its duties and obligations as Successor Servicer
on the date that a new servicer enters into a servicing agreement with the
Issuer and delivers a copy of such servicing agreement to the Indenture Trustee
and the Issuer as provided in Section 7.2(b).
(d) Upon acceptance of its appointment as Successor Servicer, the
Successor Servicer will (i) be the successor in all respects to the predecessor
Servicer and will be subject to all of the responsibilities, duties, and
liabilities following such Successor Servicer's appointment placed on the
predecessor Servicer relating to such predecessor Servicer's performance of its
23
duties as Servicer and (ii) become the Administrator under the Administration
Agreement in accordance with Section 5.2 of the Administration Agreement.
(e) In connection with any appointment of a Successor Servicer, the
Indenture Trustee may make such arrangements for the compensation of such
Successor Servicer out of payments on Receivables as it and such Successor
Servicer may agree, provided that no such compensation will be in excess of the
amount paid to the predecessor Servicer under this Agreement. The Indenture
Trustee and such Successor Servicer will take such action, consistent with this
Agreement, as will be necessary to effectuate any such succession.
(f) If the Indenture Trustee succeeds to the Servicer's duties as
provided in Section 7.2(c), it will do so in its individual capacity and not in
its capacity as Indenture Trustee and, accordingly, Article VI of the Indenture
will be inapplicable to the Indenture Trustee in its duties as Successor
Servicer. In case the Indenture Trustee becomes Successor Servicer pursuant to
Section 7.2(c), the Indenture Trustee will be entitled to appoint as Servicer
any one of its Affiliates, provided that the Indenture Trustee, in its capacity
as Successor Servicer, will be liable for the actions and omissions of such
Affiliate in its capacity as Servicer.
Section 7.3 Notification to Noteholders and the Holder of the Residual
Interest. Upon any termination of the Servicer, or appointment of a Successor
Servicer pursuant to this Article VII, the Indenture Trustee will promptly
notify the Noteholders and each Rating Agency, and the Owner Trustee will
promptly notify the holder of the Residual Interest.
Section 7.4 Waiver of Events of Servicing Termination. The Noteholders of
at least a majority of the Note Balance of the Controlling Class or, if no Notes
are Outstanding, the Owner Trustee, at the direction of the holder of the
Residual Interest, may waive any Event of Servicing Termination and its
consequences, except an event resulting from the failure to make any required
deposits to or payments from any of the Bank Accounts in accordance with this
Agreement that resulted in an Event of Default in the payment of principal or
interest on any of the Notes (other than an Event of Default relating to failure
to pay principal due only by reason of acceleration) under the Indenture. Upon
any such waiver of an Event of Servicing Termination, such Event of Servicing
Termination will cease to exist and will be deemed to have been remedied for
every purpose under this Agreement. No such waiver will extend to any subsequent
or other event or impair any right resulting from such waiver. The Issuer will
notify the Rating Agencies of any such waiver.
ARTICLE VIII
TERMINATION
Section 8.1 Clean-Up Call.
(a) If the Pool Balance is equal to or less than 10% of the Initial
Pool Balance on the last day of any Collection Period, the Servicer has the
option to purchase the Trust Property (other than the amounts on deposit in or
invested in Permitted Investments maturing on or before the following Payment
Date in the Trust Accounts). The Servicer may exercise its option to purchase
the Trust Property by (i) notifying the Indenture Trustee, the Owner Trustee and
the Rating Agencies at least 10 days before the Payment Date related to such
Collection
24
Period and (ii) depositing into the Collection Account an amount equal to the
aggregate Principal Balance of the Receivables as of the last day of the
preceding Collection Period plus 30 days of interest at a rate equal to the
weighted average APR of the Receivables as of the last day of the preceding
Collection Period, in immediately available funds on the Business Day preceding
the Payment Date (or, with Rating Agency Confirmation, on the Payment Date)
related to such Collection Period. Notwithstanding the foregoing, the Servicer
will not be permitted to purchase the Trust Property unless the amount specified
above is greater than or equal to the sum of the Note Balance of the Notes
Outstanding and all accrued but unpaid interest thereon. The amount deposited
into the Collection Account pursuant to this Section 8.1(a) will be used on the
related Payment Date to make payments in full to the Noteholders in the manner
set forth in Section 8.2 of the Indenture.
(b) Upon Servicer's payment of the amount specified in Section 8.1(a), the
Issuer will be deemed to have sold and assigned all of the Issuer's right, title
and interest in and to any Receivable purchased by the Servicer pursuant to
Section 8.1(a), and all security and documents relating to such Receivable. Such
sale will not require any action by the Issuer and will be without recourse,
representation or warranty by the Issuer except the representation that the
Issuer owns the Receivable free and clear of any Liens other than Permitted
Liens. Upon such sale, the Servicer may xxxx its computer records indicating
that any receivables purchased pursuant to Section 8.1(a) are no longer
Receivables, file UCC termination or amendment statements or take any other
action necessary or appropriate to evidence the transfer of ownership of the
purchased Receivables free from any Lien of the Issuer or the Indenture Trustee.
The Issuer, the Owner Trustee or the Indenture Trustee, as applicable, will
execute such documents and instruments and any and all further instruments,
including any authorizations to file UCC financing statement amendments,
required or reasonably requested by the Servicer to effect such transfer.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Amendment.
(a) Subject to Section 9.1(f), this Agreement may be amended by the
Depositor, the Servicer and the Issuer, with prior notice to the Rating Agencies
(and the consent of the Indenture Trustee and the Owner Trustee to the extent
that their respective rights or obligations will be materially and adversely
affected, which consent may not be unreasonably withheld, delayed or
conditioned), but without the consent of any of the Noteholders subject to the
following conditions:
(i) the Depositor, the Servicer or the Issuer delivers an Opinion
of Counsel to the Indenture Trustee and the Owner Trustee to the effect
that such amendment will not materially and adversely affect the interest
of any Noteholder, and
(ii) the Depositor, the Servicer or the Issuer delivers an
Opinion of Counsel to the Indenture Trustee and the Owner Trustee to the
effect that such amendment will not (A) cause any Note to be deemed sold or
exchanged for purposes of Section 1001 of the Code, (B) cause the Issuer to
be treated as an association or publicly traded partnership taxable as a
corporation for U.S. federal
25
income tax purposes or (C) adversely affect the treatment of the Notes as
debt for U.S. federal income tax purposes.
(b) Subject to Section 9.1(f), this Agreement also may be amended by
the Depositor, the Servicer and the Issuer, with prior notice to the Rating
Agencies and with the consent of (i) the Indenture Trustee, to the extent that
its rights or obligations will be materially and adversely affected by such
amendment (which consent may not be unreasonably withheld, delayed or
conditioned), (ii) the Owner Trustee, to the extent that its rights and
obligations will be materially and adversely affected by such amendment (which
consent may not be unreasonably withheld, delayed or conditioned), and (iii) the
Noteholders of at least a majority of the Note Balance of each Class of the
Notes Outstanding (with each Class voting separately, except that all
Noteholders of Class A Notes will vote together as a single class).
(c) Notwithstanding anything else stated in Section 9.1(a) or (b), no
such amendment: (i) may (A) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the allocation or priority of,
Collections or distributions that are required to be made for the benefit of the
Secured Parties or (B) reduce the percentage of the Note Balance of the Notes
Outstanding required to consent to any such amendment without the consent of all
affected Noteholders or (ii) may change the Specified Reserve Balance without
receipt of Rating Agency Confirmation and the consent of all affected
Noteholders.
(d) Promptly upon the execution of any amendment in accordance with
this Section 9.1, the Owner Trustee will send a copy of such amendment to the
Indenture Trustee and each Rating Agency, and the Indenture Trustee will notify
each Noteholder of the substance of such amendment.
(e) If the consent of the Owner Trustee, the Indenture Trustee or the
Noteholders is required, they do not need to approve the particular form of any
proposed amendment so long as their consent approves the substance of the
proposed amendment.
(f) Before executing any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee will be entitled to request, receive and rely
upon an Opinion of Counsel delivered by the Depositor stating that the execution
of such amendment is authorized or permitted by this Agreement.
Section 9.2 Protection of Right, Title and Interest to the Trust Property.
(a) The Depositor will file financing statements and continuation
statements, in the manner and place required by law to preserve, maintain and
protect the interest of the Issuer and the Indenture Trustee for the benefit of
the Secured Parties in the Trust Property. The Depositor will deliver to the
Issuer and the Indenture Trustee file-stamped copies of, or filing receipts for,
any financing statement and continuation statement promptly upon such document
becoming available following filing. The Depositor authorizes the Issuer and the
Indenture Trustee to file any financing or continuation statements, and
amendments to such statements, in all jurisdictions and with all filing offices
as the Issuer or the Indenture may determine are necessary or advisable to
preserve, maintain and protect the interest of the Issuer and the Indenture
Trustee in the Trust Property. Such financing and continuation statements may
26
describe the Trust Property in any manner as the Issuer or the Indenture Trustee
may reasonably determine to ensure the perfection of the interest of the Issuer
and the Indenture Trustee in the Trust Property. The Issuer or the Indenture
Trustee, as applicable, will deliver to the Depositor file-stamped copies of, or
filing receipts for, any such financing statement and continuation statement
promptly upon such document becoming available following filing.
(b) The (i) Depositor, the Issuer and the Indenture Trustee, if
required or reasonably requested by the other or by the Owner Trustee or the
Indenture Trustee and (ii) Owner Trustee, if required or reasonably requested by
the Indenture Trustee, agree to do and perform any and all acts and to execute
any and all further instruments to more fully effect the purposes of this
Agreement.
(c) Each of the Depositor and the Servicer will give the Owner Trustee
and the Indenture Trustee at least 60 days' prior notice of any change in its
corporate structure, form of organization or jurisdiction of organization if, as
a result of such relocation or change, Section 9-307 of the UCC could require
the filing of a new financing statement or an amendment to a previously filed
financing or continuation statement and will promptly file any such new
financing statement or amendment. Each of the Depositor and the Servicer will
maintain its chief executive office, and the Servicer will maintain each office
from which it will service the Receivables, within the United States and will
maintain its jurisdiction of organization in only one State.
(d) Neither the Depositor nor the Servicer will change its name in any
manner that could make any financing statement or continuation statement filed
by the Depositor, the Issuer or the Indenture Trustee in accordance with Section
9.2(a) seriously misleading within the meaning of Section 9-506 of the UCC,
unless it has given the Owner Trustee and the Indenture Trustee at least 5 days'
prior notice thereof and promptly files appropriate amendments to all previously
filed financing statements.
(e) On and after the Closing Date until a Receivable has been paid in
full or repurchased, the Servicer will maintain its computer systems to indicate
clearly that such Receivable is owned by the Issuer and has been pledged to the
Indenture Trustee pursuant to the Indenture.
(f) At any time the Owner Trustee or the Indenture Trustee has
reasonable grounds to believe that a list of all Receivables (by contract
number) then included in the Trust Property is necessary in connection with the
performance of its duties under any Basic Agreement, the Owner Trustee or the
Indenture Trustee may request such a list from the Depositor and the Depositor
will furnish such list to the Owner Trustee and the Indenture Trustee within 30
Business Days of the request.
(g) The Depositor will, to the extent required by applicable law,
cause the Notes to be registered with the Securities and Exchange Commission
pursuant to Section 12(b) or Section 12(g) of the Exchange Act, within the time
periods specified in such sections.
27
Section 9.3 Notices.
(a) All notices, requests, demands, consents, waivers or other
communications to or from the parties to this Agreement must be in writing and
will be deemed to have been given and made:
(i) upon delivery or, in the case of a letter mailed by
registered first class mail, postage prepaid, 3 days after deposit in the
mail,
(ii) in the case of a fax, when receipt is confirmed by
telephone, reply email or reply fax from the recipient,
(iii) in the case of an email, when receipt is confirmed by
telephone or reply email from the recipient, and
(iv) in the case of an electronic posting to a password-protected
website to which the recipient has been provided access, upon delivery of
an email to such recipient stating that such electronic posting has
occurred.
Any such notice, request, demand, consent or other communication must be
delivered or addressed as set forth on Schedule B to this Agreement or at such
other address as any party may designate by notice to the other parties.
(b) Any notice required or permitted to be mailed to a Noteholder must
be sent by overnight delivery, mailed by registered first class mail, postage
prepaid, or sent by fax, to the address of such Person as shown in the Note
Register. Any notice so mailed within the time prescribed in this Agreement will
be conclusively presumed to have been properly given, whether or not the
Noteholder receives such notice.
Section 9.4 Assignment by the Depositor or the Servicer. Except as provided
in Sections 6.4, 6.6 and 7.2, this Agreement may not be assigned by the
Depositor or the Servicer without the prior consent of the Owner Trustee, the
Indenture Trustee, the holder of the Residual Interest and the Noteholders of at
least 66 2/3% of the Note Balance of the Notes Outstanding.
Section 9.5 Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties to this Agreement. The Owner Trustee
and the Indenture Trustee for the benefit of the Secured Parties will be
third-party beneficiaries of this Agreement entitled to enforce this Agreement
against the Depositor and the Servicer. Except as otherwise provided in this
Agreement, no other Person will have any right or obligation under this
Agreement.
Section 9.6 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 9.7 Submission to Jurisdiction. The parties submit to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State Court sitting in New York, New
York for purposes of all legal proceedings arising out of or relating to this
Agreement. The parties irrevocably waive, to the fullest extent
28
they may do so, any objection that they may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
Section 9.8 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
Section 9.9 Severability. If any of the covenants, agreements or terms of
this Agreement is held invalid, illegal or unenforceable, then it will be deemed
severable from the remaining covenants, agreements or terms of this Agreement
and will in no way affect the validity, legality or enforceability of the
remaining Agreement.
Section 9.10 Counterparts. This Agreement may be executed in any number of
counterparts. Each counterpart will be an original, and all counterparts will
together constitute one and the same instrument.
Section 9.11 Headings. The headings in this Agreement are included for
convenience only and will not affect the meaning or interpretation of this
Agreement.
Section 9.12 No Waiver; Cumulative Remedies. No failure or delay of the
Owner Trustee, the Indenture Trustee or the Noteholders in exercising any power,
right or remedy under this Agreement will operate as a waiver. No single or
partial exercise of any power, right or remedy precludes any other or further
exercise of such power, right or remedy or the exercise of any other power,
right or remedy. The powers, rights and remedies provided in this Agreement are
in addition to any powers, rights and remedies provided by law.
Section 9.13 Agent for Service.
(a) The agent for service of the Depositor in respect of this
Agreement will be the person holding the office of Corporate Secretary of the
Depositor, at the following address:
Ford Credit Auto Receivables Two LLC
c/o Ford Motor Credit Company
World Headquarters
Xxx Xxxxxxxx Xxxx, Xxxxx 000-X0
Xxxxxxxx, Xxxxxxxx 00000.
Attention: Securitization Operations Supervisor
Telephone: (000) 000-0000
Fax: (000) 000-0000
(b) The agent for service of the Servicer in respect of this Agreement
will be the person holding the office of Corporate Secretary of the Servicer, at
the following address:
29
Ford Motor Credit Company
Xxx Xxxxxxxx Xxxx
Xxxxx 0000, Xxxxxx 000-000
Xxxxxxxx, Xxxxxxxx 00000.
Attention: Corporate Secretary
Telephone: (000) 000-0000
Fax: (000) 000-0000
Section 9.14 No Petition. The Owner Trustee, the Indenture Trustee, the
Issuer and the Servicer each covenants and agrees that, before the date that is
1 year and 1 day after the payment in full of all securities issued by the
Depositor or by a trust for which the Depositor was the depositor, it will not
institute against, or join any other Person in instituting against, the
Depositor any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other proceedings under any federal or State bankruptcy or
similar law in connection with any obligations relating to the Notes or any of
the Basic Documents. This Section 9.14 will survive the resignation or removal
of the Owner Trustee under the Trust Agreement or the Indenture Trustee under
the Indenture and the termination of this Agreement.
Section 9.15 Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained in this Agreement to the
contrary, this Agreement has been countersigned by U.S. Bank Trust, National
Association, not in its individual capacity but solely as Owner Trustee of the
Issuer and in no event will U.S. Bank Trust, National Association in its
individual capacity or, except as provided in the Trust Agreement, as Owner
Trustee of the Issuer have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer under this Agreement or
in any of the certificates, notices or agreements delivered pursuant to this
Agreement. For all purposes of this Agreement, in the performance of its duties
or obligations under this Agreement or in the performance of any duties or
obligations of the Issuer under this Agreement, the Owner Trustee will be
subject to, and entitled to the benefits of, Articles V, VI and VII of the Trust
Agreement.
(b) Notwithstanding anything contained in this Agreement to the
contrary, this Agreement has been accepted by The Bank of New York, not in its
individual capacity but solely as Indenture Trustee, and in no event will The
Bank of New York have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer under this Agreement or
in any of the certificates, notices or agreements delivered pursuant to this
Agreement.
30
EXECUTED BY:
FORD CREDIT AUTO RECEIVABLES TWO LLC,
as Depositor
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
FORD CREDIT AUTO OWNER TRUST 2006-X,
as Issuer
By: U.S. BANK TRUST,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee of Ford
Credit Auto Owner Trust 2006-X
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
FORD MOTOR CREDIT COMPANY,
as Servicer
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
AGREED AND ACCEPTED BY:
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Indenture Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
U.S. BANK TRUST, NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
FORD MOTOR CREDIT COMPANY,
as Custodian
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
SCHEDULE A
Schedule of Receivables
Delivered on CD-ROM to Indenture Trustee at Closing
SA-1
SCHEDULE B
Notice Addresses
1. If to Ford Credit, in its individual capacity or as Servicer, Custodian,
Administrator or Sponsor under the Purchase Agreement:
Ford Motor Credit Company
c/o Ford Motor Company
World Headquarters
Xxx Xxxxxxxx Xxxx, Xxxxx 000-X0
Xxxxxxxx, Xxxxxxxx 00000
Attention: Securitization Operations Supervisor
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Ford Motor Credit Company
Xxx Xxxxxxxx Xxxx
Xxxxx 0000, Xxxxxx 000-000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
Telephone: (000) 000-0000
Fax: (000) 000-0000
2. If to the Depositor:
Ford Motor Credit Company
c/o Ford Motor Company
World Headquarters
Xxx Xxxxxxxx Xxxx, Xxxxx 000-X0
Xxxxxxxx, Xxxxxxxx 00000
Attention: Ford Credit SPE Management Office
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Ford Motor Credit Company
Xxx Xxxxxxxx Xxxx
Xxxxx 0000, Xxxxxx 000-000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
Telephone: (000) 000-0000
Fax: (000) 000-0000
SB-1
3. If to the Issuer:
c/o the Owner Trustee at the Corporate Trust Office of the Owner Trustee
With copies to:
Ford Motor Credit Company
c/o Ford Motor Company
World Headquarters
Xxx Xxxxxxxx Xxxx, Xxxxx 000-X0
Xxxxxxxx, Xxxxxxxx 00000
Attention: Ford Credit SPE Management Office
Telephone: (000) 000-0000
Fax: (000) 000-0000
and
Ford Motor Credit Company
Xxx Xxxxxxxx Xxxx
Xxxxx 0000, Xxxxxx 000-000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
Telephone: (000) 000-0000
Fax: (000) 000-0000
4. If to the Owner Trustee, at the Corporate Trust Office of the Owner Trustee
5. If to the Indenture Trustee, at the Corporate Trust Office of the Indenture
Trustee;
6. If to Xxxxx'x Investors Service, Inc.:
Xxxxx'x Investors Service, Inc.
ABS Monitoring Department
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: [___________]
Fax: [___________]
SB-2
7. If to Standard & Poor's:
Standard & Poor's
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Surveillance Department
Telephone: [___________]
Fax: [___________]
8. If to Fitch, Inc.:
Fitch, Inc.
0 Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Surveillance
Telephone: [___________]
Fax: [___________]
SB-3
APPENDIX A
USAGE AND DEFINITIONS
FORD CREDIT AUTO OWNER TRUST 0000-X
Xxxxx
The following rules of construction and usage apply to this Appendix, any
agreement that incorporates this Appendix and any document made or delivered
pursuant to any such agreement:
(a) The term "documents" includes any and all documents, agreements,
instruments, certificates, notices, reports, statements or other writings
however evidenced, whether in electronic or physical form.
(b) Accounting terms not defined or not completely defined in this
Appendix will be construed in conformity with U.S. generally accepted accounting
principles as in effect on the date of the document that incorporates this
Appendix.
(c) References to "Article," "Section," "Exhibit," "Schedule" or
another subdivision of or to an attachment are, unless otherwise specified, to
an article, section, exhibit, schedule or subdivision of or an attachment to the
document in which such reference appears.
(d) Any document defined or referred to in this Appendix or in any
document that incorporates this Appendix means such document as from time to
time amended, modified, supplemented or replaced, including by waiver or
consent, and includes all attachments to and instruments incorporated in such
document.
(e) Any statute defined or referred to in this Appendix or in any
document that incorporates this Appendix means such statute as from time to time
amended, modified, supplemented or replaced, including by succession of
comparable successor statutes, and includes any rules and regulations
promulgated under such statute and any judicial and administrative
interpretations of such statute.
(f) Calculation of any amount on or as of any date will be determined
at or as of the close of business on such day after the application of any
monies, payments and other transactions to be applied on such day, except that
calculations as of the Cutoff Date will be determined as of the open of business
on such day prior to the application of any monies, payments and other
transactions to be applied on such day.
(g) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including," the word "to"
means "to but excluding" and the word "through" means "to and including."
AA-1
(h) All terms defined in this Appendix apply to the singular and
plural forms of such terms and the term "including" means "including without
limitation."
(i) References to a Person are also to its permitted successors and
assigns.
Definitions
"Accrued Note Interest" means, for a Class and a Payment Date, the sum of
the Note Monthly Interest and the Note Interest Shortfall.
"Act of Noteholders" has the meaning specified in Section 11.3(a) of the
Indenture.
"Adjusted Pool Balance" means, on the Closing Date, an amount equal to:
(a) the Initial Pool Balance, minus
(b) the Yield Supplement Overcollateralization Amount,
and means, on a Payment Date, an amount (not less than zero) equal to:
(a) the Pool Balance as of the last day of the preceding Collection
Period, minus
(b) the Yield Supplement Overcollateralization Amount.
"Administration Agreement" means the Administration Agreement, dated as of
the Cutoff Date, among the Administrator, the Issuer and the Indenture Trustee.
"Administrator" means Ford Credit, in its capacity as administrator under
the Administration Agreement.
"Affiliate" means, for a specified Person, any other Person controlling,
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise.
"Amount Financed" means, for a Receivable, the amount financed by the
Obligor for the purchase of the Financed Vehicle, the purchase of extended
warranty protection plans, physical damage, credit life and disability insurance
policies and similar products, prior balances on trade-in vehicles and other
related fees and charges.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
finance charges stated in the Receivable or in any federal Truth In Lending Act
correction notice related to the Receivable.
AA-2
"Applicable Tax State" means the State in which the Owner Trustee maintains
its Corporate Trust Office, the State in which the Owner Trustee maintains its
principal executive offices and the State of Michigan.
"Authenticating Agent" has the meaning specified in Section 2.12(a) of the
Indenture.
"Available Collections" means, for a Payment Date, the sum of the following
amounts for such Payment Date or the preceding Collection Period:
(a) Collections, plus
(b) Purchase Amounts received on Receivables that became Purchased
Receivables during such Collection Period, plus
(c) any amounts deposited by the Servicer to purchase the Trust
Property on such Payment Date pursuant to Section 8.1 of the Sale
and Servicing Agreement, minus
(d) the Supplemental Servicing Fee.
"Available Funds" means, for a Payment Date, the sum of the following
amounts for such Payment Date:
(a) Available Collections, and
(b) the Reserve Account Draw Amount.
"Bank Accounts" means the Reserve Account, the Collection Account and the
Principal Payment Account.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. 101 et
seq.
"Basic Documents" means the Certificate of Formation, the Limited Liability
Company Agreement, the Certificate of Trust, the Trust Agreement, the Purchase
Agreement, the Sale and Servicing Agreement, the Indenture, the Administration
Agreement, the DTC Letter and the Control Agreement.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York, New York or the State
of Delaware are authorized or obligated by law, regulation or executive order to
close.
"Certificate of Formation" means the Amended and Restated Certificate of
Formation of Ford Credit Auto Receivables Two LLC.
"Certificate of Trust" means the Amended and Restated Certificate of Trust
of Ford Credit Auto Owner Trust 2006-X.
AA-3
"Class" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes or the Class D
Notes, as applicable.
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes and the Class A-4 Notes.
"Class A-1 Notes" means the $[_______] Class A-1 [__]% Asset Backed Notes
issued by the Issuer, substantially in the form of Exhibit A-1 to the Indenture.
"Class A-2 Notes" means the $[______] Class A-2 [__]% Asset Backed Notes
issued by the Issuer, substantially in the form of Exhibit A-2 to the Indenture.
"Class A-3 Notes" means the $[______] Class A-3 [__]% Asset Backed Notes
issued by the Issuer, substantially in the form of Exhibit A-3 to the Indenture.
"Class A-4 Notes" means the $[_______] Class A-4 [__]% Asset Backed Notes
issued by the Issuer, substantially in the form of Exhibit A-4 to the Indenture.
"Class B Notes" means the $[_______] of Class B [__]% Asset Backed Notes
issued by the Issuer, substantially in the form of Exhibit B to the Indenture.
"Class C Notes" means the $[_______] Class C [_____]% Asset Backed Notes
issued by the Issuer, substantially in the form of Exhibit C to the Indenture.
"Class D Notes" means the $[_______] Class D [__]% Asset Backed Notes
issued by the Issuer, substantially in the form of Exhibit D to the Indenture.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Closing Date" means [_______], 2006.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means (a) the Trust Property, (b) the Issuer's rights under
the Sale and Servicing Agreement, (c) all present and future claims, demands,
causes of action and choses in action in respect of the foregoing, and (d) all
payments on or under and all proceeds of the foregoing, but excluding, if
established, the Trust Distribution Account and all funds deposited in the Trust
Distribution Account, if any.
"Collection Account" means the account or accounts established and
maintained pursuant to Section 4.1(a) of the Sale and Servicing Agreement.
"Collection Period" means each calendar month commencing with the Cutoff
Date. For any Payment Date and Determination Date or for purposes of determining
the Principal Balance, Pool Balance or Note Pool Factor, the related Collection
Period means the Collection Period preceding (a) such Payment Date or
Determination Date or (b) the month in which the Principal Balance, Pool Balance
or Note Pool Factor is determined.
AA-4
"Collections" means, for a Collection Period, all amounts received and
applied by the Servicer on the Receivables during such Collection Period,
including, without duplication:
(a) payments received from Obligors, plus
(b) payments received on behalf of Obligors, including amounts under
physical damage, credit life and disability insurance policies,
plus
(c) partial prepayments due to refunds of cancelled items originally
included in the Amount Financed, such as extended warranty
protection plan costs or physical damage, credit life, disability
insurance premiums and similar products, plus
(d) Liquidation Proceeds, plus
(e) Recoveries,
but excluding amounts on any Receivable for which the Purchase Amount has been
included in the Available Funds in a prior Collection Period.
"Control Agreement" means the Collateral Account Control Agreement, dated
as of the Cutoff Date, among the Depositor, the Issuer, the Indenture Trustee
and The Bank of New York, in its capacity as a securities intermediary.
"Controlling Class" means (a) the Outstanding Class A Notes, (b) if no
Class A Notes are Outstanding, the Outstanding Class B Notes, (c) if no Class B
Notes are Outstanding, the Outstanding Class C Notes, and (d) if no Class C
Notes are Outstanding, the Outstanding Class D Notes.
"Corporate Trust Office" means,
(a) with respect to the Owner Trustee:
000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Telephone: 000-000-0000
Fax: 000-000-0000
or at such other address in the State of Delaware as the Owner Trustee may
designate by notice to the Indenture Trustee, the Administrator and the
Depositor, or the principal corporate trust office of any successor Owner
Trustee (the address of which the successor Owner Trustee will notify the
Indenture Trustee, the Administrator and the Depositor), and
(b) with respect to the Indenture Trustee:
000 Xxxxxxx Xxxxxx
AA-5
Floor 8 West
New York, New York 10286
Attention: Structured Finance Services - Asset Backed Securities
Ford Credit Auto Owner Trust 2006-X
Telephone: (000) 000-0000
Fax: (000) 000-0000
or at such other address as the Indenture Trustee may designate by notice to the
Owner Trustee and the Administrator, or the principal corporate trust office of
any successor Indenture Trustee (the address of which the successor Indenture
Trustee will notify the Owner Trustee and the Administrator).
"Credit and Collection Policy" means the credit and collection policies and
procedures of Ford Credit relating to retail installment sale contracts
originated or purchased and serviced by Ford Credit as they may change from time
to time.
"Custodian" has the meaning specified in Section 2.5 of the Sale and
Servicing Agreement.
"Cutoff Date" means [__________], 2006.
"Dealer" means the seller of a Financed Vehicle, originator of the related
Receivable and seller of the Receivable to Ford Credit.
"Dealer Recourse" means all recourse rights against the originating Dealer
on a Receivable.
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10 of the
Indenture.
"Delaware Limited Liability Company Act" means Chapter 18 of Title 6 of the
Delaware Code.
"Delaware Statutory Trust Act" means Chapter 38 of Title 12 of the Delaware
Code.
"Delinquent" means, for a Receivable and a Collection Period, a Receivable
on which more than $49.99 of the scheduled payment required to be paid by the
Obligor in such Collection Period is past due.
"Depositor" means Ford Credit Auto Receivables Two LLC.
"Determination Date" means, for a Collection Period, the Business Day
immediately preceding the related Payment Date.
"DTC Letter" means the letter of representations for the Notes, dated the
Closing Date, among the Issuer, the Indenture Trustee and The Depository Trust
Company.
AA-6
"Event of Default" has the meaning specified in Section 5.1(a) of the
Indenture.
"Event of Servicing Termination" has the meaning specified in Section 7.1
of the Sale and Servicing Agreement.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exempt Notes" means the Class A-1 Notes.
"Final Scheduled Payment Date" means, for each Class, the Payment Date
specified below:
Class Final Scheduled Payment Date
----- ----------------------------
Class A-1 ________ ____
Class A-2 ________ ____
Class A-3 ________ ____
Class A-4 ________ ____
Class B ________ ____
Class C ________ ____
Class D ________ ____
"Financed Vehicle" means a new or used car or light truck and all related
accessories securing an Obligor's indebtedness under a Receivable.
"First Priority Principal Payment" means, for a Payment Date, the greater
of:
(a) an amount (not less than zero) equal to the Note Balance of the
Class A Notes as of the preceding Payment Date minus the Adjusted
Pool Balance, and
(b) on and after the Final Scheduled Payment Date of any Class A
Notes, the Note Balance of such Class A Notes.
"Fitch" means Fitch, Inc., d/b/a Fitch Ratings.
"Ford Credit" means Ford Motor Credit Company, a Delaware corporation.
"Grant" means to mortgage, pledge, assign and to xxxxx x xxxx upon and a
security interest in the relevant property.
"Indemnified Person" has the meaning specified in Section 6.7(c) of the
Indenture, Section 6.3(b) of the Sale and Servicing Agreement and Section 7.2(b)
of the Trust Agreement, as applicable.
"Indenture" means the Indenture, dated as of the Cutoff Date, between the
Issuer and the Indenture Trustee.
AA-7
"Indenture Trustee" means The Bank of New York, a New York banking
corporation, not in its individual capacity but solely as Indenture Trustee
under the Indenture.
"Independent" means that the relevant Person (a) is independent of the
Issuer, the Depositor and their Affiliates, (b) does not have any direct
financial interest or any material indirect financial interest in the Issuer,
the Depositor or their Affiliates, and (c) is not an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions of or for the Issuer, the Depositor or their Affiliates.
"Independent Certificate" means a certificate or opinion to be delivered to
the Indenture Trustee under Section 11.1 of the Indenture, signed by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable care, and stating that
the signer has read the definition of "Independent" and that the signer is
Independent.
"Initial Pool Balance" means $[__________], the aggregate Principal Balance
of the Receivables as of the Cutoff Date.
"Insolvency Event" means, for a Person, (a) the making of a general
assignment for the benefit of creditors, (b) the filing of a voluntary petition
in bankruptcy, (c) being adjudged bankrupt or insolvent, or having had an order
entered against such Person for relief in any bankruptcy or insolvency
proceeding, (d) the filing by such Person of a petition or answer seeking
reorganization, liquidation, dissolution or similar relief under any statute,
law or regulation, (e) seeking, consenting to or acquiescing in the appointment
of a trustee, liquidator, receiver or similar official of such Person or of all
or any substantial part of such Person's assets, (f) the failure to obtain
dismissal or a stay within 60 days of the commencement of or the filing by such
Person of an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against such Person in any proceeding
against such Person seeking (i) reorganization, liquidation, dissolution or
similar relief under any statute, law or regulation or (ii) the appointment of a
trustee, liquidator, receiver or similar official of such Person or of all or
any substantial part of such Person's assets, or (g) the failure by such Person
generally to pay its debts as such debts become due.
"Interest Period" means, for a Payment Date, (a) for the Class A-1 Notes,
from the preceding Payment Date (or the Closing Date in the case of the first
Payment Date) to the following Payment Date and (b) for each other Class of
Notes, from the 15th day of the calendar month preceding each Payment Date (or
the Closing Date in the case of the first Payment Date) to the 15th day of the
following calendar month.
"Issuer" means Ford Credit Auto Owner Trust 2006-X.
"Issuer Order" and "Issuer Request" has the meaning specified in Section
11.1(a) of the Indenture.
"Lien" means a security interest, lien, charge, pledge or encumbrance.
AA-8
"Limited Liability Company Agreement" means the Amended and Restated
Limited Liability Company Agreement of the Depositor, dated as of March 1, 2001,
executed by Ford Credit, as sole member.
"Liquidated Receivable" means a Receivable for which the Servicer has
received and applied the proceeds of a sale by auction or other disposition of
the related Financed Vehicle.
"Liquidation Proceeds" means, for a Collection Period and any Liquidated
Receivable and any other Receivable that is charged off during such Collection
Period in accordance with the Credit and Collection Policy, an amount (not less
than zero) equal to:
(a) all amounts received and applied by the Servicer with respect to
such Receivable from whatever source, whether allocable to
interest or principal, during such Collection Period, minus
(b) Recoveries with respect to such Receivable, minus
(c) any amounts expended by the Servicer for the account of the
related Obligor (including collection expenses and all amounts
paid to third parties in connection with the repossession,
transportation, reconditioning and disposition of the related
Financed Vehicle), minus
(d) any amounts required by law or under the Credit and Collection
Policy to be remitted to the related Obligor.
"Monthly Investor Report" has the meaning specified in Section 3.4(a) of
the Sale and Servicing Agreement.
"Monthly Remittance Required Ratings" has the meaning specified in Section
4.3(a) of the Sale and Servicing Agreement.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Note Balance" means, for a Note or Class of Notes, the initial aggregate
principal amount of such Note or Class of Notes minus all amounts distributed on
such Note or Class of Notes that is allocable to principal.
"Note Interest Rate" means, for each Class, the interest rate per annum
specified below:
Class Note Interest Rate
----- ------------------
Class A-1 _____%
Class A-2 _____%
Class A-3 _____%
Class A-4 _____%
Class B _____%
Class C _____%
Class D _____%
AA-9
"Note Interest Shortfall" means, for a Class of Notes and a Payment Date,
an amount equal to:
(a) the Note Monthly Interest for the preceding Payment Date for such
Class, plus
(b) any outstanding Note Interest Shortfall for that Class for the
preceding Payment Date together with interest on such Note
Interest Shortfall, to the extent lawful, at the Note Interest
Rate for such Class for the related Interest Period, minus
(c) the amount of interest that was paid to the Noteholders of such
Class on such preceding Payment Date.
"Note Monthly Interest" means, for a Class of Notes and a Payment Date, the
aggregate amount of interest accrued on the Note Balance of that Class at the
Note Interest Rate for such Class for the related Interest Period.
"Note Owner" means the Person who is the beneficial owner of a Note as
reflected on the books of the Clearing Agency or on the books of a Person
maintaining an account with such Clearing Agency (as a direct participant or as
an indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Note Paying Agent" means the Indenture Trustee and any other Person
appointed as Note Paying Agent pursuant to Section 2.13 of the Indenture.
"Note Pool Factor" means, for a Class of Notes and a Payment Date, a
seven-digit decimal figure equal to the Note Balance of such Class after giving
effect to any principal payments to be made on that Class on that Payment Date
divided by the initial Note Balance of such Class.
"Note Register" and "Note Registrar" have the meanings specified in Section
2.4 of the Indenture.
"Noteholder" means the Person in whose name a Note is registered on the
Note Register.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D
Notes, collectively.
"Obligor" means the purchaser or co-purchasers of the Financed Vehicle or
any guarantor or other Person who owes payments under the related Receivable
(not including any Dealer for Dealer Recourse).
"Officer's Certificate" means (a) for the Issuer, a certificate signed by a
Responsible Person of the Issuer and (b) for the Depositor or the Servicer, a
certificate signed by any officer of the Depositor or the Servicer, as
applicable.
AA-10
"Opinion of Counsel" means a written opinion of counsel which counsel is
reasonably acceptable to the Indenture Trustee, the Owner Trustee and the Rating
Agencies, as applicable.
"Other Assets" means any assets or interests in any assets (other than the
Trust Property) conveyed or purported to be conveyed by the Depositor to any
Person other than the Issuer, whether by way of a sale, capital contribution,
the Grant of a Lien or otherwise.
"Outstanding" means, as of any date, all Notes authenticated and delivered
under the Indenture on or before such date except (a) Notes that have been
cancelled by the Note Registrar or delivered to the Note Registrar for
cancellation, (b) Notes or portions of Notes to the extent an amount necessary
to pay all or a portion of such Notes has been deposited with the Indenture
Trustee or any Note Paying Agent in trust for the Noteholders of such Notes on
or before such date, provided that if such Notes are to be redeemed, notice of
such redemption has been given pursuant to the Indenture or provision for such
notice has been made in a manner satisfactory to the Indenture Trustee, and (c)
Notes in exchange for or in lieu of which other Notes have been authenticated
and delivered pursuant to the Indenture unless proof satisfactory to the
Indenture Trustee is presented that any such Notes are held by a bona fide
purchaser, provided that in determining (i) whether Noteholders evidencing the
required Note Balance have given any request, demand, authorization, direction,
notice, consent or waiver under any Basic Document, Notes owned by the Issuer,
the Depositor, the Servicer or their Affiliates will be deemed not to be
Outstanding and (ii) whether the Indenture Trustee is protected in relying on
any such request, demand, authorization, direction, notice, consent or waiver,
only Notes that a Responsible Person of the Indenture Trustee knows to be so
owned will be deemed not to be Outstanding. Notes owned by the Issuer, the
Depositor, the Servicer or their Affiliates that have been pledged in good faith
will be treated as Outstanding if the pledgee establishes to the satisfaction of
the Indenture Trustee the pledgee's right to act with respect to such Notes and
that the pledgee is not the Issuer, the Depositor, the Servicer or their
Affiliate.
"Owner Trustee" means U.S. Bank Trust, National Association, a national
banking association, not in its individual capacity but solely as Owner Trustee
under the Trust Agreement.
"Payment Date" means the 15th day of each calendar month or, if not a
Business Day, the next Business Day, commencing in the first full month after
the Closing Date.
"Permitted Investments" means book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form that
evidence:
(a) direct non-callable obligations of, and obligations fully
guaranteed as to timely payment by, the United States,
(b) demand deposits, time deposits, certificates of deposit or
bankers' acceptances of any depository institution or trust company (i)
incorporated under the laws of the United States or any State or any United
States branch or agency of a foreign bank, (ii) subject to supervision and
examination by federal or State banking or depository institution authorities,
and (iii) that at the time the investment or contractual commitment to invest is
made, the commercial
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paper or other short-term unsecured debt obligations (other than obligations
with a rating based on the credit of a Person other than such depository
institution or trust company) of such depository institution or trust company
have the Required Rating,
(c) commercial paper, including asset-backed commercial paper, having,
at the time the investment or contractual commitment to invest is made, the
Required Rating,
(d) investments in money market funds having, at the time the
investment or contractual commitment to invest is made, a rating in the highest
investment grade category from each of the Rating Agencies (including funds for
which the Indenture Trustee or the Owner Trustee or any of their Affiliates is
investment manager or advisor),
(e) repurchase obligations with respect to any security that is a
direct non-callable obligation of, or fully guaranteed by, the United States 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, in either case entered
into with a depository institution or trust company (acting as principal)
described in clause (b) above, and
(f) any other investment for which the Issuer or the Administrator has
received Rating Agency Confirmation.
"Permitted Lien" means a tax, mechanics' or other Lien that attaches by
operation of law, or any security interest of the Depositor in the Purchased
Property under the Purchase Agreement, the Issuer in the Trust Property under
the Sale and Servicing Agreement or the Indenture Trustee in the Collateral
under the Indenture.
"Person" means any legal person, including any corporation, natural person,
joint venture, limited liability company, partnership, trust, business trust,
association, government, any department or agency of any government or any other
entity of whatever nature.
"Pool Balance" means, on the last day of a Collection Period, an amount
equal to the aggregate Principal Balance of the Receivables as of such day,
excluding Purchased Receivables.
"Preliminary Prospectus" means the preliminary prospectus supplement, dated
[____________], to the Depositor's prospectus, dated [___________].
"Principal Balance" means, for a Receivable as of the close of business on
the last day of a Collection Period, an amount (not less than zero) equal to:
(a) the Amount Financed, minus
(b) the portion of all Collections applied on or prior to such date
allocable to principal, minus
(c) Realized Losses.
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"Principal Payment Account" means the administrative subaccount of the
Collection Account established and maintained pursuant to Section 4.1(b) of the
Sale and Servicing Agreement.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding, or governmental investigation.
"Prospectus" means (a) the Preliminary Prospectus, together with the final
prospectus supplement, dated [___________], to the Depositor's prospectus, dated
[___________], relating to the Class A-2 Notes, the Class A-3 Notes, the Class
A-4 Notes, the Class B Notes and the Class C Notes and (b) the preliminary
offering memorandum, dated [___________], and the final offering memorandum,
dated [___________], relating to the Class A-1 Notes.
"Purchase Agreement" means the Purchase Agreement, dated as of the Cutoff
Date, between the Sponsor and the Depositor.
"Purchase Amount" means, for a Receivable, the Principal Balance of the
Receivable as of the last day of the preceding Collection Period plus 30 days of
interest at the applicable APR or, if such Receivable has been charged off, an
amount equal to the Realized Loss on such Receivable minus any Recoveries
through the last day of the preceding Collection Period.
"Purchased Property" means (a) the Receivables, (b) all amounts received
and applied on the Receivables on or after the Cutoff Date, (c) the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of Ford Credit in the Financed Vehicles, (d)
rights to receive proceeds from claims on any physical damage, credit life,
credit disability or other insurance policies covering Financed Vehicles or
Obligors, (e) Dealer Recourse, (f) the Receivables Files, (g) all property
securing the Receivables, (h) rebates of premiums and other amounts relating to
insurance policies and other items financed under the Receivables in effect as
of the Cutoff Date, (i) all present and future claims, demands, causes of action
and choses in action in respect of any of the foregoing, and (j) all payments on
or under and all proceeds in respect of any of the foregoing.
"Purchased Receivable" means, for a Collection Period, a Receivable (a)
purchased by the Servicer pursuant to Section 3.2(a) of the Sale and Servicing
Agreement, (b) repurchased by the Depositor pursuant to Section 2.4(a) of the
Sale and Servicing Agreement, or (c) repurchased by Ford Credit pursuant to
Section 3.3(a) of the Purchase Agreement.
"QIB" has the meaning specified in Section 2.4 of the Indenture.
"Qualified Institution" means any bank or depository institution organized
under the laws of the United States or any State or any United States branch or
agency of a foreign bank or depository institution that (a) is subject to
supervision and examination by federal or State banking authorities, (b) has a
short-term deposit rating of "P-1" by Moody's and "A-1+" by Standard & Poor's,
(c) if such institution holds any Bank Accounts other than as segregated trust
accounts and the deposits are to be held in such accounts more than 30 days, has
a long-term unsecured debt rating or issuer rating of not less than "AA-" by
Standard & Poor's, and (d) if
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such institution is organized under the laws of the United States, whose
deposits are insured by the Federal Deposit Insurance Corporation.
"Qualified Trust Institution" means the corporate trust department of The
Bank of New York, U.S. Bank Trust, National Association, or any other bank or
depository institution organized under the laws of the United States or any
State or any United States branch or agency of a foreign bank or depository
institution that is subject to supervision and examination by federal or State
banking authorities that (a) is authorized under such laws to act as a trustee
or in any other fiduciary capacity and (b) has a long-term deposit rating of not
less than "Baa3" from Xxxxx'x.
"Rating Agency" means, as of any date, each nationally recognized
statistical rating organization that has been designated by the Depositor to
provide a rating on the Notes and is then rating the Notes.
"Rating Agency Confirmation" means, for an action or request, that each of
the Rating Agencies has notified the Depositor, the Servicer, the Owner Trustee
and the Indenture Trustee that such action or request will not result in a
reduction or withdrawal of its then current rating of the Notes.
"Realized Loss" means, for a Receivable that is charged off by the Servicer
in accordance with the Credit and Collection Policy, an amount (not less than
zero) equal to:
(a) the Principal Balance of such Receivable as of the last day of
the Collection Period preceding the Collection Period in which
the Receivable is charged off, minus
(b) any Liquidation Proceeds received in the Collection Period in
which the Receivable is charged off.
"Receivable" means any retail installment sale contract listed on the
Schedule of Receivables, excluding Purchased Receivables.
"Receivables Files" has the meaning specified in Section 2.5 of the Sale
and Servicing Agreement.
"Record Date" means, for a Payment Date and a Note in global form, the
close of business on the day before such Payment Date and, for a Payment Date
and a Definitive Note, the last day of the month preceding the month in which
such Payment Date occurs.
"Recoveries" means, for a Receivable that has been charged off in
accordance with the Credit and Collection Policy (whether or not such Receivable
is a Liquidated Receivable) and a Collection Period, an amount (not less than
zero) equal to:
(a) all amounts received and applied by the Servicer during such
Collection Period with respect to such Receivable from whatever
source, whether allocable to interest or principal, after the
date it was charged off, minus
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(b) the sum of any amounts expended by the Servicer for the account
of the related Obligor in accordance with the Credit and
Collection Policy, including collection expenses and all amounts
paid to third parties in connection with the repossession,
transportation, reconditioning and disposition of the related
Financed Vehicle, to the extent such amounts have not been
included in calculating Liquidation Proceeds for such Collection
Period, minus
(c) any amounts required by law or under the Credit and Collection
Policy to be remitted to the Obligor.
"Redemption Date" means the Payment Date specified by the Servicer for a
redemption of the Notes pursuant to Section 10.1 of the Indenture.
"Registered Noteholder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Regular Principal Payment" means, for a Payment Date, an amount (not less
than zero) equal to:
(a) the greater of:
(i) the Note Balance of the Class A-1 Notes as of the preceding
Payment Date or the Closing Date, as the case may be, and
(ii) an amount equal to:
(A) the aggregate Note Balances of all Notes as of the
preceding Payment Date or the Closing Date, as the case
may be, minus
(B) the Pool Balance as of the last day of the preceding
Collection Period minus the Targeted
Overcollateralization Amount,
minus
(b) the sum of the First Priority Principal Payment, the Second
Priority Principal Payment and the Third Priority Principal
Payment;
except that on and after the Final Scheduled Payment Date of the Class D Notes,
the Regular Principal Payment will be the Note Balance of the Class D Notes.
"Regulation AB" means Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. Sections 229.1100-229.1123, as clarified and
interpreted by the Securities and Exchange Commission or its staff.
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"Residual Interest" means a beneficial ownership interest in the Issuer, as
recorded on the Trust Register.
"Required Rating" means, for short-term unsecured debt obligations, a
rating of (a) "P-1" by Moody's, (b) "A-1+" by Standard & Poor's and (c) if rated
by Fitch, "F1+" by Fitch.
"Reserve Account" means the account established and maintained pursuant to
Section 4.1(c) of the Sale and Servicing Agreement.
"Reserve Account Draw Amount" means, for a Payment Date, the least of:
(a) an amount (not less than zero) equal to the Total Required
Payment minus the Available Collections, and
(b) the amount in the Reserve Account minus any investment earnings.
"Responsible Person" means:
(a) for the Administrator, the Depositor, the Sponsor and the
Servicer, any Person designated in an Officer's Certificate of such Person or
other notice signed by an officer of such Person as authorized to act for such
Person, which Officer's Certificate or other notice has been sent to the all
other transaction parties including the Owner Trustee and the Indenture Trustee,
(b) with respect to the Issuer, any officer within the Corporate Trust
Office of the Owner Trustee, including any vice president, assistant vice
president, secretary, assistant secretary or any other officer of the Owner
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject, and for so long as the
Administration Agreement is in effect, any Responsible Person of the
Administrator, and
(c) with respect to the Indenture Trustee or the Owner Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee or the Owner
Trustee, as the case may be, including any vice president, assistant vice
president, secretary, assistant secretary or any other officer of the Indenture
Trustee or the Owner Trustee, as the case may be, customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject and also means, with respect to the Owner Trustee, for so
long as the Administration Agreement is in effect, any Responsible Person of the
Administrator.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Information" has the meaning specified in Section 2.4 of the
Indenture.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of the Cutoff Date, among the Issuer, the Depositor and the Servicer.
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"Schedule of Receivables" means the schedule or file identifying the
Receivables attached as Exhibit A to the Purchase Agreement and Schedule A to
the Sale and Servicing Agreement and the Indenture.
"Second Priority Principal Payment" means, for a Payment Date, the greater
of:
(a) an amount (not less than zero) equal to:
(i) the aggregate Note Balances of the Class A Notes and the
Class B Notes as of the preceding Payment Date, minus
(ii) the Adjusted Pool Balance, minus
(iii) the First Priority Principal Payment,
and
(b) on and after the Final Scheduled Payment Date of the Class B
Notes, the Note Balance of such Class B Notes.
"Secured Parties" means the Noteholders.
"Securities Account" means each account established and maintained pursuant
to Section 1 of the Control Agreement.
"Securities Act" means the Securities Act of 1933.
"Servicer" means Ford Credit or the Successor Servicer.
"Servicing Fee" means, for a Collection Period, the fee payable to the
Servicer for services rendered during such Collection Period in an amount equal
to the product of:
(a) one-twelfth of 1.0%, times
(b) the Pool Balance as of the last day of the preceding Collection
Period.
"Specified Reserve Balance" means $[___], or 0.50% of the Initial Pool
Balance.
"Sponsor" means Ford Credit.
"Standard & Poor's" means Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc.
"State" means any state or commonwealth of the United States, or the
District of Columbia.
"Successor Servicer" means a successor Servicer appointed pursuant to
Section 7.2 of the Sale and Servicing Agreement.
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"Supplemental Servicing Fee" means, for a Collection Period, all late fees,
prepayment charges, extension fees and other administrative fees or similar
charges on the Receivables.
"Targeted Credit Enhancement Amount" means, for a Payment Date, the greater
of:
(a) the Specified Reserve Balance, and
(b) 1% of the Pool Balance as of the last day of the preceding
Collection Period.
"Targeted Overcollateralization Amount" means, for a Payment Date, an
amount equal to:
(a) the Yield Supplement Overcollateralization Amount, plus
(b) the Targeted Credit Enhancement Amount, minus
(c) the Specified Reserve Balance.
"Third Priority Principal Payment" means, for a Payment Date, the greater
of:
(a) an amount (not less than zero) equal to:
(i) the aggregate Note Balances of the Class A Notes, the Class
B Notes and the Class C Notes as of the preceding Payment
Date, minus
(ii) the Adjusted Pool Balance, minus
(iii) the sum of the First Priority Principal Payment and the
Second Priority Principal Payment,
and
(b) on and after the Final Scheduled Payment Date of the Class C
Notes, the Note Balance of the Class C Notes.
"Total Required Payment" means, for a Payment Date, the sum of
(a) the amount, up to a maximum of [________], due and payable to the
Indenture Trustee under Section 6.7 of the Indenture and to the
Owner Trustee under Sections 7.1 and 7.2 of the Trust Agreement,
plus
(b) the Servicing Fee and all unpaid Servicing Fees from preceding
Collection Periods, plus
(c) the Accrued Note Interest for all Classes of Notes, plus
(d) the First Priority Principal Payment, plus
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(e) the Second Priority Principal Payment, plus
(f) the Third Priority Principal Payment, plus
(g) on or after the Final Scheduled Payment Date of the Class D
Notes, the Note Balance of the Class D Notes.
Following an Event of Default and an acceleration of the Notes or an
Insolvency Event or dissolution of the Depositor, until the Note Balances of all
Notes have been paid in full, the Total Required Payment will also include the
aggregate Note Balances of all Notes.
"Trust Accounts" means the Bank Accounts and, if established, the Trust
Distribution Account.
"Trust Agreement" means the Amended and Restated Trust Agreement dated as
of the Cutoff Date, between the Depositor and the Owner Trustee.
"Trust Distribution Account" means the account that may be established and
maintained pursuant to Section 4.1(g) of the Sale and Servicing Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939.
"Trust Property" means (a) the Purchased Property, (b) the Depositor's
rights under the Purchase Agreement, (c) the Depositor's rights under the Sale
and Servicing Agreement, (d) all security entitlements relating to the Trust
Accounts and the property deposited in or credited to any of the Trust Accounts,
(e) all present and future claims, demands, causes of action and choses in
action in respect of any of the foregoing, and (f) all payments on or under and
all proceeds in respect of any of the foregoing.
"Trust Register" and "Trust Registrar" have the meanings specified in
Section 3.2 of the Trust Agreement.
"UCC" means the Uniform Commercial Code as in effect in any relevant
jurisdiction.
"Underwriting Agreement" means the Underwriting Agreement, dated [___],
2006, between the Depositor and [__________], [__________] and [__________] as
the representatives of the underwriters named in such agreement.
"U.S. Bank Trust" means U.S. Bank Trust, National Association, a national
banking association.
"Yield Supplement Overcollateralization Amount" means, for the Closing Date
and each Payment Date, the amount specified on the Yield Supplement
Overcollateralization Schedule for such date. The Yield Supplement
Overcollateralization Amount has been calculated for the Closing Date and each
Payment Date as the sum for each Receivable of the amount (not less than zero)
equal to:
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(a) the future payments on such Receivable discounted to present
value as of the last day of the preceding Collection Period (or
the Cutoff Date, for the Closing Date) at the APR of the
Receivable, minus
(b) such future payments on such Receivable discounted to present
value as of the last day of the preceding Collection Period at
[________]%.
For purposes of this calculation, the future payments on each Receivable are the
equal monthly payments that would reduce the Receivable's outstanding Principal
Balance as of the Cutoff Date to zero on the Receivable's final scheduled
payment date, at an interest rate equal to the APR of the Receivable and without
any delays, defaults or prepayments.
"Yield Supplement Overcollateralization Schedule" means, for the Closing
Date and each Payment Date, the following schedule:
[TO COME]
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EXHIBIT A
FORM OF MONTHLY INVESTOR REPORT
FORD CREDIT AUTO OWNER TRUST 2006-X
[to come]
EA-1
