Filed Pursuant to Rule 424(b)(2)
Registration Statement Nos. 333-148505 and 333-148505-01
Registration Statement Nos. 333-148505 and 333-148505-01
Prospectus Supplement to Prospectus dated September 22, 2009
$1,500,000,000
Series 2009-2 Floating Rate Asset Backed Notes
Ford Credit Floorplan Master Owner Trust A
Issuing Entity or Trust
Ford Credit Floorplan Corporation Ford Credit Floorplan LLC Depositors | Ford Motor Credit Company LLC Sponsor and Servicer |
Before you purchase any notes, be sure you understand the structure and the risks. You should review carefully the risk factors beginning on page S-13 of this prospectus supplement and on page 10 of the prospectus. The notes will be obligations of the issuing entity only and will not be obligations of or interests in the sponsor, either depositor or any of their affiliates. This prospectus supplement may be used to offer and sell the notes only if accompanied by the prospectus. |
| The trust will issue: | Principal Amount | Interest Rate | Expected Final Payment Date | Final Maturity Date | ||||
Class A notes | $1,500,000,000 | One-month LIBOR + 1.55% | September 15, 2012 | September 15, 2014 |
| ● | The primary assets of the trust are a revolving pool of receivables originated in connection with the purchase and financing by motor vehicle dealers of their new and used car and truck inventory. A portion of the receivables will be held by the trust directly and the remainder will be held indirectly through a participation interest in other floorplan assets. |
| ● | The trust will pay interest on the notes on the 15th day of each month (or, if not a business day, the next business day). The first distribution date will be November 16, 2009. |
| ● | The trust expects to pay the outstanding principal of the notes on the expected final payment date set forth above. No principal will be paid on the notes prior to the expected final payment date, unless an amortization event occurs. |
| ● | The series enhancement for the notes will be excess spread, amounts on deposit in an accumulation period reserve account, the subordination of a portion of the transferor interest in the issuing entity and amounts on deposit in a reserve fund. |
The notes will be "eligible collateral" under the Term Asset-Backed Securities Loan Facility, or "TALF," provided by the Federal Reserve Bank of New York. The notes and the receivables will satisfy all applicable criteria for securities relating to "auto floorplan loans" under TALF. If you want to obtain a loan under TALF, you should consult your financial and legal advisors regarding the requirements of TALF and whether you are an "eligible borrower" under TALF.
The pricing terms of the notes are: | Price to Public | Underwriting Discount | Proceeds to the Depositors(1) | ||
Class A notes | 100.00% | 0.50% | 99.50% | ||
Total | $ 1,500,000,000 | $ 7,500,000 | $ 1,492,500,000 |
__________
| (1) | Before deducting expenses estimated to be $700,000 and any selling concessions rebated to the depositors by any underwriter due to sales to affiliates. |
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined that this prospectus supplement or the prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
BARCLAYS CAPITAL | MORGAN STANLEY |
| BofA Merrill Lynch | |||||
| BNP PARIBAS | |||||
| Citi | |||||
| Deutsche Bank Securities | |||||
| HSBC | |||||
| RBS |
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The date of this prospectus supplement is September 29, 2009
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This prospectus supplement and the prospectus provide information about Ford Credit Floorplan Master Owner Trust A and the terms of the Series 2009-2 notes to be issued by the trust. You should rely only on information provided or referenced in this prospectus supplement and the prospectus. Ford Credit has not authorized anyone to provide you with different information.
This prospectus supplement begins with the following brief introductory sections:
| · | Transaction Structure Diagram — illustrates the structure of this securitization transaction, including the series enhancement available to the notes, |
| · | Transaction Parties and Documents Diagram — illustrates the role that each transaction party and transaction document plays in this securitization transaction, |
| · | Summary — describes the main terms of the notes, the assets of the trust, the cash flows in this securitization transaction and the series enhancement available to the notes, and |
| · | Risk Factors — describes the most significant risks of investing in the notes. |
The other sections of this prospectus supplement contain more detailed descriptions of the notes and the structure of this securitization transaction. Cross-references refer you to more detailed descriptions of a particular topic or related information elsewhere in this prospectus supplement or the prospectus. The Table of Contents on the preceding page contains references to key topics.
An index of defined terms is at the end of this prospectus supplement and at the end of the prospectus.
Any projections, expectations and estimates contained in this prospectus supplement are not purely historical in nature but are forward-looking statements based upon information and certain assumptions Ford Credit and the depositors consider reasonable, subject to uncertainties as to circumstances and events that have not as yet taken place and are subject to material variation. Neither Ford Credit nor either depositor has any obligation to update or otherwise revise any forward-looking statements, including statements regarding changes in economic conditions, portfolio or asset pool performance or other circumstances or developments that may arise after the date of this prospectus supplement.
The following diagram provides a simplified overview of the structure of this securitization transaction, the relations between the parties and the series enhancement available for the Series 2009-2 notes. You should read this prospectus supplement and the prospectus in their entirety for a more detailed description of this securitization transaction.
The following diagram shows the role of each transaction party and the obligations that are governed by each transaction document in this securitization transaction. Forms of the documents identified in this chart are included as exhibits to the registration statement filed with the SEC that includes the prospectus.
This summary describes the main terms of the Series 2009-2 notes, the assets of the trust, the cash flows in this securitization transaction and the series enhancement available to the notes. It does not contain all of the information that you should consider in making your investment decision. To understand fully the terms of the notes, you should read this prospectus supplement and the prospectus, especially "Risk Factors" beginning on page S-13 of this prospectus supplement.
Transaction Overview
The trust is a master owner trust that owns a revolving pool of receivables originated in connection with the purchase and financing by motor vehicle dealers of their new and used car and truck inventory. A portion of the receivables are held by the trust directly and the remainder are held indirectly through a participation interest in other floorplan assets. The trust will issue the Series 2009-2 notes backed by this revolving pool of receivables to the depositors on the closing date. The depositors will sell the Series 2009-2 notes to the underwriters who will then sell them to you.
Transaction Parties
Sponsor, Servicer and Administrator
Ford Motor Credit Company LLC, or "Ford Credit," a wholly-owned subsidiary of Ford Motor Company, or "Ford."
Depositors or Transferors
Ford Credit Floorplan Corporation, or "FCF Corp," and Ford Credit Floorplan LLC, or "FCF LLC."
Issuing Entity or Trust
Ford Credit Floorplan Master Owner Trust A.
Indenture Trustee
The Bank of New York Mellon.
Owner Trustee and Delaware Trustee
U.S. Bank Trust National Association.
Back-up Servicer
Wells Fargo Bank, National Association, or "Wells Fargo."
The Series 2009-2 Notes
The trust will issue the following notes:
Principal Amount | Interest Rate | ||
| Class A notes | $1,500,000,000 | One-month LIBOR + 1.55% | |
Form and Minimum Denomination
The notes will be issued in book-entry form. The notes will be available in minimum denominations of $100,000 and in multiples of $1,000.
Closing Date
The trust expects to issue the notes on or about October 9, 2009, the "closing date."
Distribution Dates
The trust will pay interest and principal, if any, on the notes on each "distribution date," which will be the 15th day of each month (or, if not a business day, the next business day). The first distribution date will be November 16, 2009.
Interest
The notes will accrue interest on an "actual/360" basis from the preceding distribution date (or the closing date, for the first period) to the following distribution date.
For a more detailed description of interest payments on the notes, you should read "Description of the Notes — Payments of Interest" in this prospectus supplement.
The trust expects to pay the principal of the notes in full on the expected final payment date set forth below.
Expected Final Payment Date | Final Maturity Date | ||
| Class A notes | September 15, 2012 | September 15, 2014 | |
No principal will be paid on the notes prior to the expected final payment date, unless an amortization event occurs, and principal may be paid on the notes after the expected final payment date or in reduced amounts. You will not be entitled to any premium for early or late payment of principal.
For a more detailed description of principal payments on the notes, you should read "Description of the Notes — Payments of Principal" in this prospectus supplement.
Credit Enhancement and Other Enhancement
Credit enhancement and other enhancement, together referred to as "series enhancement," provide protection for the Series 2009-2 notes against losses on the receivables and potential shortfalls in the amount of cash available to the trust to make required payments. If the series enhancement is not sufficient to cover all amounts payable on the Series 2009-2 notes, the losses will be allocated to the Series 2009-2 notes.
The series enhancement described below is available only for your series. You are not entitled to any series enhancement available to any other series that the trust has already issued or may issue in the future.
Excess Spread
Excess spread is the excess of interest collections on the receivables that are allocated to the Series 2009-2 notes over the senior fees and expenses of the trust that are allocated to the Series 2009-2 notes and interest payments on the Series 2009-2 notes. Any excess spread will be available on each distribution date to cover investor default amounts and investor charge-offs and to make required deposits to the reserve fund.
Subordination of the Transferor Interest
A portion of the transferor interest in the trust is subordinated to the Series 2009-2 notes. The amount subordinated is known as the "available subordinated amount" and will initially equal $705,882,352.94 plus the incremental subordinated amount for the first determination date. The available subordinated amount is subject to reductions and increases from time to time.
Reserve Fund
A reserve fund will be established to provide funds for the payment of interest and principal on the Series 2009-2 notes if collections on the receivables are insufficient to make certain required payments. The depositors will deposit $15,000,000 into the reserve fund on the closing date. The amount required to be on deposit in the reserve fund will equal 1.00% of the adjusted invested amount of the Series 2009-2 notes. If an amortization event occurs, the reserve fund required amount will increase.
Accumulation Period Reserve Account
An accumulation period reserve account will be established to provide funds for the payment of interest on the Series 2009-2 notes during the controlled accumulation period if interest collections are insufficient to make certain required payments. The accumulation period reserve account will be funded prior to the start of the controlled accumulation period from available investor interest collections and other amounts, after certain required distributions and deposits. The amount required to be on deposit in the accumulation period reserve account will equal $3,750,000, or 0.25% of the initial principal balance of the Series 2009-2 notes.
For a more detailed description of each of the forms of series enhancement described above, you should read "Description of the Notes — Credit Enhancement and Other Enhancement" in this prospectus supplement.
Other Interests in the Trust
Other Series
The trust has issued other series of notes which are also secured by the assets of the trust. Annex A to this prospectus supplement summarizes certain characteristics of each outstanding series of notes.
The trust may issue additional series of notes secured by the trust assets in the future. The trust may issue additional series without your consent so long as the conditions described under "Description of the Notes — New Issuances" in the prospectus are satisfied.
Transferor Interest
The interest in the trust assets not securing your series or any other series is the "transferor interest" The depositors will initially own the transferor interest. They may, however, subsequently sell all or a portion of the transferor interest to another party through the issuance of a supplemental interest. A portion of the transferor interest equal to the available subordinated amount is subordinated to the Series 2009-2 notes. In addition, other portions of the transferor interest may be subordinated to other series of notes issued by the trust.
Trust Assets
Statistical Calculation Date
Statistical information in this prospectus supplement about the trust assets is provided as of June 30, 2009, the "statistical calculation date."
Receivables
The primary assets of the trust are a revolving pool of receivables originated in connection with the purchase and financing by motor vehicle dealers of their new and used car and truck inventory. The receivables are originated in designated accounts and are comprised of principal receivables and interest receivables.
Accounts may be designated for the trust either directly or indirectly through participation interests held by the trust, as described below under "— Other Floorplan Assets." Unless otherwise indicated, references to receivables and accounts in this prospectus supplement include the receivables and accounts held by the trust both directly and indirectly.
As of the statistical calculation date, the aggregate principal balance of the receivables was $8,953,795,156.95. The number of designated accounts giving rise to these receivables was 4,466.
For more detailed information about the accounts and related receivables in the trust portfolio, you should read "Trust Portfolio" in this prospectus supplement.
Other Floorplan Assets
The trust assets include the following other floorplan assets:
| · | a participation interest in pooled participation receivables, and |
| · | third-party financed in-transit receivables. |
The depositors may transfer additional participation interests or other floorplan assets to the trust without your consent so long as the rating agency condition has been satisfied for each rating agency then rating a series of notes issued by the trust.
For more detailed information about other floorplan assets, you should read "Trust Portfolio — Other Floorplan Assets" in the prospectus.
Excess Funding Account
In certain circumstances, the trust assets will also include funds held in the excess funding account. If funds are on deposit in the excess funding account, the portion of such funds allocated to the Series 2009-2 notes will be treated as available investor principal collections and will be available to make payments on the Series 2009-2 notes in the circumstances described under "Description of the Notes —Excess Funding Account" in this prospectus supplement.
Servicer and Back-up Servicer
Ford Credit will be the servicer of the receivables. Wells Fargo will be the back-up servicer of the receivables.
The trust will pay the servicer and the back-up servicer a fee each month, as described under "Description of the Notes— Servicing Compensation and Payment of Expenses" in this prospectus supplement.
Allocation of Collections
The servicer will collect payments on the receivables and will deposit these collections, up to specified amounts, into the collection account. The servicer will keep track of those collections that are interest collections and those collections that are principal collections. The servicer will also keep track of the "defaulted amount," which is the amount of principal receivables that are written off as uncollectible.
Each month, the servicer will allocate interest collections and principal collections and the defaulted amount among:
| · | your series, |
| · | other outstanding series of notes that the trust has issued, and |
| · | the transferor interest. |
The amounts allocated to your series will be based generally on the size of your series' invested amount compared with the adjusted pool balance of the trust. The initial invested amount of the Series 2009-2 notes will be $1,500,000,000. If the invested amount of your series declines due to the application of principal payments and investor charge-offs, amounts allocated and available to make required distributions for your series may be reduced.
For a more detailed description of the allocation calculations and the events that may reduce the invested amount of your series, you should read "Description of the Notes — Investor Percentages" and "— Investor Default Amount and Reallocated Principal Collections" in this prospectus supplement.
Groups
Your series will be included in a group of series referred to as "excess interest sharing group one" and in a group of series referred to as "principal sharing group one." As part of these groups, your series will be entitled in certain situations to share in excess interest collections and excess principal collections that are allocable to other series in the same group.
For a more detailed description of these groups, you should read "Description of the Notes — Groups" in this prospectus supplement.
Application of Collections
Interest Collections
On each distribution date, available investor interest collections will be applied in the order of priority listed below:
| (1) | Note Interest — to pay interest due on the Series 2009-2 notes, |
| (2) | Trustee Fees and Expenses — to pay all fees, expenses and indemnities due to the owner trustee, the Delaware trustee and the indenture trustee for your series, and any expenses of the trust for your series, up to a maximum amount of $150,000 per year, |
| (3) | Servicing Fees — (a) to pay the monthly back-up servicing fee for your series and (b) to pay the monthly servicing fee for your series if Ford Credit is no longer the servicer, |
| (4) | Investor Default Amount — to cover the investor default amount for your series, |
| (5) | Reserve Fund — to fund the reserve fund up to the reserve fund required amount, |
| (6) | Invested Amount Reimbursement due to Investor Charge-Offs — to reimburse reductions in the invested amount for your series resulting from investor charge-offs that have not been previously reimbursed, |
| (7) | Accumulation Period Reserve Account — beginning on the accumulation period reserve account funding date, to fund the accumulation period reserve account up to the accumulation period reserve account required amount, |
| (8) | Servicing Fees — to pay the monthly servicing fee for your series if Ford Credit is the servicer, |
| (9) | Available Subordinated Amount — to increase the available subordinated amount up to the required subordinated amount, |
| (10) | Additional Trustee Fees and Expenses – to pay all fees, expenses and indemnities due to the owner trustee, the Delaware trustee, the indenture trustee and the trust for your series, to the extent not paid pursuant to (2) above, |
| (11) | Additional Servicing Fees – (a) to pay any remaining amounts due to the back-up servicer and (b) to pay any transition costs incurred by the successor servicer in excess of amounts on deposit in the back-up servicer reserve account, |
| (12) | Excess Interest Sharing Group One — to cover any shortfalls for other series in excess interest sharing group one, and |
| (13) | Transferor Interest — to the holders of the transferor interest. |
For a more detailed description of these applications, you should read "Description of the Notes — Application of Collections — Payment of Interest, Fees and Other Items" in this prospectus supplement.
Principal Collections
The order of priority for the application of available investor principal collections on each distribution date will depend on whether your series is in the revolving period, the controlled accumulation period or the early amortization period.
| · | Revolving Period. The revolving period for your series begins on the closing date and ends on the day preceding the date on which the controlled accumulation period or the early amortization period begins. During the revolving period, no principal will be paid to you or accumulated in the principal funding account for your series. Instead, available investor principal collections will be treated as shared principal collections and made available to make required principal distributions and deposits for other series in principal sharing group one, and then paid to the holders of the transferor interest to the extent not required to be deposited into the excess funding account. |
| · | Controlled Accumulation Period. The controlled accumulation period for your series is scheduled to begin on the first day of the March 2012 collection period, but may begin at a later date. During the controlled accumulation period, available investor principal collections will be deposited into the principal funding account up to the controlled deposit amount. Any remaining available investor principal collections will be treated as shared principal collections and made available to make required principal distributions and deposits for other series in principal sharing group one, and then paid to the holders of the transferor interest, to the extent not required to be deposited into the excess funding account. On the expected final payment date, the amounts on deposit in the principal funding account will be paid to the Series 2009-2 noteholders. |
| · | Early Amortization Period. If an amortization event occurs, the early amortization period will begin. On each distribution date during the early amortization period, (a) available investor principal collections and (b) available transferor collections (in the case of available transferor principal collections, in an amount not to exceed the available subordinated amount) will be paid to the Series 2009-2 noteholders. |
For a more detailed description of these applications, you should read "Description of the Notes — Application of Collections — Payment of Principal" in this prospectus supplement.
Amortization Events
The occurrence of certain adverse events, called "amortization events," will cause an early amortization period to begin. Amortization events are comprised of the trust amortization events, which are applicable to all series and are described under "Description of the Notes—Amortization Events" in the prospectus, and the following "series amortization events," which are only applicable to the Series 2009-2 notes:
| · | either depositor fails to make required distributions or deposits, violates other covenants and agreements or has made representations that are materially incorrect, and any such breach is not cured within a specified period, |
| · | the occurrence of a servicer default that has a significant adverse effect on the Series 2009-2 noteholders, |
| · | the Series 2009-2 notes are not paid in full on their expected final payment date, |
| · | the average monthly principal payment rate for three consecutive collection periods is less than 21%, |
| · | the available subordinated amount falls below the required subordinated amount for a period of five business days, |
| · | the amount on deposit in the excess funding account exceeds 30% of the sum of the adjusted invested amounts of all outstanding series issued by the trust for three consecutive collection periods, and |
| · | the Series 2009-2 notes are accelerated following an event of default under the indenture. |
For a more detailed description of amortization events, you should read "Description of the Notes — Amortization Events" in this prospectus supplement and in the prospectus.
Ratings
The depositors expect that the Series 2009-2 notes will receive the indicated ratings from the nationally recognized statistical rating organizations, or "rating agencies," listed below. It is a condition to issuance of the Series 2009-2 notes that they receive the indicated ratings from S&P and Moody's listed below.
S&P | Moody's | DBRS | |||
| Class A notes | AAA | Aaa | AAA | ||
The ratings of the notes address the likelihood of the payment of principal and interest on the notes according to their terms. Each rating agency rating the notes will monitor the ratings using its normal surveillance procedures. Any rating agency may change or withdraw an assigned rating at any time. Any rating action taken by one rating agency may not necessarily be taken by any other rating agency.
TALF Eligibility
The Series 2009-2 notes will be "eligible collateral" under the Term Asset-Backed Securities Loan Facility, or "TALF," provided by the Federal Reserve Bank of New York, or the "FRBNY." The Series 2009-2 notes and the receivables will satisfy all applicable criteria for securities relating to "auto floorplan loans" under TALF, and the trust and the sponsor have certified to the FRBNY that they have satisfied, or have undertaken to satisfy, all applicable requirements under TALF, as set forth in the "Certification as to TALF Eligibility for Non-Mortgage-Backed ABS" attached as Annex C to this prospectus supplement.
For more information on the requirements for TALF eligibility, you should read "TALF Considerations" attached as Annex B to this prospectus supplement.
Tax Status
If you purchase a Series 2009-2 note, you agree by your purchase that you will treat your note as debt for U.S. federal, state and local income and franchise tax purposes.
Dewey & LeBoeuf LLP will deliver its opinion that, for U.S. federal income tax purposes:
| · | the Series 2009-2 notes will be treated as debt, and |
| · | the trust will not be classified as an association or publicly traded partnership taxable as a corporation. |
For more information about the application of U.S. federal, state and local tax laws, you should read "Material Federal Income Tax Consequences" in this prospectus supplement and the prospectus and "State and Local Tax Consequences" in the prospectus.
ERISA Considerations
The Series 2009-2 notes generally will be eligible for purchase by employee benefit plans.
For more information about the treatment of the Series 2009-2 notes under ERISA, you should read "ERISA Considerations" in this prospectus supplement and in the prospectus.
CUSIP Number
CUSIP | |
| Class A notes | 34528Q AH7 |
Contact Information for the Depositors
Ford Credit Floorplan Corporation or
Ford Credit Floorplan LLC
c/o Ford Motor Credit Company LLC
Suite 2407, 212-045
One American Road
Dearborn, Michigan 48126
Attention: Ford Credit SPE Management Office
Telephone number: (313) 594-3495
Fax number: (313) 390-4133
Contact Information for the Servicer
Ford Motor Credit Company LLC
c/o Ford Motor Company
World Headquarters, Suite 801-C1
One American Road
Dearborn, Michigan 48126
Attention: Securitization Operations Supervisor
Telephone number: (313) 206-5899
Fax number: (313) 390-4133
Website: www.fordcredit.com
In addition to the risk factors starting on page 10 of the prospectus, you should consider the following risk factors in deciding whether to purchase the Series 2009-2 notes.
| Series enhancement is limited and if exhausted could result in losses on your notes | Series enhancement for your notes will be provided, in part, by excess spread, the available subordinated amount and amounts on deposit in the reserve fund. The amount of this series enhancement is limited and may be reduced from time to time. If the series enhancement for your notes is exhausted, you are much more likely to incur losses on your notes. | |
For more information about the series enhancement for the Series 2009-2 notes, you should read "Description of the Notes — Credit Enhancement and Other Enhancement" in this prospectus supplement. | ||
| A decline in the financial condition or business prospects of Ford, Ford Credit or Ford-franchised dealers could result in losses on your notes | The receivables owned by the trust are originated primarily through the financing provided by Ford Credit to Ford-franchised dealers. The level of principal collections therefore depends upon Ford's continuing ability to manufacture vehicles and to maintain franchise dealer relationships, upon Ford Credit's ability to provide such financing and upon Ford-franchised dealers' ability to repay the receivables. Ford Credit's ability to compete in the current industry environment will affect its ability to generate new receivables and could also affect payment patterns on the receivables. | |
The recent and continuing events in the global financial markets and the continuing economic downturn have adversely affected the financial condition and business prospects of many of the manufacturers, suppliers and other participants in the U.S. auto industry, including Ford, Ford Credit and Ford-franchised dealers, and have raised concerns about the viability of the domestic auto manufacturers and certain suppliers and other participants in the U.S. auto industry. If the financial crisis and/or economic downturn worsens or continues for a prolonged period of time, the financial condition and business prospects of the participants in the U.S. auto industry, including Ford, Ford Credit and Ford-franchised dealers, could be further adversely affected. In addition, due to the interdependence of the manufacturers and suppliers in the U.S. auto industry, adverse events affecting a domestic auto manufacturer or a major supplier could have an adverse effect on the other participants in the auto industry, including Ford, Ford Credit and Ford-franchised dealers. A further decline in the financial condition or business prospects of Ford could also have an adverse effect on Ford Credit and the Ford-franchised dealers. |
The other domestic auto manufacturers have received loans from the U.S. government, and they and certain suppliers have requested additional loans or other government assistance in order to continue operations. Despite this support, Chrysler and General Motors each commenced a Chapter 11 bankruptcy proceeding. Both Chrysler and General Motors have emerged from bankruptcy through the sale of certain preferred assets to newly formed companies, although the original companies and remaining assets remain under bankruptcy protection. However, the new companies continue to rely on significant government assistance and may require additional government assistance in the future. If additional government assistance is not provided, or if the financial crisis and/or economic downturn worsens or continues for a prolonged period of time, one or more of the domestic auto manufacturers or major suppliers may not be able to continue operations. | ||
The occurrence of any of these events could adversely affect the performance of the receivables, the financial stability of the Ford-franchised dealers, the market value of the vehicles securing the receivables, or the ability of Ford Credit, as servicer, to service the receivables or honor its commitment to repurchase receivables due to breaches of representations or warranties, which could result in losses on your notes. | ||
Investors should consider the ongoing business prospects of Ford and Ford Credit, as well as the other domestic auto manufacturers, in deciding whether to purchase any Series 2009-2 notes. | ||
For additional sources of information about Ford and Ford Credit, you should read "Where You Can Find More Information" in the prospectus. | ||
| Large scale liquidation of dealer inventory could result in accelerated, delayed or reduced payments on your notes | As part of their restructuring plans, both General Motors and Chrysler announced that they would be terminating a significant number of dealerships across the United States. Chrysler has largely completed its termination of nearly 800 dealerships. General Motors announced that it would terminate approximately 2,200 dealerships over the next several years. Even though General Motors has indicated that it plans to buy existing inventory from its terminated dealers, the dealers may nonetheless be forced to liquidate their vehicle inventory at auction. This could significantly increase the supply of vehicles sold at auction which could cause demand for vehicles and/or vehicle prices to decline. If demand for vehicles and/or prices decline, sales volumes and/or the financial condition of the dealers could be adversely affected, which could result in accelerated, delayed or reduced payments on your notes. |
| Economic, market and social factors could lead to slower sales and leases of the vehicles, which could result in accelerated, reduced or delayed payments on your notes | Payment of the receivables depends primarily on the sale or lease of the underlying vehicles by the dealers. The level of sales and leases of vehicles may change because of a variety of economic, market and social factors. Economic factors include interest rates, unemployment levels, the rate of inflation, the price of gasoline, the price of commodities used in the production of vehicles and consumer perception of general economic conditions. The use of incentive programs (e.g., manufacturers' rebate programs and low-interest-rate financing programs) may also affect sales and leases. Various market factors, including the introduction or increased promotion by other manufacturers of competitive models offering perceived advantages in performance, reliability, fuel economy or other factors, may reduce sales of Ford vehicles. Social factors include consumer perception of Ford-branded products in the marketplace, changes in consumer demand for certain vehicle segments, consumer demand for vehicles generally and government actions, including actions that encourage consumers to purchase certain types of vehicles, such as the federal government's "Cash for Clunkers" program. For instance, sharp increases in gasoline and commodities prices in recent years prompted a shift in consumer demand away from the large truck and sport utility vehicle segments in which Ford is a leading participant, which contributed to the decline in Ford's market share over that period. Currently, the United States is experiencing a severe economic downturn that has caused industry sales volumes to drop to historic lows. | |
We cannot predict whether or to what extent economic, market or social factors will continue to affect the level of sales and leases. A prolonged slump, or further decline, in the level of sales or leases could result in accelerated, reduced or delayed payments on your notes. | ||
| A decrease in the dealer repayment rate could result in accelerated, reduced or delayed payments on your notes | The payment of principal on your notes will depend primarily on dealer repayments of receivables. Dealers are generally required to repay a receivable within five days of the sale or lease of the underlying vehicle. The timing of these sales and leases is uncertain, and there can be no assurance that any particular pattern of dealer repayments will occur. The actual rate of accumulation of principal in the principal funding account and the amount of available investor principal collections will depend on such factors as the rate of repayment and the rate of default by dealers. Any significant decline in the dealer repayment rate during the controlled accumulation period or the early amortization period for your notes could result in reduced or delayed payments on your notes. Alternatively, if the average dealer repayment rate for three consecutive collection periods is less than 21%, an amortization event will occur, which could result in accelerated payments on your notes. |
| An increase in the dealer repayment rate and/or a decrease in the generation of new receivables could result in accelerated payments on your notes | If the dealer repayment rate during the revolving period significantly exceeds the rate at which new receivables are generated — which could occur as a result of an increase in the rate of sale or lease of the underlying vehicles, including increases resulting from manufacturer incentive programs or programs such as the federal government's "Cash for Clunkers" program, or a decrease in the generation of new receivables, or both — principal collections otherwise payable to the holders of the transferor interest will be accumulated in the excess funding account in order to maintain the net adjusted pool balance at a specified level. However, if the amounts on deposit in the excess funding account exceed 30% of the sum of the adjusted invested amounts of all outstanding series issued by the trust for three consecutive collection periods, an amortization event will occur, which could result in accelerated payments on your notes. | |
| Increased losses could result in accelerated, reduced or delayed payments on your notes | There can be no assurance that the historical levels of losses experienced by the trust or by Ford Credit on its U.S. dealer floorplan portfolio are predictive of future performance of the trust's receivables. Losses could increase significantly for various reasons, including adverse changes in the local, regional or national economies, adverse changes in the business prospects of Ford or Ford Credit, the inability or unwillingness of Ford to continue to provide financial assistance to dealers or decreases in the market value of the financed vehicles in the absence of manufacturer incentives. Net losses on Ford Credit's U.S. dealer floorplan portfolio increased significantly in the first half of 2009, and there has been a significant increase in the proportion of dealers rated by Ford Credit as weak or poor credit risks since the beginning of 2008. In addition, during the third quarter of 2009, sales increased significantly due to the federal government's "Cash for Clunkers" program, but in many instances the dealers have had to wait for rebate claims to be paid by the government. The resulting decrease in dealer liquidity could result in increased losses on the receivables. Any significant increase in losses on the receivables could result in accelerated, reduced or delayed payments on your notes. | |
For more information about the performance of Ford Credit's U.S. dealer floorplan portfolio, you should read "Transaction Parties — Servicer — Ford Credit's U.S. Dealer Floorplan Portfolio" in this prospectus supplement. | ||
| Geographic concentration may increase risk of accelerated, reduced or delayed payments on your notes | As of the statistical calculation date, approximately 13.9%, 7.2% and 5.1% of the outstanding principal receivables in the trust portfolio relate to dealer showrooms located in Texas, California and Florida, respectively. No other state accounted for more than 5% of the outstanding principal receivables in the trust portfolio as of the statistical calculation date. Adverse economic conditions or other factors affecting these states could result in reductions and delays in payments on the receivables relating to dealer showrooms located in these states. Any such reductions or delays in payments on the receivables could cause accelerated, reduced or delayed payments on your notes. |
For more information about the geographic distribution of the trust portfolio, you should read "Trust Portfolio — Statistical Information Regarding the Trust Portfolio" in this prospectus supplement. | ||
| You may not receive your principal on the expected payment date because of other series being in or entering into an accumulation or amortization period | If your series were to enter the controlled accumulation period or the early amortization period while another series in principal sharing group one was either in an accumulation or amortization period or were to enter an accumulation or amortization period before the principal amount of your notes is reduced to zero, available investor principal collections from that series may not be available to make payments on your notes. As a result, the principal payments on your notes may be reduced and final payment of the principal of your notes may be delayed. Also, the shorter the controlled accumulation period for the notes of your series, the greater the likelihood that payment in full of the notes of your series on the expected final payment date will depend on available investor principal collections from other series in principal sharing group one to make principal payments on your notes. | |
| The depositors have the ability to change certain eligibility criteria and certain requirements with respect to the trust and the notes without the consent of any noteholder or any other person, which could result in reduced or delayed payments on your notes | The depositors have the ability to change the definitions of the terms "eligible account" and "eligible receivable" and to reduce the required pool percentage with respect to the Series 2009-2 notes and/or increase or reduce the reserve fund required amount with respect to the Series 2009-2 notes. The depositors can make these changes so long as the rating agency condition has been satisfied for each rating agency then rating the Series 2009-2 notes. The depositors' ability to make any of the foregoing changes may result in reduced or delayed payments on your notes. | |
| The requirements of TALF could adversely affect the market value of your notes and/or limit your ability to resell your notes | On the closing date, the Series 2009-2 notes will constitute "eligible collateral" under TALF, and if you are an "eligible borrower" under TALF and satisfy the other requirements of TALF you may request a non-recourse loan from the FRBNY with a maturity of up to three years to be secured by your notes. However, the FRBNY has reserved the right to reject a loan application in exceptional cases, without regard to the qualification of the notes as "eligible collateral" or the qualification of the investor as an "eligible borrower," and the FRBNY has also reserved the right to change the terms and conditions of TALF from time to time. If a TALF loan is provided, the loan may be assigned only with the consent of the FRBNY, and no consents will be given after the termination date for making new loans under TALF, except in certain limited circumstances. In addition, there can be no assurance that the notes will constitute "eligible collateral" under TALF on any date other than the closing date. As a result, liquidity in the secondary market for the Series 2009-2 notes could be limited, which could adversely affect the market value of your notes and/or limit your ability to resell your notes. |
If you pledge your notes as collateral to secure a TALF loan, and the outstanding balance of the loan is not repaid on or prior to its three-year maturity date, you must repay the outstanding balance on such date or surrender your notes to the FRBNY. The expected final payment date for your notes will occur prior to the three-year maturity date of a TALF loan, but payments on your notes could be delayed for a variety of reasons described in this prospectus supplement, and the final payment on your notes could therefore occur later than the maturity date of the TALF loan. If your notes remain outstanding on the maturity date of the TALF loan and you are unable to repay the outstanding balance of the loan, you may suffer a loss on your investment in your notes. | ||
This prospectus supplement does not describe all of the requirements of TALF or the associated risks of obtaining loans under TALF. If you want to obtain a loan under TALF, you should consult your financial and legal advisors regarding the advisability of obtaining a loan under TALF and the requirements of TALF, including whether you are an "eligible borrower" under TALF. | ||
For more information about the requirements for "eligible collateral" under TALF, you should read "TALF Considerations" attached as Annex B to this prospectus supplement. For more information about how illiquidity may impact your ability to resell your notes, you should read "Risk Factors—The absence of a secondary market for your notes could limit your ability to resell them" in the prospectus. | ||
| Financial market disruptions and a lack of liquidity in the secondary market could adversely affect the market value of your notes and/or limit your ability to resell your notes | Recent and continuing events in the global financial markets have caused a significant reduction in liquidity in the secondary market for asset-backed securities. These events include: · the failure, acquisition or government seizure of several major financial institutions, · the establishment of government initiatives such as the government bailout programs for financial institutions and assistance programs designed to increase credit availability, support economic activity and facilitate renewed consumer lending, | |
· problems related to subprime mortgages and other financial assets, · the de-valuation of various assets in secondary markets, | ||
· the forced sale of asset-backed and other securities as a result of the de-leveraging of structured investment vehicles, hedge funds, financial institutions and other entities, and · the lowering of ratings on certain asset-backed securities. |
If the lack of liquidity in the secondary market worsens, or continues for a prolonged period of time, it could adversely affect the market value of your notes and/or limit your ability to resell your notes. | ||
For more information about how illiquidity may impact your ability to resell your notes, you should read "Risk Factors— The absence of a secondary market for your notes could limit your ability to resell them" in the prospectus. | ||
| A reduction, withdrawal or qualification of the ratings on your notes could adversely affect the market value of your notes and/or limit your ability to resell your notes | It is a condition to issuance of the Series 2009-2 notes that they receive the ratings described in this prospectus supplement from the specified rating agencies. However, a rating is not a recommendation to purchase, hold or sell securities and does not address market value or investor suitability, but rather merely reflects the related rating agency's assessment of the creditworthiness of the receivables, the credit enhancement on the notes and the likelihood of repayment of the notes. There can be no assurance that the receivables and/or the notes will perform as expected or that the ratings will not be reduced, withdrawn or qualified in the future as a result of a change of circumstances, deterioration in the performance of the receivables, errors in analysis or otherwise. Other series of notes issued by the trust have been downgraded by one or more of the rating agencies in the past, and some of these notes currently have a negative outlook from one or more of the rating agencies. In connection with the rating of the Series 2009 2 notes, the sponsor has been advised that certain of the rating agencies revised their criteria for rating dealer floorplan receivables and, if the revised criteria are applied to a previously issued series of notes, it could result in a reduction, withdrawal or qualification of the ratings on those notes. | |
Any reduction, withdrawal or qualification of the ratings on the notes, or the issuance of an unsolicited adverse rating from another TALF approved rating agency, will cause your notes to no longer be "eligible collateral" for new borrowings under TALF and may adversely affect the market value of your notes and/or limit your ability to resell your notes. | ||
Potential investors in the notes are urged to make their own evaluation of the creditworthiness of the receivables and the credit enhancement on the notes, and not to rely solely on the ratings on the notes. |
The following information identifies certain transaction parties for this securitization transaction. For a description of the other transaction parties, and a description of the rights and responsibilities of all transaction parties, you should read "Sponsor and Servicer," "Depositor," "Issuing Entity," "Indenture Trustee" and "Owner Trustee" in the prospectus.
The depositors are Ford Credit Floorplan Corporation, a Delaware corporation, and Ford Credit Floorplan LLC, a Delaware limited liability company. Ford Credit Floorplan Corporation and Ford Credit Floorplan LLC are wholly-owned subsidiaries of Ford Credit.
The issuing entity for this securitization transaction is Ford Credit Floorplan Master Owner Trust A. The trust's fiscal year is the calendar year.
The trust is a master owner trust that issues its notes in series. On the closing date, the trust will issue the Series 2009-2 notes. The trust has issued other series of notes, each of which is also secured by the assets of the trust. Annex A to this prospectus supplement summarizes certain characteristics of each outstanding series of notes which has been issued by the trust. The following table shows the expected capitalization of the trust on the closing date after issuance of the Series 2009-2 notes:
Principal Amount | ||||
| Series 2006-1 | $ | 0 | (1) | |
| Series 2006-4 | 2,250,000,000 | |||
| Series 2006-6 | 1,500,000,000 | (1) | ||
| Series 2008-2 | 645,000,000 | |||
| Series 2009-1 | 500,000,000 | |||
| Series 2009-2 | 1,500,000,000 | |||
| Total | $ | 6,395,000,000 | ||
(1) Subject to increase or decrease, as set forth in Annex A. | ||||
The Bank of New York Mellon, a New York banking corporation, is the "indenture trustee" under the indenture. Its principal corporate trust office is located at 101 Barclay Street, New York, New York 10286. The Bank of New York Mellon has been, and currently is, serving as indenture trustee and trustee for numerous securitization transactions and programs involving pools of auto receivables. The Bank of New York Mellon is one of the largest corporate trust providers of trust services on securitization transactions.
For a description of the duties and responsibilities of the indenture trustee, you should read "Indenture Trustee" in the prospectus.
U.S. Bank Trust National Association, or "U.S. Bank Trust," is the "owner trustee" and the "Delaware trustee" under the trust agreement. U.S. Bank Trust is a national banking association and a wholly-owned subsidiary of U.S. Bank National Association, or "U.S. Bank," the sixth largest commercial bank in the United States. U.S. Bancorp, with total assets exceeding $266 billion as of June 30, 2009, is the parent company of U.S. Bank. As of June 30, 2009, U.S. Bancorp served approximately 15.8 million customers, operated over 2,800 branch offices in 24 states and had over 54,000 employees. A network
of specialized U.S. Bancorp offices across the nation provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses, governments and institutions.
U.S. Bank Trust has provided owner trustee services since 2000. As of June 30, 2009, U.S. Bank Trust was acting as owner trustee with respect to over 700 issuances of securities. This portfolio includes mortgage-backed and asset-backed securities. U.S. Bank Trust has acted as owner trustee of auto loan receivable-backed securities since 2000. As of June 30, 2009, U.S. Bank Trust was acting as owner trustee on 81 issuances of auto loan receivable-backed securities.
For a description of the duties and responsibilities of the owner trustee and Delaware trustee, you should read "Owner Trustee" in the prospectus.
Wells Fargo is the "back-up servicer" under the back-up servicing agreement. Wells Fargo is a national banking association and a wholly-owned subsidiary of Wells Fargo & Company. Its principal offices for its back-up servicing operations are located at Sixth and Marquette Avenue, MAC N9311-161, Minneapolis, Minnesota 55479.
A diversified financial services company with approximately $1.3 trillion in assets and 282,000 employees as of June 30, 2009, Wells Fargo & Company provides banking, insurance, trust, mortgage and consumer finance services throughout the United States and internationally. Wells Fargo provides retail and commercial banking services and corporate trust, custody, securities lending, securities transfer, cash management, investment management and other financial and fiduciary services.
Wells Fargo has provided back-up servicing services since 1992. As of June 30, 2009, Wells Fargo was acting as back-up servicer on more than 400 series of asset-backed securities. Wells Fargo also services dealer floorplan receivables for itself and others and, as of June 30, 2009, was acting as servicer for over $5 billion of dealer floorplan receivables.
For a description of the duties and responsibilities of the back-up servicer, you should read "Back-up Servicer" in the prospectus.
Ford Credit is the sponsor of this securitization transaction and is primarily responsible for structuring the transaction. The receivables being securitized are originated by Ford Credit under designated accounts with motor vehicle dealers or are purchased by Ford Credit in the ordinary course of its business. The following table contains information about the average principal receivables balance of the dealer accounts maintained by Ford Credit in its U.S. dealer floorplan portfolio (excluding in-transit receivables and, for any periods prior to June 30, 2006, any receivables originated by Ford Credit's Volvo Car Finance North America division and its predecessors).
Ford Credit's U.S. Dealer Floorplan Portfolio
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
| (Dollars in Millions) | ||||||||||||||||||||||||||||
Average principal receivables balance (1) | $ | 11,012 | $ | 16,766 | $ | 15,280 | $ | 17,043 | $ | 21,233 | $ | 23,633 | $ | 26,479 | ||||||||||||||
__________
| (1) | Average principal receivables balance is the average of the monthly average principal balances (based on daily balances) for the period indicated. |
Dealer floorplan volumes are sensitive to competitive pressures, in particular with respect to manufacturer incentive programs. Early in the decade, Ford periodically launched 0% special-rate financing programs through Ford Credit on new Ford vehicles. In 2004, Ford shifted its incentive marketing programs from special-rate financing to larger cash rebates, and during July, August and September of 2005, ran the "Family Plan" marketing program that offered employee pricing to all customers. In 2006, Ford launched a marketing program offering a combination of 0% special-rate financing for up to a 72-month term through Ford Credit. Each of these marketing programs caused a significant reduction in total dealer inventory levels due to the increase in sales of Ford vehicles.
Dealer floorplan volumes are also affected by market conditions. In 2006, as part of its "Way Forward" plan, Ford announced its intention to improve the alignment of production capacity with consumer demand and to decrease the amount of inventory held on dealer lots. In 2007, Ford announced its intention to decrease the number of Ford dealerships in light of its decline in market share. In 2007 and 2008, sharp increases in gasoline and commodities prices, together with an overall slowdown in the global economy, resulted in a significant decrease in industry sales volumes, and in particular prompted a shift in consumer demand away from the large truck and sport utility vehicle segments in which Ford is a leading participant, which contributed to the decline in Ford's total sales and market share over that period. In the second half of 2008 and the first half of 2009, industry sales volumes fell to historic lows as a result of the continuing events in the global financial markets and the continuing economic downturn, causing Ford to announce production cuts in order to align inventory supply with consumer demand. In the third quarter of 2009, industry sales volumes increased significantly due to the federal government's "Cash for Clunkers" program, which caused a significant reduction in total dealer inventory levels. Finally, following Ford's sale of Jaguar and Land Rover in June 2008 and the disposition of a substantial portion of its interest in Mazda in November of 2008, dealers began transitioning the financing for non-Ford affiliated Jaguar, Land Rover and Mazda dealers to other finance sources, which transition is largely complete. Each of these factors contributed to a significant decrease in the total dealer inventory levels and/or Ford Credit's U.S. dealer floorplan portfolio. However, Ford announced in May 2009 that it would be increasing production in the second half of 2009 and, following the increase in sales volumes related to the "Cash for Clunkers" program, announced in August 2009 that it would further increase production of certain models.
In the first half of 2006, Ford Credit completed a transformation of its U.S. sales and originations operations in which it reduced the number of its regional offices and local sales offices. This transformation consolidated Ford Credit's separate sales and originations units into one unit for all Ford brands. Also in 2006, Ford Credit integrated its commercial lending offices into these units. Starting in September 2006 and during 2007, Ford Credit consolidated its remaining U.S. branches into six existing service centers, creating business centers that manage originations, dealer credit and wholesale operations in addition to the servicing function. However, dealer relationships continue to be managed by key-pointed sales personnel located in their markets. All of these transformation and consolidation actions were implemented to provide cost efficiencies, ensure consistency and control, increase dealer and customer satisfaction and make it easier to implement new technology. As part of the transformation, Ford Credit commonized policies and procedures for all brands and also streamlined certain origination and underwriting functions by decreasing the frequency of full credit reviews on its lower-risk dealers and relying more on its electronic monitoring tools, allowing it to focus more resources on its higher-risk dealers.
In January 2009, Ford Credit announced a plan to restructure its operations to meet changing business conditions, including the decline in its retail installment sale contract, lease and dealer floorplan receivable portfolios. The restructuring included the consolidation of its origination operations, including dealer credit and wholesale operations, into four of its existing business centers in order to achieve cost effectiveness consistent with its smaller portfolios of retail installment sale contracts, leases and dealer floorplan receivables. These actions were completed in July 2009.
Ford Credit continued to improve its dealer risk scoring model during the last five years. In December 2008, Ford Credit launched its latest update to the scoring model, which utilizes Ford Credit's historical performance data to more accurately categorize dealers into risk groups. The updated model improves Ford Credit's ability to predict the likelihood of "status" declarations.
For more information about Ford Credit's origination and underwriting policies and procedures, you should read "Sponsor and Servicer" in the prospectus.
Ford Credit is the servicer of the receivables in the trust and for this securitization transaction and is responsible for managing, maintaining custody of and collecting payments on the receivables for the trust. Ford Credit will be responsible for all servicing functions, except that the indenture trustee will be responsible for making payments to the noteholders based on information and calculations provided by the servicer.
Ford Credit's U.S. Dealer Floorplan Portfolio. The tables below set forth the loss, age distribution, principal payment rate and dealer risk rating distribution experience for Ford Credit's U.S. dealer floorplan portfolio (excluding, for purposes of the "Loss Experience," "Age Distribution" and "Monthly Principal Payment Rate" tables, in-transit receivables and, for the "Loss Experience" and "Monthly Principal Payment Rate" tables and any periods prior to June 30, 2006, any receivables originated by Ford Credit's Volvo Car Finance North America division and its predecessors). Loss, age distribution, principal payment rate and dealer risk rating distribution experience may be influenced by a variety of economic, social and geographic conditions and other factors beyond the control of Ford Credit. Because the eligible accounts designated from time to time for the trust will represent only a portion of Ford Credit's U.S. dealer floorplan portfolio, the actual loss, age distribution, principal payment rate and dealer risk rating distribution experience of the trust's receivables may differ. Accordingly, there can be no assurance that the loss, age distribution, principal payment rate and dealer risk rating distribution experience for the trust's receivables will be similar to the historical experience set forth below with respect to Ford Credit's U.S. dealer floorplan portfolio. The percentages in the tables below may not sum to 100.0% due to rounding.
Loss Experience. The table below sets forth the loss experience for Ford Credit's U.S. dealer floorplan portfolio (excluding in-transit receivables and, for any periods prior to June 30, 2006, any receivables originated by Ford Credit's Volvo Car Finance North America division and its predecessors). The loss experience in the table below reflects financial assistance provided by Ford to dealers in limited instances. If Ford does not provide this assistance in the future, the loss experience of the U.S. dealer floorplan portfolio may be adversely affected. The loss experience in the table also takes into account recoveries from any non-vehicle related security granted by dealers to Ford Credit for capital loans, real estate loans and other advances not related to floorplan financing. However, because the interest of the trust in any non-vehicle related security will be subordinated to Ford Credit's interest in such security, the net losses experienced by Ford Credit as shown below may be lower than the net losses experienced by the trust.
For more information about the financial assistance provided by Ford to dealers, you should read "Sponsor and Servicer — Servicing and Dealer Relations — Relationship with Ford and Other Manufacturers" in the prospectus. For more information about the non-vehicle related security, you should read "Sponsor and Servicer — Origination and Underwriting — Security Interests in Vehicles and Non-Vehicle Related Security" and "Description of the Agreements — Sale and Transfer of Assets" in the prospectus.
Loss Experience of Ford Credit's U.S. Dealer Floorplan Portfolio
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
| (Dollars in Millions) | ||||||||||||||||||||||||||||
Average principal receivables balance (1) | $ | 11,012 | $ | 16,766 | $ | 15,280 | $ | 17,043 | $ | 21,233 | $ | 23,633 | $ | 26,479 | ||||||||||||||
Net losses (recoveries)(2) | $ | 24.9 | $ | 9.0 | $ | 23.1 | $ | 15.3 | $ | 21.8 | $ | 11.6 | $ | 21.7 | ||||||||||||||
Liquidations(3) | $ | 25,594 | $ | 38,337 | $ | 68,163 | $ | 89,008 | $ | 98,378 | $ | 103,322 | $ | 110,849 | ||||||||||||||
Net losses/liquidations | 0.097 | % | 0.024 | % | 0.034 | % | 0.017 | % | 0.022 | % | 0.011 | % | 0.020 | % | ||||||||||||||
Net losses/average principal receivables balance(4) | 0.453 | % | 0.108 | % | 0.151 | % | 0.090 | % | 0.103 | % | 0.049 | % | 0.082 | % | ||||||||||||||
__________
| (1) | Average principal receivables balance is the average of the monthly average principal balances (based on daily balances) for the period indicated. |
| (2) | Net losses in any period are gross losses, including actual losses and estimated losses, less any recoveries, including actual recoveries and reductions in the amount of estimated losses, in each case, for such period. Recoveries include amounts received from any related security in addition to the underlying vehicles. |
| (3) | Liquidations represent monthly cash payments and charge-offs that reduce the outstanding principal balance of a receivable. |
| (4) | For the non-annual periods, the percentages are annualized. |
Age Distribution Experience. The table below sets forth the age distribution experience for Ford Credit's U.S. dealer floorplan portfolio (excluding in-transit receivables), expressed as a percentage of total principal receivables outstanding as of the dates indicated. The age distribution set forth below does not take into account the "in-transit period," which is the period from the date of vehicle shipment to the date of delivery to the dealer (or, if later, the date when the invoice price is finalized). The age distribution measures, in the case of those receivables relating to Ford-manufactured or Ford-distributed new vehicles, the age of such receivables from the date the related vehicles were actually delivered to the dealer.
For more information about the in-transit period, you should read "Sponsor and Servicer — Origination and Underwriting — Origination of Receivables" in the prospectus.
Age Distribution of Ford Credit's U.S. Dealer Floorplan Portfolio
| As of June 30, | Year Ended December 31,(1) | |||||||||||||||||||||||||||
Days Outstanding | 2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||||
| 0 - 120 | 71.2 | % | 64.3 | % | 63.5 | % | 74.6 | % | 68.7 | % | 70.5 | % | 71.5 | % | ||||||||||||||
| 121 - 180 | 8.5 | % | 13.0 | % | 14.0 | % | 11.6 | % | 13.4 | % | 12.2 | % | 13.2 | % | ||||||||||||||
| 181 - 270 | 11.3 | % | 12.0 | % | 11.8 | % | 8.4 | % | 10.7 | % | 11.3 | % | 9.8 | % | ||||||||||||||
Over 270 | 9.0 | % | 10.7 | % | 10.7 | % | 5.5 | % | 7.3 | % | 6.0 | % | 5.5 | % | ||||||||||||||
__________
| (1) | The age distribution for each year ending December 31 is the average of the age distributions as of the end of each quarter. |
Principal Payment Rate Experience. The table below sets forth the monthly principal payment rate experience for Ford Credit's U.S. dealer floorplan portfolio (excluding in-transit receivables and, for any periods prior to June 30, 2006, any receivables originated by Ford Credit's Volvo Car Finance North America division and its predecessors). The monthly principal payment rate for Ford Credit's U.S. dealer floorplan portfolio for any period is equal to the change in the principal receivables balance from the beginning of the period to the end of the period (net of new principal receivables), divided by the average principal receivables balance (calculated as described above under "— Loss Experience") for the period.
Monthly Principal Payment Rates of Ford Credit's U.S. Dealer Floorplan Portfolio
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
Highest month | 47.6 | % | 43.8 | % | 44.9 | % | 54.4 | % | 44.9 | % | 55.5 | % | 38.9 | % | ||||||||||||||
Lowest month | 31.0 | % | 32.8 | % | 30.7 | % | 32.8 | % | 29.6 | % | 29.9 | % | 31.1 | % | ||||||||||||||
Average | 38.9 | % | 38.1 | % | 37.0 | % | 43.6 | % | 38.7 | % | 36.7 | % | 34.9 | % | ||||||||||||||
Dealer Risk Rating Distribution Experience. The table below sets forth the dealer risk rating distribution experience for Ford Credit's U.S. dealer floorplan portfolio. Ford Credit rates each dealer based on a proprietary risk rating model and, for purposes of this prospectus supplement and the prospectus, has combined these ratings into four groups, with Group I representing the lowest risk dealers and Group IV representing the highest risk dealers. The distribution shows the percentage of the total number of accounts and total principal receivables outstanding in each group as of the dates indicated. The information set forth below for periods prior to January 1, 2006 will not be deemed to be part of the prospectus, this prospectus supplement or the registration statement that includes the prospectus.
For more information on Ford Credit's dealer risk ratings, you should read "Sponsor and Servicer — Origination and Underwriting — Credit Underwriting Process; Dealer Risk Rating" in the prospectus.
Dealer Risk Rating Distribution of Ford Credit's U.S. Dealer Floorplan Portfolio
| As of June 30,(1) | ||||||||||||||||||
Dealer Risk Rating Group | 2009 | 2008 | ||||||||||||||||
| Number of Accounts | Principal Receivables Outstanding | Number of Accounts | Principal Receivables Outstanding | |||||||||||||||
| I | 33.5 | % | 47.2 | % | 37.6 | % | 45.4 | % | ||||||||||
II | 27.1 | % | 39.1 | % | 30.4 | % | 41.9 | % | ||||||||||
III | 8.8 | % | 10.1 | % | 7.2 | % | 8.7 | % | ||||||||||
IV | 2.1 | % | 1.0 | % | 1.6 | % | 0.7 | % | ||||||||||
Other(2) | 28.5 | % | 2.6 | % | 23.1 | % | 3.2 | % | ||||||||||
| As of December 31,(1) | ||||||||||||||||||||||||||||||||||||||||||
| Dealer Risk Rating Group | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||||||||||
| Number of Accounts | Principal Receivables Outstanding | Number of Accounts | Principal Receivables Outstanding | Number of Accounts | Principal Receivables Outstanding | Number of Accounts | Principal Receivables Outstanding | Number of Accounts | Principal Receivables Outstanding | |||||||||||||||||||||||||||||||||
| I | 33.0 | % | 42.3 | % | 42.0 | % | 50.2 | % | 42.1 | % | 46.5 | % | 45.7 | % | 49.2 | % | 46.5 | % | 49.6 | % | ||||||||||||||||||||||
| II | 30.9 | % | 43.6 | % | 30.2 | % | 39.6 | % | 34.9 | % | 42.8 | % | 36.3 | % | 41.7 | % | 37.5 | % | 41.4 | % | ||||||||||||||||||||||
| III | 8.3 | % | 9.8 | % | 6.6 | % | 6.7 | % | 6.9 | % | 7.4 | % | 6.1 | % | 6.2 | % | 6.7 | % | 6.8 | % | ||||||||||||||||||||||
| IV | 2.5 | % | 2.0 | % | 1.3 | % | 0.7 | % | 1.0 | % | 0.8 | % | 0.7 | % | 0.5 | % | 0.7 | % | 0.7 | % | ||||||||||||||||||||||
Other(2) | 25.3 | % | 2.3 | % | 19.9 | % | 2.8 | % | 15.0 | % | 2.5 | % | 11.3 | % | 2.4 | % | 8.6 | % | 1.6 | % | ||||||||||||||||||||||
__________
| (1) | Beginning in 2007, the data includes in-trust dealers that have a zero balance, but excludes out-of-trust dealers that have a zero balance. Prior to 2007, the data excluded both in-trust and out-of-trust dealers that had a zero balance. |
| (2) | Includes dealers that have no dealer risk rating, generally because Ford Credit only provides in-transit financing for such dealer or because Ford Credit is in the process of terminating the financing for such dealer. |
In the first half of 2006, Ford Credit completed a transformation of its U.S. servicing operations in which it reduced the number of its regional offices and local sales offices. This transformation consolidated Ford Credit's separate sales and originations units into one unit for all Ford brands. Also in 2006, Ford Credit integrated its commercial lending offices into these units. Starting in September 2006 and during 2007, Ford Credit consolidated its remaining U.S. branches into six existing service centers, creating business centers that manage the servicing function in addition to originations, dealer credit and wholesale operations. However, dealer relationships continue to be managed by key-pointed sales personnel located in their markets. All of these transformation and consolidation actions were implemented to provide cost efficiencies, ensure consistency and control, increase dealer and customer satisfaction and make it easier to implement new technology. As part of the transformation, Ford Credit commonized policies and procedures for all brands and also streamlined certain servicing functions by decreasing the frequency of full credit reviews and physical audits on its lower-risk dealers and relying more on its electronic monitoring tools, allowing it to focus more resources on its higher-risk dealers. In the first quarter of 2009, Ford Credit also allocated additional personnel to assist in the review and monitoring of higher-risk dealers. Such personnel are key-pointed in the field in order to perform on-site verification, validation and reconciliation of financial information provided by the dealer.
In January 2009, Ford Credit announced a plan to restructure its operations to meet changing business conditions, including the decline in its retail installment sale contract, lease and dealer floorplan receivable portfolios. The restructuring included the consolidation of its origination operations, including dealer credit and wholesale operations, into four of its existing business centers in order to achieve cost effectiveness consistent with its smaller portfolios of retail installment sale contracts, leases and dealer floorplan receivables. These actions were completed in July 2009. In August 2009, Ford Credit engaged a third-party vendor to perform physical wholesale inventory audits. The vendor performs the audits in accordance with established Ford Credit policies and procedures and provides the results of the audits to Ford Credit, and Ford Credit regularly monitors the vendor for compliance with the policies and procedures.
For more information about Ford Credit's servicing policies and procedures, you should read "Sponsor and Servicer" in the prospectus.
As of the date of this prospectus supplement, Ford Credit's senior unsecured debt ratings are:
S&P | Moody's | Fitch | DBRS | ||||
| Short-term debt ratings | NR | NP | C | R5 | |||
| Long-term debt ratings | CCC+ | Caa1 | B- | B (low) | |||
| Outlook | Negative | Negative | Negative | Negative | |||
The rating agencies have lowered Ford Credit's debt ratings several times over the past few years and may further downgrade Ford Credit at any time.
Based on Ford Credit's short term debt ratings, as servicer it will be required to deposit collections into the collection account no later than two business days after processing.
For more information about how Ford Credit's ratings and other factors affect the timing of deposits into the collection account, you should read "Description of the Notes—Application of Collections" in the prospectus.
The trust portfolio will consist of receivables originated in accounts designated for the trust from Ford Credit's U.S. dealer floorplan portfolio. The accounts designated to the trust include floorplan financing accounts established by Ford or Ford Credit with motor vehicle dealers pursuant to sales and service agreements or floorplan financing agreements, respectively. As of the statistical calculation date, the pool of receivables is comprised of:
| · | receivables, called "classic floorplan receivables," representing dealer payment obligations arising from the dealer's financing of its purchases of vehicles, including dealer payment obligations in respect of the in-transit period for Ford-manufactured vehicles, and for which Ford Credit will be the dealer's finance source, and |
| · | receivables, called "third-party financed in-transit receivables," representing dealer payment obligations in respect of the in-transit period for Ford-manufactured vehicles, but for which Ford Credit will not be the dealer's finance source. |
The third-party financed in-transit receivables have been assigned by Ford to Ford Credit pursuant to a sale and assignment agreement and are payable generally upon delivery of the vehicles to the dealers. Pursuant to the sale and assignment agreement, Ford collects the payments from the dealer's finance source and remits these collections to Ford Credit on the following business day.
As of the statistical calculation date, the trust portfolio also includes a participation interest in pooled participation receivables owned by Ford Credit Floorplan Master Owner Trust B and comprised of classic floorplan receivables and third-party financed in-transit receivables. This participation interest was transferred to the trust by FCF Corp and represents a 100% beneficial ownership interest in a specified pool of receivables owned by Ford Credit Floorplan Master Owner Trust B and will not terminate until (a) no series of notes issued by the trust remains outstanding, (b) all of the receivables underlying the participation interest have been redesignated, reassigned, paid in full or otherwise liquidated or (c) in certain limited circumstances, the entire pool of receivables underlying the participation interest has been transferred and assigned directly to the trust.
Both the participation interest and the third-party financed in-transit receivables constitute other floorplan assets. The trust portfolio may in the future include additional participation interests or different types of other floorplan assets that may be added to the trust without your consent so long as the rating agency condition is satisfied for each rating agency then rating a series or class of notes issued by the trust.
For more information about the trust portfolio and other floorplan assets, you should read "Trust Portfolio" and "Trust Portfolio — Other Floorplan Assets" in the prospectus.
Each designated account must meet specified eligibility criteria. The eligibility criteria applicable to such designated accounts for all trusts are more fully described under "Description of the Agreements — Eligible Accounts" in the prospectus. Any dealer may have one or more accounts, depending on how many dealership locations the dealer has, the number of credit lines (e.g. new, used, medium and heavy truck and fleet credit lines), or both. The depositors may choose to designate all or only a portion of the accounts relating to any dealer to the trust.
The eligible accounts that FCF Corp, as depositor, may designate for the trust will be limited to those relating to dealer showrooms located in the following states in the western half of the U.S.:
| Alaska | Arizona | California | Colorado | Hawaii |
| Idaho | Illinois | Kansas | Minnesota | Montana |
| Nebraska | Nevada | New Mexico | North Dakota | Oklahoma |
| Oregon | South Dakota | Texas | Utah | Washington |
| Wisconsin | Wyoming |
The accounts currently designated by FCF Corp for the trust relate to dealer showrooms located in the above listed states. A majority of those accounts are subject to the participation interest.
The eligible accounts that FCF LLC, as depositor, may designate for the trust will be limited to those relating to dealer showrooms located only in the District of Columbia and in the following states in the eastern half of the U.S.:
| Alabama | Arkansas | Connecticut | Delaware | Florida |
| Georgia | Indiana | Iowa | Kentucky | Louisiana |
| Maine | Maryland | Massachusetts | Michigan | Mississippi |
| Missouri | New Hampshire | New Jersey | New York | North Carolina |
| Ohio | Pennsylvania | Rhode Island | South Carolina | Tennessee |
| Vermont | Virginia | West Virginia |
The accounts currently designated by FCF LLC for the trust relate to dealer showrooms located in the above listed states and the District of Columbia.
The composition of permitted states for either depositor may be revised without the consent of any noteholders or series enhancers, but only if, among other things, the rating agency condition is satisfied for each rating agency then rating a series or class of notes issued by the trust.
After the closing date, the depositors have the right to designate additional eligible accounts for the trust subject to the same criteria as outlined above under "—Criteria for Selection of Eligible Accounts." In this case, the existing and future eligible receivables of these additional accounts will be sold to the depositors and then transferred to the trust, so long as the conditions described under "Description of the Agreements — Additional Designated Accounts" in the prospectus are satisfied. In addition, for so long as any notes issued by the trust remain outstanding, the depositors will be required to designate additional eligible accounts, to the extent available, to ensure that the net adjusted pool balance remains equal to or greater than the required pool balance.
The depositors also have the right to redesignate eligible accounts from the trust, in which case all of the receivables originated in these accounts will be removed from the trust and transferred back to the related depositor. In addition, the depositors will be required to redesignate ineligible accounts. The redesignation of accounts by the depositors, whether elective or mandatory, is subject to the satisfaction of the conditions described under "Description of the Agreements — Redesignation of Accounts" in the prospectus.
Throughout the term of the trust, the receivables in the trust will be the receivables originated in the accounts designated for the trust at the time of its formation, plus any additional accounts, minus any redesignated accounts. As a result, the composition of the trust assets will change over time.
For a general description of the receivables and interests in other floorplan assets in the trust, you should read "Trust Portfolio" in the prospectus.
The statistical information in this section relates to the trust's combined portfolio of receivables originated in the accounts
designated to the trust directly and receivables originated in the accounts designated to the trust indirectly through the participation interest and, in each case, the principal receivables related thereto.
Key Statistics for the Trust Portfolio. As of the statistical calculation date, the receivables and the related accounts designated for the trust had the following characteristics:
| · | There were 4,466 designated accounts and the total outstanding balance of principal receivables originated in these accounts was $8,953,795,156.95. There were 736 designated accounts that had an outstanding balance of principal receivables of zero. |
| · | The average outstanding balance of principal receivables per designated account was $2,004,880.24. Excluding the designated accounts that had an outstanding balance of principal receivables of zero, the average outstanding balance of principal receivables per designated account was $2,400,481.28. |
| · | The weighted average spread over the prime rate charged on the principal receivables was 1.34% per annum. This percentage was calculated for all dealers on the basis of the new vehicle base rate of prime plus 1.50% per annum and the used vehicle base rate of prime plus 2.00% per annum and for Ford on the basis of the adjustment fee rate of prime plus 0.30% per annum, although the spread over the prime rate for certain dealers may actually be a smaller amount, or a negative amount, in certain limited situations. For the new and used vehicle base rates, the prime rate is subject to a floor of 4.00%. |
| · | The dealer, development dealer, fleet, manufacturer, medium and heavy truck and used vehicle overconcentration amounts were each zero. |
| · | The total outstanding balance of ineligible principal receivables was $67,537,836.52. |
As of September 1, 2009, 251 additional accounts were designated to the trust, with a total outstanding balance of principal receivables equal to $196,203,029.08. If these additional accounts had been included in the trust on the statistical calculation date, they would not have materially affected the statistical information presented in this prospectus supplement.
The tables set forth below provide information on the receivables in the trust portfolio and their related designated accounts as of the statistical calculation date. Because the composition of the designated accounts and the receivables in the trust portfolio will change over time, the information in these tables is not necessarily indicative of the composition of the trust portfolio as of any subsequent date. The percentages may not sum to 100.0% due to rounding.
Geographic Distribution of the Trust Portfolio as of the Statistical Calculation Date | ||||||||||||||||
State(1) | Principal Receivables Outstanding | Percentage of Total Principal Receivables Outstanding | Number of Designated Accounts | Percentage of Total Number of Designated Accounts | ||||||||||||
| Texas | $ | 1,245,227,922.13 | 13.9 | % | 330 | 7.4 | % | |||||||||
| California | 646,541,667.43 | 7.2 | 271 | 6.1 | ||||||||||||
| Florida | 458,310,049.93 | 5.1 | 195 | 4.4 | ||||||||||||
Other(2) | 6,603,715,517.46 | 73.8 | 3,670 | 82.2 | ||||||||||||
Total | $ | 8,953,795,156.95 | 100.0 | % | 4,466 | 100.0 | % | |||||||||
__________
| (1) | Based on the locations of the related dealer showrooms. |
| (2) | No other state included represents more than 5.0% of the outstanding principal receivables owned by the trust. |
Account Balance Distribution of the Trust Portfolio as of the Statistical Calculation Date | ||||||||||||||||
Range of Account Balances | Principal Receivables Outstanding | Percentage of Total Principal Receivables Outstanding | Number of Designated Accounts | Percentage of Total Number of Designated Accounts | ||||||||||||
$999,999.99 or lower | $ | 616,402,203.37 | 6.9 | % | 2,237 | 50.1 | % | |||||||||
| From $1,000,000.00 to $2,499,999.99 | 1,782,749,304.63 | 19.9 | 1,069 | 23.9 | ||||||||||||
| From $2,500,000.00 to $4,999,999.99 | 2,456,070,290.37 | 27.4 | 689 | 15.4 | ||||||||||||
| From $5,000,000.00 to $7,499,999.99 | 1,668,911,887.23 | 18.6 | 275 | 6.2 | ||||||||||||
From $7,500,000.00 to $9,999,999.99 | 812,276,599.46 | 9.1 | 96 | 2.1 | ||||||||||||
$10,000,000.00 or higher | 1,617,384,871.89 | 18.1 | 100 | 2.2 | ||||||||||||
Total | $ | 8,953,795,156.95 | 100.0 | % | 4,466 | 100.0 | % | |||||||||
"Status" Distribution of the Trust Portfolio as of the Statistical Calculation Date | ||||||||||||||||||
Number of Days since Redesignation of "Status" Account(1) | Principal Receivables Outstanding in Redesignated "Status" Accounts | Percentage of Total Principal Receivables Outstanding | Number of Redesignated "Status" Accounts(2) | Percentage of Total Number of Designated Accounts | ||||||||||||||
| 0 -30 | $ | 1,933,560.02 | 0.0 | % | 8 | 0.2 | % | |||||||||||
| 31-60 | 2,792,133.64 | 0.0 | 3 | 0.1 | ||||||||||||||
| 61-90 | 6,072,390.82 | 0.1 | 8 | 0.2 | ||||||||||||||
| 91-120 | – | – | – | – | ||||||||||||||
| 121 -150 | – | – | – | – | ||||||||||||||
| 151 -180 | – | – | – | – | ||||||||||||||
Total | $ | 10,798,084.48 | 0.1 | % | 19 | 0.4 | % | |||||||||||
__________
| (1) | For purposes of this table, each month is assumed to have 30 days. |
| (2) | Only includes "status" dealers that have an outstanding balance on the statistical calculation date. |
The tables below set forth the loss, age distribution, principal payment rate and dealer risk rating distribution experience for the trust portfolio. Loss, age distribution, principal payment rate and dealer risk rating distribution experience may be influenced by a variety of economic, social and geographic conditions and other factors beyond the control of Ford Credit. Because the composition of the designated accounts and the receivables in the trust portfolio will change over time, the actual loss, age distribution, principal payment rate and dealer risk rating distribution experience of the trust portfolio may differ from that shown below. Accordingly, there can be no assurance that the loss, age distribution, principal payment rate and dealer risk rating distribution experience for the trust portfolio in the future will be similar to the historical experience set forth below. The information set forth below concerning the trust portfolio for periods prior to January 1, 2006 will not be deemed to be part of the prospectus, this prospectus supplement or the registration statement that includes the prospectus. The percentages may not sum to 100.0% due to rounding.
Loss Experience. The table below sets forth the loss experience for the trust portfolio. As indicated below, the trust has not experienced a loss on any receivable during the indicated periods, primarily due to the requirement that "status" accounts be redesignated from the trust and as a result of the depositors'
exercise of their option during such period to also remove receivables relating to these "status" accounts from the trust, as described under "Description of the Agreements — Redesignation of Accounts" in the prospectus. However, the depositors are not required to exercise this option, and there can be no assurance that they will continue to do so in the future.
For information on the losses experienced by Ford Credit on its U.S. dealer floorplan portfolio generally, you should read "Servicer — Ford Credit's U.S. Dealer Floorplan Portfolio — Loss Experience" in this prospectus supplement.
Loss Experience of the Trust Portfolio
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
| (Dollars in Millions) | ||||||||||||||||||||||||||||
Average principal receivables balance (1) | $ | 10,549 | $ | 14,845 | $ | 13,863 | $ | 14,723 | $ | 18,705 | $ | 18,793 | $ | 20,268 | ||||||||||||||
Net losses (recoveries)(2) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
Net losses/average principal receivables balance(3) | 0.000 | % | 0.000 | % | 0.000 | % | 0.000 | % | 0.000 | % | 0.000 | % | 0.000 | % | ||||||||||||||
__________
| (1) | Average principal receivables balance is the average of the monthly average principal balances (based on beginning balances) for the period indicated. |
| (2) | Net losses in any period are gross losses less any recoveries for such period. Recoveries include amounts received from any related security in addition to the underlying vehicles. |
| (3) | For the non-annual periods, the percentages are annualized. |
Age Distribution Experience. The table below sets forth the age distribution experience for the trust portfolio, expressed as a percentage of total principal receivables outstanding as of the dates indicated. Age distribution experience for the 2004 period cannot be obtained without unreasonable effort or expense. For receivables relating to Ford-manufactured or –distributed new vehicles, the age distribution set forth below separately takes into account the in-transit period. The age distribution measures, in the case of those receivables relating to Ford-manufactured or –distributed new vehicles that are in-transit, the age of such receivables from the date the related vehicles were released from the factory, and in the case of those receivables relating to Ford-manufactured or –distributed new vehicles that have been delivered to the dealer, the age of such receivables from the date the related vehicles were actually delivered to the dealer.
For more information about the in-transit period, you should read "Sponsor and Servicer — Origination and Underwriting — Origination of Receivables" in the prospectus.
Age Distribution of the Trust Portfolio
| As of June 30, | As of December 31, | ||||||||||||||||||||||||
Days Outstanding | 2009 | 2008 | 2008 | 2007 | 2006 | 2005 | |||||||||||||||||||
| 0 - 120 | 75.6 | % | 67.7 | % | 69.7 | % | 78.7 | % | 73.5 | % | 80.4 | % | |||||||||||||
| 121 - 180 | 7.5 | % | 11.9 | % | 11.5 | % | 11.0 | % | 13.0 | % | 10.5 | % | |||||||||||||
| 181 - 270 | 9.9 | % | 11.0 | % | 8.9 | % | 6.4 | % | 7.8 | % | 5.1 | % | |||||||||||||
| Over 270 | 7.0 | % | 9.4 | % | 9.9 | % | 4.0 | % | 5.7 | % | 4.0 | % | |||||||||||||
Principal Payment Rate Experience. The table below sets forth the monthly principal payment rate experience for the trust portfolio. The monthly principal payment rate for the trust portfolio for any period is equal to the principal collections for the period divided by the pool balance as of the first day of the period.
Monthly Principal Payment Rates of the Trust Portfolio
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2009 | 2008 | 2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||||||||
Highest month | 50.7 | % | 39.2 | % | 39.2 | % | 45.8 | % | 40.5 | % | 54.6 | % | 39.9 | % | ||||||||||||||
| Lowest month | 29.0 | % | 32.3 | % | 28.9 | % | 31.1 | % | 28.7 | % | 27.3 | % | 31.7 | % | ||||||||||||||
| Average | 38.0 | % | 36.3 | % | 35.3 | % | 39.0 | % | 34.4 | % | 35.2 | % | 34.9 | % | ||||||||||||||
Dealer Risk Rating Distribution Experience. The table below sets forth the dealer risk rating distribution experience for the trust portfolio. Ford Credit rates each dealer based on a proprietary risk rating model and, for purposes of this prospectus supplement and the prospectus, has combined these ratings into four groups, with Group I representing the lowest risk dealers and Group IV representing the highest risk dealers. The distribution shows the percentage of the total number of accounts and total principal receivables outstanding in each group as of the dates indicated.
For more information on Ford Credit's dealer risk ratings, you should read "Sponsor and Servicer — Origination and Underwriting — Credit Underwriting Process; Dealer Risk Rating" in the prospectus.
Dealer Risk Rating Distribution of the Trust Portfolio
| As of June 30,(1) | ||||||||||||||||
| Dealer Risk Rating Group | 2009 | 2008 | ||||||||||||||
| Number of Accounts | Principal Receivables Outstanding | Number of Accounts | Principal Receivables Outstanding | |||||||||||||
| I | 34.8 | % | 48.6 | % | 39.4 | % | 45.8 | % | ||||||||
II | 27.0 | % | 38.3 | % | 30.4 | % | 42.2 | % | ||||||||
III | 8.5 | % | 10.0 | % | 7.2 | % | 9.0 | % | ||||||||
IV | 0.8 | % | 0.3 | % | 0.3 | % | 0.1 | % | ||||||||
Other(2) | 29.0 | % | 2.7 | % | 22.7 | % | 2.9 | % | ||||||||
| As of December 31,(1) | ||||||||||||||||||||||||||||||||||||||||
| Dealer Risk Rating Group | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||||||||
| Number of Accounts | Principal Receivables Outstanding | Number of Accounts | Principal Receivables Outstanding | Number of Accounts | Principal Receivables Outstanding | Number of Accounts | Principal Receivables Outstanding | Number of Accounts | Principal Receivables Outstanding | |||||||||||||||||||||||||||||||
| I | 34.2 | % | 42.6 | % | 44.0 | % | 51.2 | % | 49.4 | % | 48.5 | % | 49.3 | % | 52.1 | % | 49.7 | % | 52.4 | % | ||||||||||||||||||||
| II | 31.2 | % | 44.4 | % | 30.0 | % | 39.1 | % | 39.9 | % | 43.5 | % | 38.6 | % | 41.5 | % | 38.5 | % | 40.9 | % | ||||||||||||||||||||
| III | 8.2 | % | 9.8 | % | 6.4 | % | 6.7 | % | 7.8 | % | 7.5 | % | 6.1 | % | 5.7 | % | 6.5 | % | 6.4 | % | ||||||||||||||||||||
| IV | 0.8 | % | 0.9 | % | 0.4 | % | 0.2 | % | 0.0 | % | 0.0 | % | 0.1 | % | 0.1 | % | 0.2 | % | 0.1 | % | ||||||||||||||||||||
Other(2) | 25.6 | % | 2.4 | % | 19.3 | % | 2.8 | % | 2.8 | % | 0.4 | % | 5.9 | % | 0.6 | % | 5.1 | % | 0.2 | % | ||||||||||||||||||||
__________
| (1) | Beginning in 2007, the data includes in-trust dealers that have a zero balance. Prior to 2007, the data excluded in-trust dealers that had a zero balance. |
| (2) | Includes dealers that have no dealer risk rating, generally because Ford Credit only provides in-transit financing for such dealers or because Ford Credit is in the process of terminating the financing for such dealer. |
The following is a summary of the material provisions of the terms of the Series 2009-2 notes and the transaction documents. The following is not a complete description of all of the provisions of the notes or the transaction documents. For more information about the notes and the transaction documents, you
should read the prospectus and the forms of the indenture, the indenture supplement, the transfer and servicing agreement, the receivables purchase agreement and the trust agreement that are included as exhibits to the registration statement filed with the SEC that includes the prospectus.
The Class A notes comprise the Series 2009-2 notes and will be issued under the indenture, as supplemented by the indenture supplement for the Series 2009-2 notes, between the trust and the indenture trustee. The Series 2009-2 notes will be issued in minimum denominations of $100,000 and in multiples of $1,000 and will be available only in book-entry form, registered in the name of Cede & Co., as nominee of DTC.
For additional information on the form of the notes, you should read "Description of the Notes — General," "— Book-Entry Registration" and "— Definitive Notes Only in Limited Circumstances" in the prospectus.
The Series 2009-2 notes will accrue interest from and including the closing date to but excluding November 16, 2009, and for each following interest period, at a rate of one-month LIBOR plus 1.55% per annum. The trust will make interest payments on each distribution date to the noteholders of record on the day before the distribution date.
The indenture trustee will determine LIBOR for each interest period on the "LIBOR determination date," which is two London business days before the start of such interest period. Such interest rates will be posted on each distribution date on the indenture trustee's website, provided they are made part of the monthly servicer's certificate.
Interest on the Series 2009-2 notes will accrue for each distribution date on the basis of the actual number of days in the related interest period and a 360-day year and will be calculated on the aggregate principal balance of the Series 2009-2 notes as of the end of the prior interest period, except that interest for the first distribution date will be calculated on the initial aggregate principal balance of the Series 2009-2 notes.
Interest due on the Series 2009-2 notes but not paid on any distribution date will be payable on the following distribution date, together with additional interest on that unpaid amount at the applicable note interest rate. Additional interest will accrue from the distribution date on which the overdue interest became due, to but excluding the distribution date on which the additional interest is paid.
Interest payments on the Series 2009-2 notes on any distribution date will be paid from available investor interest collections. However, if the amount of available investor interest collections for any distribution date is insufficient to pay the interest due on the Series 2009-2 notes, the trust will pay such shortfalls using funds from other sources in the following order of priority:
| (1) | excess interest collections available for your series from other series in excess interest sharing group one, |
| (2) | available transferor interest collections and available transferor principal collections (in an amount not to exceed the available subordinated amount) retained in the collection account, |
| (3) | amounts on deposit in the reserve fund, and |
| (4) | reallocated principal collections. |
For a more detailed description of the application of collections and other funds on each distribution date, you should read "— Application of Collections — Payment of Interest, Fees and Other Items" below.
The trust expects to pay the principal on the Series 2009-2 notes in full on their expected final payment date. However, the trust may pay principal on the Series 2009-2 notes earlier or later than the expected final payment date if an amortization event occurs.
Principal payments on the Series 2009-2 notes on any distribution date will be made from available investor principal collections. The amount of available investor principal collections applied to the Series 2009-2 notes on each distribution date will depend on whether the Series 2009-2 notes are in the revolving period, the controlled accumulation period or the early amortization period.
Revolving Period. The revolving period for the Series 2009-2 notes begins on the closing date and ends on the day before the date on which the controlled accumulation period or the early amortization period begins. On each distribution date with respect to the revolving period, available investor principal collections will be treated as shared principal collections and made available to make principal payments for other series in principal sharing group one. Any available investor principal collections not used for this purpose will be paid to the holders of the transferor interest, to the extent not required to be deposited into the excess funding account, as described below under "— Application of Collections — Payment of Principal" and "— Excess Funding Account."
Controlled Accumulation Period. The controlled accumulation period for the Series 2009-2 notes is scheduled to begin on the first day of the March 2012 collection period, but may be postponed, as described below under "— Postponement of Controlled Accumulation Period." The controlled accumulation period will end on the earlier of:
| · | the end of the collection period preceding the distribution date on which the aggregate principal balance of the Series 2009-2 notes will be paid in full, and |
| · | the day before the date on which the early amortization period begins. |
If an amortization event occurs before the controlled accumulation period begins, there will be no controlled accumulation period and the early amortization period will begin.
On the first business day of the controlled accumulation period, the Series 2009-2 excess funding amount as of the end of the revolving period (together with any other amounts on deposit in the excess funding account that are allocated to Series 2009-2 as shared principal collections) will be deposited into the principal funding account, but only to the extent of the controlled deposit amount. The "controlled deposit amount" for any distribution date with respect to the controlled accumulation period will equal the sum of (a) the controlled accumulation amount for that distribution date, plus (b) any shortfalls in required deposits of the controlled accumulation amount for the preceding distribution date. The "controlled accumulation amount" initially equals $250,000,000, but may be higher if the commencement of the controlled accumulation period is postponed, as described below under "— Postponement of Controlled Accumulation Period."
On each distribution date with respect to the controlled accumulation period, the indenture trustee will deposit available investor principal collections into the principal funding account in an amount equal to the lesser of:
| · | the controlled deposit amount for that distribution date, and |
| · | the adjusted invested amount before any deposits on that date. |
If the amount of available investor principal collections (excluding any shared principal collections) for any distribution date is insufficient to deposit the full amount needed to be deposited into the principal funding account, shared principal collections available for your series from other series in principal sharing group one will be used to cover the shortfall. However, if the amount of available investor principal collections (excluding any shared principal collections) exceeds the amount needed to be deposited into the principal funding account, the excess will be treated as shared principal collections for other series in principal sharing group one. Any available investor principal collections not used for this purpose will be paid to the holders of the transferor interest to the extent not required to be deposited into the excess funding account, as described below under "— Application of Collections — Payment of Principal" and "— Excess Funding Account."
On the expected final payment date (unless paid earlier during the early amortization period), all amounts in the principal funding account will be paid to the Series 2009-2 noteholders until the Series 2009-2 notes have been paid in full. If the Series 2009-2 notes are not paid in full on their expected final payment date, an amortization event will occur.
Postponement of Controlled Accumulation Period. The controlled accumulation period is scheduled to last six months. However, the servicer may elect to extend the revolving period and postpone the controlled accumulation period if the number of months needed to fund the principal funding account in full is expected to be less than six months.
On or before each determination date beginning in February 2012, and ending when the controlled accumulation period begins, the servicer will review the amount of expected principal collections and determine the number of months expected to be required to fully fund the principal funding account by the expected final payment date. In making its determination, the servicer is required to assume that the monthly principal payment rate will be no greater than the lowest monthly principal payment rate for the prior twelve months and will consider the amount of principal expected to be allocable to the noteholders of all other series in principal sharing group one that are expected to be amortizing or accumulating principal during the controlled accumulation period for your series. In no case will the controlled accumulation period be reduced to less than one month.
The method for determining the number of months required to fully fund the principal funding account may be changed upon receipt by the indenture trustee of written confirmation from the servicer that the change will not result in a significant adverse effect on the noteholders.
Early Amortization Period. The early amortization period for the Series 2009-2 notes will begin on the first day of the collection period in which an amortization event with respect to Series 2009-2 occurs or, if the servicer is required to make daily deposits into the collection account, on the day an amortization event occurs, and will end on the earlier of:
| · | the end of the collection period preceding the distribution date on which the aggregate principal balance of the Series 2009-2 notes will be paid in full, and |
| · | the final maturity date. |
On each distribution date during the early amortization period, the indenture trustee will deposit available investor principal collections and available transferor collections (in the case of available transferor principal collections, in an amount not to exceed the available subordinated amount) into the principal funding account in an amount equal to the adjusted invested amount before any deposits on that date.
If the amount of available investor principal collections (excluding any shared principal collections) and available transferor collections (in the case of available transferor principal collections, in an amount not to exceed the available subordinated amount) for any distribution date are insufficient to deposit the full amount needed to be deposited into the principal funding account, shared principal collections
available for your series from other series in principal sharing group one will be used to cover the shortfall. However, if on any distribution date, the amount of available investor principal collections (excluding any shared principal collections) exceeds the amount needed to pay the Series 2009-2 notes in full, the excess will be treated as shared principal collections for other series in principal sharing group one. Any available investor principal collections not used for this purpose will be paid to the holders of the transferor interest to the extent not required to be deposited into the excess funding account, as described below under "— Application of Collections — Payment of Principal" and "— Excess Funding Account."
On each distribution date during the early amortization period, all amounts in the principal funding account will be paid to the Series 2009-2 noteholders until the Series 2009-2 notes have been paid in full.
For a discussion of the events that might lead to the commencement of the early amortization period, you should read "— Amortization Events" below.
The credit enhancement and other enhancement described below is available only for your series. You are not entitled to any series enhancement available to any other series that the trust has already issued or may issue in the future.
Excess Spread. Excess spread for the Series 2009-2 notes for any distribution date will be the amount, if any, by which interest collections on the receivables during the related collection period allocated to the Series 2009-2 notes exceeds certain senior fees and expenses of the trust for the Series 2009-2 notes and interest payments on the Series 2009-2 notes. Any excess spread will be available on each distribution date to cover investor default amounts and investor charge-offs and to make required deposits to the reserve fund.
Available Subordinated Amount. If on any distribution date, available investor interest collections, together with excess interest collections available for your series from other series in excess interest sharing group one, are insufficient to fund certain amounts required to be distributed or deposited on that date, as described below under "— Application of Collections — Payment of Interest, Fees and Other Items," then available transferor interest collections and available transferor principal collections (in an amount not to exceed the available subordinated amount) will be applied to cover those shortfalls, as described below under "— Retention of Available Transferor Collections." Any such application of available transferor principal collections will reduce the available subordinated amount. In addition, during an early amortization period, available transferor interest collections and available transferor principal collections (in an amount not to exceed the available subordinated amount), along with available investor principal collections and amounts on deposit in the principal funding account, will be available to make principal payments on the Series 2009-2 notes, as described above under "— Payment of Principal — Early Amortization Period." However, any such application of available transferor collections will not reduce the available subordinated amount.
If on any distribution date, there remains any unfunded investor default amount after application of available funds from all available sources or if any reallocated principal collections are used, in each case, as described below under "— Application of Collections — Payment of Interest, Fees and Other Items," then the available subordinated amount, in an amount equal to the lesser of (a) the sum of the unfunded investor default amount and the amount of reallocated principal collections and (b) the available subordinated amount (after giving effect to any reductions on such date) will be reallocated to the invested amount for your series. Any reallocation of the available subordinated amount for this purpose avoids a reduction in the invested amount for your series. The available subordinated amount, however, will be reduced by the amount reallocated.
The available subordinated amount will be increased by any incremental subordinated amount. The incremental subordinated amount for any date of determination reflects increases in the available subordinated amount due to ineligible receivables transferred to the trust and due to receivables
transferred to the trust in excess of specified dealer, development dealer, fleet, manufacturer, medium and heavy truck and used vehicle overconcentration limits, as described below under "— Ineligible Receivables and Overconcentration Amounts."
The "available subordinated amount" for the Series 2009-2 notes as of the first determination date will be $705,882,352.94 plus the incremental subordinated amount for the first determination date. As of each subsequent determination date, the available subordinated amount will be the lesser of:
| · | the required subordinated amount for that determination date, and |
| · | an amount equal to: |
| — | the available subordinated amount for the prior determination date, minus |
| — | the amount of any available transferor principal collections used to cover shortfalls of the required distributions and deposits to be made on the related distribution date, as described below under "— Application of Collections — Payment of Interest, Fees and Other Items," minus |
| — | the amount of the available subordinated amount reallocated to the invested amount in order to avoid a reduction in the invested amount due to the unfunded investor default amount or reallocated principal collections, as described below under "— Investor Default Amount and Reallocated Principal Collections," plus |
| — | the amount of any available investor interest collections available to be paid to the holders of the transferor interest to increase the available subordinated amount, as described below under "— Application of Collections — Payment of Interest, Fees and Other Items," minus |
| — | the incremental subordinated amount for the prior determination date, plus |
| — | the incremental subordinated amount for the current determination date, minus |
| — | the subordinated percentage of the increase in the Series 2009-2 excess funding amount since the prior distribution date to the succeeding distribution date, plus |
| — | the subordinated percentage of the decrease in the Series 2009-2 excess funding amount since the prior distribution date to the succeeding distribution date, plus |
| — | any increases made by the depositors, as described in the following paragraph. |
The depositors may, in their sole discretion, at any time increase the available subordinated amount so long as the cumulative amount of such increases does not exceed 3.50% of the initial principal balance of the Series 2009-2 notes. The depositors are not under any obligation to increase the available subordinated amount at any time. If the available subordinated amount falls below the required subordinated amount, an amortization event may occur with respect to the Series 2009-2 notes. However, the depositors may elect to increase the available subordinated amount at the time an amortization event would otherwise occur, thus preventing or delaying the occurrence of the amortization event with respect to the Series 2009-2 notes.
The "required subordinated amount" means, for the Series 2009-2 notes as of any date of determination, the sum of:
| · | the product of (a) the subordinated percentage, times (b) the excess of the initial invested amount over the Series 2009-2 excess funding amount (after giving effect to any changes in such amount on such date), plus |
| · | the incremental subordinated amount for such date. |
The "subordinated percentage" for the Series 2009-2 notes is approximately 47.06%, which is equal to the subordination factor, divided by the excess of 100% over the subordination factor. The "subordination factor" for the Series 2009-2 notes is 32.00%.
The "incremental subordinated amount" means, for the Series 2009-2 notes for any determination date, the product of:
| · | a fraction: |
| — | the numerator of which is an amount equal to (a) the adjusted invested amount as of the related distribution date (after giving effect to any changes to be made in such amount on such distribution date), plus (b) the product of the initial invested amount multiplied by the excess of the required pool percentage over 100%, plus (c) the required subordinated amount on that date (without giving effect to the incremental subordinated amount), minus (d) the Series 2009-2 excess funding amount as of that date (after giving effect to any changes in such amount on such date), and |
| — | the denominator of which is the pool balance as of that determination date, times |
| · | the excess of (a) the aggregate amount of ineligible principal receivables and dealer, development dealer, fleet, manufacturer, medium and heavy truck and used vehicle overconcentrations for such determination date, over (b) the aggregate amount of ineligible principal receivables and principal receivables contributing to dealer, development dealer, fleet, manufacturer, medium and heavy truck and used vehicle overconcentrations that, in each case, became defaulted receivables during the period beginning on the prior determination date and ending on the day before the current determination date. |
The "required pool percentage" for the Series 2009-2 notes is 104%. However, the depositors may reduce this percentage so long as the rating agency condition is satisfied for each rating agency then rating the Series 2009-2 notes.
Reserve Fund. The indenture trustee will establish an account for the benefit of the Series 2009-2 noteholders to serve as the reserve fund. If on any distribution date, available investor interest collections, together with excess interest collections available for your series from other series in excess interest sharing group one and available transferor collections allocable to your series, are insufficient to fund certain of the amounts required to be distributed on that date, as described below under "—Application of Collections — Payment of Interest, Fees and Other Items," then funds on deposit in the reserve fund (exclusive of any net investment earnings) will be used to cover shortfalls of those amounts.
On the closing date, $15,000,000 (or 1.00% of the initial principal balance of the Series 2009-2 notes) will be deposited into the reserve fund. The "reserve fund required amount" for any distribution date is an amount equal to 1.00% of the adjusted invested amount of the Series 2009-2 notes on that distribution date (after giving effect to any changes in that amount on that date), except that for any distribution date relating to the early amortization period, the reserve fund required amount will be an amount equal to 5.00% of the initial principal balance of the Series 2009-2 notes. However, the depositors may elect to reduce this amount so long as the rating agency condition is satisfied for each rating agency then rating the Series 2009-2 notes.
If, on any distribution date, the amount on deposit in the reserve fund is less than the reserve fund required amount, the indenture trustee will deposit available funds, up to the amount of the shortfall, into the reserve fund. Any such shortfall will be funded from available investor interest collections, excess interest collections available for your series from other series in excess interest sharing group one and available transferor collections allocable to your series, after other required distributions and deposits have been made from such sources, as described below under "— Application of Collections — Payment of Interest, Fees and Other Items."
At the direction of the servicer, the indenture trustee will invest funds in the reserve fund in eligible investments that mature no later than the following distribution date. Net investment earnings on funds in the reserve fund will be deposited into the collection account and included in available investor interest collections.
If, on any distribution date before payment in full of the Series 2009-2 notes, after giving effect to all withdrawals from and deposits into the reserve fund, the amount on deposit in the reserve fund (excluding net investment earnings) exceeds the reserve fund required amount, the excess will be distributed to the holders of the transferor interest. After the earlier of the payment in full of the Series 2009-2 notes and the final maturity date, any funds remaining in the reserve fund will be treated as available investor principal collections and made available to cover shortfalls for other series in principal sharing group one. Any excess not used for other series in principal sharing group one will be paid to the holders of the transferor interest.
Accumulation Period Reserve Account. The indenture trustee will establish an account for the benefit of the Series 2009-2 noteholders to serve as the accumulation period reserve account. The purpose of the accumulation period reserve account is to assist with the payment of interest on the Series 2009-2 notes during the controlled accumulation period.
Commencing on the "accumulation period reserve account funding date," which is the distribution date occurring in the second month preceding the start of the controlled accumulation period, the indenture trustee will deposit available funds on each distribution date to increase the amount in the accumulation period reserve account to the "accumulation period reserve account required amount" which is an amount equal to $3,750,000 or 0.25% of the initial principal balance of the Series 2009-2 notes. Funds to be applied for this purpose will be available investor interest collections and excess interest collections available for your series from other series in excess interest sharing group one, after other required distributions and deposits have been made from such sources, as described below under "— Application of Collections — Payment of Interest, Fees and Other Items."
If on any distribution date, after giving effect to all withdrawals from and deposits into the accumulation period reserve account, the amount on deposit in this account (excluding net investment earnings) exceeds the accumulation period reserve account required amount, the excess will be distributed to the holders of the transferor interest.
On or before each distribution date with respect to the controlled accumulation period and on or before the first distribution date with respect to an early amortization period, the indenture trustee will withdraw from the accumulation period reserve account and deposit into the collection account an amount equal to the lesser of:
| · | the amount on deposit in the accumulation period reserve account (excluding net investment earnings), and |
| · | the "accumulation period reserve draw amount" for that distribution date, which is the excess of (a) one-twelfth of the product of (i) the amount in the principal funding account (excluding net investment earnings) as of the preceding distribution date, after giving effect to any deposits on that distribution date, times (ii) the note interest rate, over (b) the portion of available investor interest collections for that distribution date constituting net investment |
| earnings from the reserve fund, the principal funding account and the accumulation period reserve account for that distribution date. |
Amounts withdrawn from the accumulation period reserve account on any distribution date will be included as available investor interest collections for your series for that distribution date.
The accumulation period reserve account will terminate on the earliest to occur of:
| · | the first distribution date with respect to the early amortization period, |
| · | the payment in full of the Series 2009-2 notes, and |
| · | the final maturity date. |
At the direction of the servicer, the indenture trustee will invest funds on deposit in the accumulation period reserve account in eligible investments that mature no later than the following distribution date. The indenture trustee will deposit net investment earnings on funds in the accumulation period reserve account into the collection account and such amounts will be included in available investor interest collections for that distribution date.
After the termination of the accumulation period reserve account, any funds remaining in the accumulation period reserve account will be treated as available investor interest collections and made available to cover shortfalls for other series in excess interest sharing group one. Any excess not used for other series in excess interest sharing group one will be paid to the holders of the transferor interest.
The revolving period will continue until the controlled accumulation period begins, unless an amortization event occurs before that date.
An "amortization event" for the Series 2009-2 notes consists of the trust amortization events described under "Description of the Notes—Amortization Events" in the prospectus and the following "series amortization events":
| (1) | failure by either depositor (a) to make any payment or deposit on the date required under the related transfer and servicing agreement, the indenture or the Series 2009-2 indenture supplement, or within the applicable grace period, not to exceed five business days, or (b) to observe or perform in any material respect any other covenants or agreements of the depositors set forth in the related transfer and servicing agreement, the indenture or the Series 2009-2 indenture supplement that has a significant adverse effect on the Series 2009-2 noteholders and continues unremedied for a period of 60 days after written notice of the failure requiring the same to be remedied, |
| (2) | any representation or warranty made by either depositor in the related transfer and servicing agreement, the indenture or the Series 2009-2 indenture supplement, or any information required to be given by such depositor to the indenture trustee to identify the designated accounts proves to have been incorrect in any material respect when made or delivered and which continues to be incorrect in any material respect for a period of 60 days after written notice of the failure, requiring the same to be remedied, and as a result of which the interests of the noteholders are materially and adversely affected except that an amortization event will not occur if such depositor has accepted reassignment of the related receivable or all related receivables, if applicable, during the specified period, |
| (3) | any servicer default occurs that would have a significant adverse effect on the Series 2009-2 noteholders, |
| (4) | insufficient funds are available to pay in full the aggregate principal balance of the Series 2009-2 notes on the expected final payment date, |
| (5) | the average of the monthly principal payment rates for three consecutive collection periods is less than 21%, |
| (6) | on any determination date, the available subordinated amount for the next distribution date will be less than the required subordinated amount for that distribution date, after giving effect to any distributions to be made on that distribution date, which shortfall continues unremedied for a period of five business days after that distribution date; provided, that, any reduction of the available subordinated amount resulting from reallocations of the available transferor principal collections to pay interest on the Series 2009-2 notes if LIBOR is equal to or greater than the prime rate upon which interest on the receivables is calculated on the applicable LIBOR determination date will be considered an amortization event only if LIBOR remains equal to or greater than such prime rate for the next 30 consecutive days following such LIBOR determination date, |
| (7) | the amount in the excess funding account exceeds 30% of the sum of the adjusted invested amounts of all outstanding series (including Series 2009-2) issued by the trust for three consecutive collection periods, after giving effect to any distributions to be made on each related distribution date, and |
| (8) | an event of default and acceleration of the Series 2009-2 notes occurs under the indenture. |
In the case of any event described in clauses (1) through (3) above, an amortization event will be deemed to have occurred with respect to the Series 2009-2 notes only if, after any applicable grace period, either the indenture trustee or the holders of at least a majority of the aggregate principal balance of the Series 2009-2 notes, declare that an amortization event has occurred with respect to the Series 2009-2 notes.
In the case of any trust amortization event, an amortization event with respect to all series, and in the case of any event described in clauses (4) through (8) above, an amortization event with respect to only the Series 2009-2 notes, will occur upon the occurrence of the event without any notice or other action on the part of the indenture trustee or the holders of any series of notes.
For a more detailed discussion of the amortization events and the consequences of a bankruptcy or dissolution of the depositors or Ford Credit, you should read "Description of the Notes — Amortization Events" in the prospectus.
The Series 2009-2 notes are subject to specified events of default which are applicable to all series. These events of default, as well as the rights and remedies available to the indenture trustee and the Series 2009-2 noteholders when an event of default occurs, are described under "Description of the Indenture — Events of Default and Remedies" in the prospectus. There are no additional events of default which are only applicable to the Series 2009-2 notes. The events of default include:
| · | the failure to pay interest on the Series 2009-2 notes for 35 days after it is due, |
| · | the failure to pay principal on the Series 2009-2 notes on its final maturity date, or |
| · | the bankruptcy or dissolution of the trust. |
If an event of default for the Series 2009-2 notes occurs because of a bankruptcy or dissolution of the trust, the notes will be automatically accelerated. If an event of default for the Series 2009-2 notes occurs for any other reason, the notes may be accelerated by the indenture trustee or the holders of at least a majority of the outstanding principal balance of the notes. If the Series 2009-2 notes are accelerated, you may receive principal before the expected final payment date for your notes.
For a more detailed description of events of default and the acceleration of the notes, you should read "Description of the Indenture — Events of Default and Remedies" in the prospectus.
The indenture trustee has established an account to serve as the collection account. The collection account is held by the indenture trustee for the benefit of the noteholders of all series issued by the trust, not just for the benefit of the holders of any particular series, including the Series 2009-2 noteholders. The servicer will deposit into the collection account the required portion of amounts collected on the receivables. The servicer will deposit collections into the collection account on a daily, monthly (subject to certain conditions) or other basis that satisfies the rating agency condition for each rating agency then rating a series of notes issued by the trust. The servicer currently remits collections to the collection account daily, until required amounts for the collection period are reached.
At the direction of the servicer, the indenture trustee will invest funds in the collection account in eligible investments that mature no later than the following distribution date. Net investment earnings on funds in the collection account will be included in interest collections.
The indenture trustee has established an account for the benefit of the noteholders of all series issued by the trust to serve as the excess funding account. Deposits will be made into the excess funding account from available funds so that the net adjusted pool balance is not less than the required pool balance. If the net adjusted pool balance is less than the required pool balance following the issuance of the Series 2009-2 notes, a portion of the proceeds of the issuance equal to the amount of such shortfall will be deposited by the indenture trustee into the excess funding account on the closing date. In addition, the holders of the transferor interest may direct the servicer and the indenture trustee to deposit any amounts otherwise distributable to the holders of the transferor interest into the excess funding account. Also, if the net adjusted pool balance exceeds the required pool balance, the servicer may instruct the indenture trustee to withdraw such excess from the excess funding account and pay that amount to the holders of the transferor interest.
At the direction of the servicer, the indenture trustee will invest funds on deposit in the excess funding account in eligible investments that mature no later than the following distribution date. Net investment earnings on funds in the excess funding account will be deposited into the collection account and included in interest collections.
The "Series 2009-2 excess funding amount" means the product of (a) the amount on deposit in the excess funding account (excluding net investment earnings) on such date, times (b) a fraction (i) the numerator of which is the adjusted invested amount of the Series 2009-2 notes, and (ii) the denominator of which is the sum of the adjusted invested amounts of each series being allocated a portion of the funds in the excess funding account.
The indenture trustee will establish an account for the benefit of the Series 2009-2 noteholders to serve as the principal funding account. During the controlled accumulation period, the indenture trustee will transfer available investor principal collections up to an amount equal to the monthly principal amount for each related distribution date from the collection account to the principal funding account, as
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described below under "— Application of Collections — Payment of Principal." The "monthly principal amount" means the least of:
| · | available investor principal collections for that distribution date, |
| · | for each distribution date with respect to the controlled accumulation period, the controlled deposit amount for that distribution date, and |
| · | the adjusted invested amount (as adjusted for any unreimbursed investor charge-offs and reallocated principal collections on that distribution date). |
On the first distribution date with respect to the early amortization period, the indenture trustee will apply the amounts on deposit in the principal funding account, together with available investor principal collections for that date, to pay the principal of the Series 2009-2 notes, as described below under "— Application of Collections — Payment of Principal."
At the direction of the servicer, the indenture trustee will invest funds on deposit in the principal funding account in eligible investments that mature no later than the following distribution date. The indenture trustee will deposit net investment earnings on funds in the principal funding account into the collection account and such amounts will be included in available investor interest collections for that distribution date.
The servicer will allocate all collections and all defaulted amounts for each collection period among:
| · | the Series 2009-2 notes, |
| · | other outstanding series of notes that the trust has issued, and |
| · | the transferor interest. |
These amounts will be allocated to the Series 2009-2 notes based on the applicable investor percentage for the Series 2009-2 notes. Each investor percentage is calculated by reference to the invested amount or the adjusted invested amount of the Series 2009-2 notes. The "investor percentages" for the Series 2009-2 notes are:
| · | the "floating investor percentage," which is the percentage equivalent of a fraction (a) the numerator of which is the adjusted invested amount on the last day of the preceding collection period (or, for the first collection period, the initial principal balance of the Series 2009-2 notes), and (b) the denominator of which is the adjusted pool balance as of the last day of the preceding collection period (or, for the first collection period, the pool balance as of the close of business on September 30, 2009, the "series cut-off date"), and |
| · | the "fixed investor percentage," which is the percentage equivalent of a fraction (a) the numerator of which is the invested amount on the last day of the revolving period, and (b) the denominator of which is the greater of (i) the adjusted pool balance as of the last day of the preceding collection period and (ii) the sum of the numerators used to calculate the applicable investor percentages for allocating principal collections to all outstanding series for such collection period. |
The floating investor percentage is used for allocating interest collections and the defaulted amount at any time and for allocating principal collections during the revolving period. The fixed investor percentage is used for allocating principal collections during the controlled accumulation or early amortization period.
On each deposit date, the servicer will allocate and distribute interest collections to the holders of the transferor interest, based on the transferor percentage, an amount equal to:
| · | the interest collections for such collection period, times |
| · | the percentage (not less than 0%) equal to 100% minus the sum of: |
| — | the sum of the floating investor percentages for that collection period for all series, plus |
| — | the percentage equivalent of a fraction (a) the numerator of which is the trust available subordinated amount as of the determination date occurring in the preceding collection period and (b) the denominator of which is the adjusted pool balance as of the last day of the preceding collection period; |
provided, that an amount equal to the monthly transferor servicing fee for each series (including Series 2009-2) will be deducted from the amount to be distributed to the holders of the transferor interest and such amount will be deposited into the collection account.
On each deposit date, the servicer will allocate and distribute principal collections to the holders of the transferor interest, based on the transferor percentage, but only to the extent that the transferor amount exceeds the required transferor amount for such date, an amount equal to:
| · | the principal collections for such collection period, times |
| · | the percentage (not less than 0%) equal to 100% minus the sum of |
| — | the sum of the floating investor percentages for that collection period for all series that are in their revolving periods and the fixed investor percentage for that collection period for all series that are not in their revolving periods, plus |
| — | the percentage equivalent of a fraction (a) the numerator of which is the trust available subordinated amount as of the determination date occurring in the preceding collection period, and (b) the denominator of which is the adjusted pool balance as of the last day of the preceding collection period; |
provided, that an amount equal to the monthly transferor servicing fee for each series (including Series 2009-2) not distributed from interest collections as described above will be deducted from the amount to be distributed to the holders of the transferor interest and such amount will be deposited into the collection account.
The transferor interest collections not paid to the holders of the transferor interest as described above are the "available transferor interest collections." The transferor principal collections not paid to the holders of the transferor interest as described above are the "available transferor principal collections." The sum of these two amounts, called "available transferor collections," will be deposited by the servicer into the collection account, to the extent needed to:
| · | cover shortfalls in distributions required to be made from available investor interest collections and excess interest collections available for your series, |
| · | fund principal payments on your series during an early amortization period, or |
| · | cover similar shortfalls for other series. |
Available transferor principal collections that may be used to fund shortfalls for your series or that may be used to fund principal payments on your series during an early amortization period will be limited to the available subordinated amount. If the available subordinated amount is zero, available transferor collections allocable to your series for these purposes will also be zero. If the amount of available transferor collections for any distribution date is insufficient to cover the aggregate shortfall for all series, then available transferor collections will be allocated to each series based on the ratio that its available subordinated amount bears to the aggregate available subordinated amount for all series that have shortfalls.
For additional details on the application of available transferor collections for your series, you should read "— Application of Collections — Payment of Interest, Fees and Other Items" below.
Any remaining available transferor collections not required to be deposited into the collection account will be distributed to the holders of the transferor interest, but only to the extent that the transferor amount exceeds the required transferor amount for such date. The "transferor amount" means the excess of the adjusted pool balance on that date over the sum of the adjusted invested amounts as of that date of all series issued by the trust.
Payments of interest and principal on the Series 2009-2 notes will be made on each distribution date from available investor interest collections and available investor principal collections.
"Available investor interest collections" for any distribution date will equal the sum of:
| · | the floating investor percentage of interest collections for the related collection period and net investment earnings on the collection account, the excess funding account and the back-up servicer reserve account, plus |
| · | the sum of net investment earnings from the reserve fund, the principal funding account and the accumulation period reserve account, plus |
| · | any accumulation period reserve draw amount for that distribution date, plus |
| · | upon the earliest of the first distribution date with respect to the early amortization period, the payment in full of the Series 2009-2 notes and the final maturity date, any remaining amounts in the accumulation period reserve account, plus |
| · | the monthly transferor servicing fee for such distribution date. |
"Available investor principal collections" for any distribution date will equal the excess of:
| · | the sum of: |
| — | the sum of (a) the applicable investor percentage of principal collections for the related collection period, plus (b) the aggregate amount of any available investor interest collections, reserve fund withdrawals, excess interest collections available from other series in excess interest sharing group one and available transferor collections used to cover shortfalls in some of the specified amounts required to be distributed or deposited on that distribution date, as described below under "— Payment of Interest, Fees and Other Items" and, thus, treated as part of investor principal collections for that distribution date, plus |
| — | the Series 2009-2 excess funding amount, plus |
| — | any shared principal collections from other series in principal sharing group one (including any amounts on deposit in the excess funding account that are allocated to Series 2009-2 for application as shared principal collections), plus |
| — | upon the earlier of the payment in full of the Series 2009-2 notes and the final maturity date, any remaining amounts in the reserve fund, over |
| · | any reallocated principal collections for such distribution date. |
Payment of Interest, Fees and Other Items. On each distribution date, the servicer will direct the indenture trustee to apply available investor interest collections on deposit in the collection account in the following order:
| (1) | the interest due on the Series 2009-2 notes for that distribution date, will be paid to the Series 2009-2 noteholders, |
| (2) | the fees, expenses and indemnities due to the owner trustee, the Delaware trustee and the indenture trustee for the Series 2009-2 notes, and any expenses incurred by the trust for the Series 2009-2 notes in accordance with the transaction documents, in each case, to the extent not paid by the servicer or the administrator, up to a maximum amount of $150,000 per year, will be paid to the owner trustee, the Delaware trustee, the indenture trustee and the trust, as applicable, |
| (3) | pro rata (a) the monthly back-up servicing fees due for that distribution date, will be paid to the back-up servicer and (b) if Ford Credit or one of its affiliates is no longer the servicer, the monthly servicing fees due for that distribution date, will be paid to the servicer, |
| (4) | the investor default amount, if any, for the related collection period, will be treated as investor principal collections and further applied, as described below under "— Payment of Principal," |
| (5) | the excess, if any, of the reserve fund required amount over the amount then on deposit in the reserve fund will be deposited into the reserve fund, |
| (6) | the sum of investor charge-offs that have not been previously reimbursed will be treated as investor principal collections and further applied, as described below under "— Payment of Principal," |
| (7) | beginning on the accumulation period reserve account funding date, the excess, if any, of the accumulation period reserve account required amount over the amount then on deposit in the accumulation period reserve account will be deposited into the accumulation period reserve account, |
| (8) | if Ford Credit or one of its affiliates is the servicer, the monthly servicing fees due for that distribution date will be paid to the servicer, |
| (9) | the excess of the required subordinated amount over the available subordinated amount will be distributed to the holders of the transferor interest to increase the available subordinated amount by the amount so distributed, |
| (10) | the fees, expenses and indemnities due to the owner trustee, the Delaware trustee and the indenture trustee for the Series 2009-2 notes, any expenses incurred by the trust for the Series 2009-2 notes in accordance with the transaction documents, in each case, to the extent not paid by the servicer or the administrator or pursuant to clause (2) above, |
| will be paid to the owner trustee, the Delaware trustee, the indenture trustee and the trust, as applicable, |
| (11) | pro rata, (a) any amounts due to the back-up servicer that remain unpaid will be paid to the back-up servicer and (b) any transition costs incurred by the successor servicer in excess of the amount on deposit in the back-up servicer reserve account will be paid to the successor servicer, |
| (12) | the shortfalls in interest collections for other outstanding series in excess interest sharing group one will be treated as excess interest collections available from Series 2009-2 and applied to cover these shortfalls, and |
| (13) | all remaining available investor interest collections will be distributed to the holders of the transferor interest. |
If available investor interest collections for any distribution date are insufficient to make the full distribution of the amounts required above, the indenture trustee will apply available funds from the following sources on that distribution date in the following order to make up certain shortfalls:
| (1) | from excess interest collections available from other series in excess interest sharing group one, to cover shortfalls in the distributions required under clauses (1) through (11) above. |
| (2) | from available transferor interest collections and available transferor principal collections (in an amount not to exceed the available subordinate amount) deposited into the collection account, to cover shortfalls in the distributions required under clauses (1) through (6) above. If the amount of available transferor collections is insufficient to cover in full the aggregate shortfalls for all series, then available transferor collections will be allocated to your series based on the ratio that your series' available subordinated amount bears to the aggregate available subordinated amount for all series that have shortfalls. On the other hand, if the amount of available transferor collections exceeds the aggregate amount of such shortfalls for all series, the excess available transferor collections will be applied to cover any unpaid adjustment payments. The available subordinated amount will be reduced by the amount of available transferor principal collections applied to cover shortfalls under clauses (1) through (6) above and any unpaid adjustment payments. |
| (3) | from the reserve fund, to cover shortfalls in the distributions required under clauses (1) through (4) above. |
| (4) | from reallocated principal collections for that distribution date, to cover shortfalls in the distributions required under clause (1) above. |
Payment of Principal. On each distribution date, the servicer will direct the indenture trustee to apply available investor principal collections in the following order:
| (1) | if such distribution date relates to the controlled accumulation period, available investor principal collections in an amount up to the monthly principal amount will be deposited into the principal funding account for distribution to the Series 2009-2 noteholders on the expected final payment date, |
| (2) | if such distribution date relates to the early amortization period, available investor principal collections (together with any available transferor interest collections and available transferor principal collections (in an amount not to exceed the available subordinated amount)) in an amount up to the monthly principal amount will be deposited |
| into the principal funding account for distribution to the Series 2009-2 noteholders on such distribution date, |
| (3) | remaining available investor principal collections will be treated as shared principal collections with respect to principal sharing group one and applied as described below under "— Groups — Principal Sharing Group One" and under "Description of the Notes — Groups — Principal Sharing Groups" in the prospectus, and |
| (4) | remaining available investor principal collections will be paid to the holders of the transferor interest to the extent not required to be deposited into the excess funding account, as described above under "— Excess Funding Account." |
The servicer will allocate to the Series 2009-2 notes amounts owed on principal receivables that become defaulted receivables and, if applicable, the principal portion of any interests in other floorplan assets that default. The servicer will make these allocations to the Series 2009-2 notes based on the floating investor percentage. The portion of the defaulted amount allocated to the Series 2009-2 notes is the "investor default amount" for the Series 2009-2 notes.
The investor default amount represents your series' share of losses on principal receivables and the principal portion of any interests in other floorplan assets. The investor default amount for any distribution date will be funded from available investor interest collections, excess interest collections available to your series from other series in excess interest sharing group one and available transferor collections allocable to your series and available amounts on deposit in the reserve fund. If the investor default amount for any distribution date exceeds the funds available from those sources, the available subordinated amount (after giving effect to any reductions described above under "— Application of Collections — Payment of Interest, Fees and Other Items"), will be reallocated to the Series 2009-2 notes in order to avoid a reduction of the invested amount. Any remaining unfunded investor default amount, called an "investor charge-off," will reduce the invested amount of your series.
If on any distribution date, reallocated principal collections are used to fund shortfalls in the payments of interest on the Series 2009-2 notes, the available subordinated amount (after giving effect to any reductions described above under "— Application of Collections — Payment of Interest, Fees and Other Items"), will be reallocated to the Series 2009-2 notes. For the Series 2009-2 notes for any distribution date, "reallocated principal collections" means the amount of investor principal collections for that distribution date reallocated to cover shortfalls in payments of interest on the Series 2009-2 notes, except that the amount of investor principal collections reallocated for this purpose cannot exceed the available subordinated amount for that distribution date (after giving effect to any change in that amount on that date).
Reductions in the invested amount from investor charge-offs may be reimbursed from subsequent available investor interest collections, excess interest collections available from other series in excess interest sharing group one and available transferor collections allocable to your series, as described above under "— Application of Collections — Payment of Interest, Fees and Other Items." If the invested amount is reduced to zero, your series will not receive any further allocations of interest collections and principal collections.
The depositors have the option to transfer certain ineligible receivables to the trust so long as these ineligible receivables are originated in an eligible account. If any ineligible receivables are in the trust, the available subordinated amount will be increased by the incremental subordinated amount, which takes into account the principal amount of those ineligible receivables allocable to the Series 2009-2 notes.
The incremental subordinated amount will also take into account the aggregate principal amount of receivables that constitute dealer, development dealer, fleet, manufacturer, medium and heavy truck and used vehicle overconcentrations allocable to the Series 2009-2 notes on the related determination date.
In the case of any dealer or group of affiliated dealers (as determined in accordance with the servicer's customary policies and procedures), a "dealer overconcentration" for any determination date means any excess of:
| · | the aggregate amount of the trust's principal receivables originated in all the designated accounts of a dealer or a group of affiliated dealers as of the last day of the related collection period, over |
| · | 2% (or 5% in the case of dealers affiliated with AutoNation, Inc.) of the pool balance as of the last day of that collection period. |
A "development dealer overconcentration" for any determination date means any excess of:
| · | the aggregate amount of the trust's principal receivables relating to dealers in which Ford or any affiliate of Ford has an equity investment exceeding 5% (as determined in accordance with the servicer's customary policies and procedures), known as "development dealers," and its affiliates as of the last day of the related collection period, over |
| · | 4% of the pool balance as of the last day of that collection period. |
A "fleet overconcentration" for any determination date means any excess of:
| · | the aggregate amount of the trust's principal receivables originated in designated accounts that are designated by the servicer for fleet purchases of vehicles by the related dealer as of the last day of the related collection period, over |
| · | 4% of the pool balance as of the last day of that collection period. |
A "manufacturer overconcentration" for any determination date means either:
| · | any excess of: |
| — | the aggregate amount of the trust's principal receivables that relate to a particular vehicle manufacturer (other than Ford or one of its associated manufacturers) with a long-term credit rating of at least "A-" by Standard & Poor's and Fitch (if rated by Fitch), and "A3" by Moody's (if rated by Moody's) as of the last day of the related collection period, over |
| — | 10% of the pool balance as of the last day of that collection period, or |
| · | any excess of: |
| — | the aggregate amount of the trust's principal receivables that relate to a particular vehicle manufacturer (other than Ford or one of its associated manufacturers) with a long-term credit rating of "BBB+" or lower by Standard & Poor's or unrated by Standard & Poor's, or "BBB+" or lower by Fitch (if rated by Fitch), or "Baa1" or lower by Moody's (if rated by Moody's) as of the last day of the related collection period, over |
| — | 6% of the pool balance as of the last day of that collection period. |
A "medium and heavy truck overconcentration" for any determination date means any excess of :
| · | the aggregate amount of the trust's principal receivables originated in designated accounts that are designated by the servicer in its records specifically for purchases of medium- and heavy-duty trucks and vans by the related dealer as of the last day of the related collection period, over |
| · | 2% of the pool balance as of the last day of that collection period. |
A "used vehicle overconcentration" for any determination date means any excess of:
| · | the aggregate amount of the trust's principal receivables relating to used vehicles as of the last day of the related collection period, over |
| · | 20% of the pool balance as of the last day of that collection period. |
The definitions of dealer, development dealer, fleet, manufacturer, medium and heavy truck and used vehicle overconcentration, including the percentages specified therein, may be modified without your prior consent so long as the rating agency condition is satisfied for each rating agency then rating the Series 2009-2 notes.
Excess Interest Sharing Group One. Your series will be included in a group of series referred to as "excess interest sharing group one." Excess interest collections for your series will be made available to any other series in excess interest sharing group one whose share of interest collections and other amounts treated like interest collections are not sufficient to make required distributions or deposits for that series. If available investor interest collections for your series are insufficient to make all required distributions and deposits for your series, your series will have access to excess interest collections from other series in excess interest sharing group one. Each series that is part of excess interest sharing group one and has a shortfall will receive a share of the total amount of excess interest collections available for that month based on the amount of shortfall for that series, divided by the total shortfall for all series in excess interest sharing group one for that same month.
Principal Sharing Group One. Your series will be included in a group of series referred to as "principal sharing group one." Available investor principal collections for any collection period allocated to the invested amount will first be used to cover, during the controlled accumulation period, deposits of the applicable controlled deposit amount to the principal funding account, and during the early amortization period, payments to the noteholders. The servicer will determine the shared principal collections, which is the amount of collections of principal receivables for any collection period allocated to the invested amount remaining after covering required payments to the Series 2009-2 noteholders and any similar amount remaining for any other series in principal sharing group one. Shared principal collections will be determined and allocated by the servicer to cover principal shortfalls. Shared principal collections will not be used to cover unfunded investor default amounts. Each series that is part of principal sharing group one and has a principal shortfall will receive a share of the total amount of shared principal collections available for that collection period based on the amount of shortfall for that series, divided by the total shortfall for all series in principal sharing group one for that same collection period. To the extent that shared principal collections exceed principal shortfalls, the balance will be paid to the holders of the transferor interest to the extent not required to be deposited into the excess funding account, as described above under "— Excess Funding Account."
The share of the servicing fee and the back-up servicing fee allocable to the Series 2009-2 notes for any distribution date is the monthly servicing fee and the monthly back-up servicing fee, respectively.
The portion of the monthly servicing fee and the monthly back-up servicing fee that is attributable to the transferor interest is the monthly transferor servicing fee, and such amount will be deducted from amounts otherwise distributable to the holders of the transferor interest and deposited into the collection account for each distribution date.
The "monthly servicing fee" means, for any collection period, an amount equal to one-twelfth the product of (a) the servicing fee rate (1% or such lesser percentage as may be specified by the servicer), times (b) the percentage equivalent of a fraction, the numerator of which is the floating investor percentage and the denominator of which is the sum of the floating investor percentages for all series (including Series 2009-2) for such collection period, times (c) the total amount of principal receivables on the last day of the preceding collection period.
The "monthly back-up servicing fee" means, for any collection period, an amount equal to the greater of (a) one-twelfth the product of (1) the back-up servicing fee rate (0.009% or such lesser percentage as may be specified by the back-up servicer), times (2) the percentage equivalent of a fraction, the numerator of which is the floating investor percentage and the denominator of which is the sum of the floating investor percentages for all series (including Series 2009-2) for such collection period, times (3) the total amount of principal receivables on the last day of the preceding collection period, and (b) $4,000.
The "monthly transferor servicing fee" means, for any collection period, an amount equal to one-twelfth the product of (a) the product of (1) the sum of the servicer fee rate and the back-up servicing fee rate, times (2) 100% minus the sum of the floating investor percentages for all series (including Series 2009-2) for such collection period, times (3) the total amount of principal receivables on the last day of the preceding collection period, times (b) the percentage equivalent of a fraction, the numerator of which is the floating investor percentage and the denominator of which is the sum of the floating investor percentages for all series (including Series 2009-2) for such collection period.
The servicer will pay from its servicing compensation expenses incurred in servicing the receivables, including payment of taxes imposed on the servicer, expenses incurred in making distributions and providing reports to the noteholders and others and, if Ford Credit is the servicer, payment of the reasonable fees and disbursements of the owner trustee, the Delaware trustee, the indenture trustee, the administrator and independent certified public accountants.
On or prior to the closing date, the indenture trustee will establish a "back-up servicer reserve account" for the benefit of the back-up servicer, and the servicer will deposit $200,000 into such account. If the back-up servicer becomes the successor servicer, amounts on deposit in the back-up servicer reserve account (exclusive of any net investment earnings) will be used by the indenture trustee to pay the transition costs of the back-up servicer. Transition costs in excess of the amount on deposit in the back-up servicer reserve account will be paid from available investor interest collections in the priority described above under "— Application of Collections — Payment of Interest, Fees and Other Items." At the direction of the servicer, the indenture trustee will invest funds on deposit in the back-up servicer reserve account in eligible investments that mature no later than the following distribution date. Net investment earnings on funds in the back-up servicer reserve account will be deposited into the collection account and included in interest collections.
On each determination date, the servicer will prepare and deliver to the owner trustee, the indenture trustee, the depositors and the rating agencies a monthly investor report. On each distribution date, the indenture trustee, as paying agent, will forward the monthly investor report to each noteholder of record or make such statement available to the Series 2009-2 noteholders through the indenture trustee's internet website, which is located as of the date of this prospectus supplement at https://GCTInvestorreporting.bnymellon.com. Each monthly investor report will set forth the items described under "Description of the Agreements — Reporting Obligations of the Servicer" in the prospectus. An officer of the servicer will certify the accuracy of the information in each monthly investor report. For so long as the trust is required to file reports under the Securities Exchange Act of 1934, the
servicer will file the monthly investor reports with the SEC on Form 10-D within 15 days after each distribution date. The servicer will post each monthly investor report on each distribution date on its website located at www.fordcredit.com/institutionalinvestments/index.jhtml.
For information regarding other reports prepared by the servicer, including assessment of compliance with the minimum servicing criteria, you should read "Description of the Notes — Reports to Noteholders" and "Description of the Agreements — Reporting Obligations of the Servicer" in the prospectus.
The following table shows the fees that will be payable by the trust out of the portion of the collections allocated to your notes. On each distribution date, the servicer will instruct the indenture trustee to pay these fees, to the extent these fees have not been paid by the servicer or the administrator, from available investor interest collections, in the order and priority described under "Description of the Notes — Application of Collections — Payment of Interest, Fees and Other Items" in this prospectus supplement. The fees to the owner trustee, the Delaware trustee and the indenture trustee may be paid monthly, annually or on another schedule as agreed by the servicer, the administrator and the owner trustee, the Delaware trustee or the indenture trustee, as applicable.
| Fee | Monthly Amount |
| Monthly owner trustee and Delaware trustee fees | 1/12 of $3,500 |
| Monthly indenture trustee fees | 1/12 of $4,000 |
Monthly servicing fee | 1/12 of 1% of the portion of the receivables allocated to your series for this purpose |
Monthly back-up servicing fee | 1/12 of 0.009% of the portion of the receivables allocated to your series for this purpose, subject to a minimum of $4,000 |
The owner trustee and Delaware trustee fee is paid to the owner trustee and Delaware trustee for performance of its duties under the trust agreement. The indenture trustee fee is paid to the indenture trustee for performance of its duties under the indenture. The trust will pay and reimburse the owner trustee and Delaware trustee and the indenture trustee for their respective fees and reasonable out-of-pocket expenses incurred under the trust agreement and the indenture, respectively, each to the extent not paid by the servicer or the administrator.
The monthly servicing fee is paid to the servicer for the servicing of the receivables under the transfer and servicing agreements. The servicer is required to pay all expenses incurred by it in connection with its servicing activities under the transfer and servicing agreements, including (a) if Ford Credit is the servicer, all reasonable fees and disbursements of the owner trustee, Delaware trustee, indenture trustee, administrator and independent accountants, (b) taxes imposed on the servicer and (c) expenses incurred in connection with making distributions and providing reports to the noteholders. The monthly back-up servicing fee is paid to the back-up servicer for performing its duties under the back-up servicing agreement.
The net proceeds from the sale of the Series 2009-2 notes will be used by the depositors to purchase the receivables and any interests in other floorplan assets from Ford Credit. Ford Credit will use the proceeds that it receives for its general corporate purposes.
Ford Credit is the sponsor of this securitization transaction, the originator of the receivables that are being securitized and the servicer of the receivables. As the sponsor, Ford Credit has caused the depositors to be formed for purposes of participating in securitization transactions. Each depositor is a wholly-owned subsidiary of Ford Credit. Ford Credit has caused the depositors to form the trust that is the issuing entity for this securitization transaction. The depositors initially will be the sole beneficiaries of the trust and the holders of the transferor interest in the trust.
In the ordinary course of business from time to time, Ford Credit and its affiliates have business relationships and agreements with the owner trustee, the indenture trustee and the back-up servicer including commercial banking, committed credit facilities, underwriting agreements, hedging agreements and financial advisory services, all on arm's length terms and conditions.
You should consider the following discussion of certain material federal income tax consequences to investors of the purchase, ownership and disposition of the Series 2009-2 notes only in connection with "Material Federal Income Tax Consequences" and "State and Local Tax Consequences" in the prospectus. The discussion in this prospectus supplement and in the prospectus is based upon laws, regulations, rulings and decisions now in effect, all of which are subject to change. The discussion below does not purport to deal with all federal tax considerations applicable to all categories of investors. Some holders, including insurance companies, tax-exempt organizations, financial institutions or broker dealers, taxpayers subject to the alternative minimum tax, holders that will hold the Series 2009-2 notes as part of a hedge, straddle, appreciated financial position or conversion transaction and holders that will hold the Series 2009-2 notes as other than capital assets, may be subject to special rules. You are encouraged to consult with your own tax advisors to determine the particular federal, state, local and any other tax consequences of the purchase, ownership and disposition of the Series 2009-2 notes.
In the opinion of Dewey & LeBoeuf LLP, tax counsel to the depositors:
| · | assuming the parties comply with the terms of the governing agreements, the trust will not be characterized as an association or publicly traded partnership taxable as a corporation and will be treated as a division of the depositors for U.S. federal income tax purposes, and |
| · | the Series 2009-2 notes will be treated as debt for U.S. federal income tax purposes. |
Each noteholder, by its acceptance of a Series 2009-2 note, agrees to treat the Series 2009-2 notes as debt for federal, state and local income and franchise tax purposes.
The trust does not anticipate issuing the Series 2009-2 notes with any original issue discount, as described under "Material Federal Income Tax Consequences — Tax Characterization and Treatment of the Notes — Original Issue Discount" in the prospectus.
If a Series 2009-2 note is sold or retired, the seller will recognize gain or loss equal to the difference between the amount realized on the sale and the holder's adjusted basis in that Series 2009-2 note, as described under "Material Federal Income Tax Consequences — Tax Characterization and Treatment of the Notes — Disposition of Notes" in the prospectus.
Employee benefit plans and other retirement plans and arrangements, or "plans", that are subject to Title I of ERISA and/or Section 4975 of the Internal Revenue Code generally may purchase the offered
notes. Although no assurance can be given, the Series 2009-2 notes are expected to be treated as "debt" and not as "equity interests" for purposes of the plan assets regulation issued by the U.S. Department of Labor because the Series 2009-2 notes:
| · | are expected to be treated as indebtedness for federal income tax purposes, and |
| · | should not be deemed to have any "substantial equity features." |
Any plan subject to Title I of ERISA and/or Section 4975 of the Internal Revenue Code that purchases and holds the Series 2009-2 notes will be deemed to have represented that its purchase and holding of the notes does not and will not constitute a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code due to the applicability of a statutory or administrative exemption from the prohibited transaction rules. Any plan subject to laws or regulations substantially similar to Title I of ERISA or Section 4975 of the Internal Revenue Code that purchases and holds the Series 2009-2 notes will be deemed to represent that its purchase and holding of the Series 2009-2 notes does not constitute and will not result in a violation of such similar laws or regulations.
For additional information regarding treatment of the Series 2009-2 notes under ERISA, see "ERISA Considerations" in the prospectus.
The depositors and the underwriters named below have entered into an underwriting agreement for the Series 2009-2 notes. Subject to certain conditions, each underwriter has agreed to purchase the principal amount of Series 2009-2 notes indicated in the following table:
Underwriters | Series 2009-2 notes | |||
Barclays Capital Inc. | $ | 600,000,000 | ||
| Morgan Stanley & Co. Incorporated | 600,000,000 | |||
Banc of America Securities LLC | 50,000,000 | |||
BNP Paribas Securities Corp. | 50,000,000 | |||
Citigroup Global Markets Inc. | 50,000,000 | |||
Deutsche Bank Securities Inc. | 50,000,000 | |||
HSBC Securities (USA) Inc. | 50,000,000 | |||
RBS Securities Inc. | 50,000,000 | |||
Total | $ | 1,500,000,000 | ||
The underwriters will resell the Series 2009-2 notes offered by this prospectus supplement to the public. The selling concessions that the underwriters may allow to certain dealers, and the discounts that those dealers may reallow to other dealers, expressed as a percentage of the initial principal amount of Series 2009-2 notes, are indicated in the following table. Due to sales to affiliates, one or more of the underwriters may be required to forego a de minimis portion of the selling concessions they would otherwise be entitled to receive.
Selling Concessions not to exceed | Reallowances not to exceed | |
Series 2009-2 notes | 0.30% | 0.18% |
The Series 2009-2 notes are a new issue of securities with no established trading market. The depositors have been advised by the underwriters that they intend to make a market in the Series 2009-2 notes purchased by them but they are not obligated to do so and may discontinue market-making at any time without notice. No assurance can be given about the liquidity of the trading market for the Series 2009-2 notes.
Upon request by an investor who has received an electronic prospectus and prospectus supplement from an underwriter within the period during which there is an obligation to deliver a prospectus and prospectus supplement, the underwriter will promptly deliver, without charge, a paper copy of the prospectus and this prospectus supplement.
Dewey & LeBoeuf LLP will review or provide opinions on legal matters relating to the notes and certain U.S. federal income tax and other matters for the trust, the depositors and the servicer. Bingham McCutchen LLP will review or provide opinions on legal matters relating to the notes and other matters for the underwriters. Bingham McCutchen LLP has from time to time represented Ford Credit and its affiliates in connection with other matters.
| accumulation period reserve account funding date | S-39 |
| accumulation period reserve account required amount | S-39 |
| accumulation period reserve draw amount | S-39 |
| amortization event | S-11, S-40 |
| available investor interest collections | S-45 |
| available investor principal collections | S-45 |
| available subordinated amount | S-7, S-37 |
| available transferor collections | S-44 |
| available transferor interest collections | S-44 |
| available transferor principal collections | S-44 |
| back-up servicer | S-21 |
| back-up servicer reserve account | S-51 |
| classic floorplan receivables | S-27 |
| closing date | S-6 |
| controlled accumulation amount | S-34 |
| controlled deposit amount | S-34 |
| dealer overconcentration | S-49 |
| defaulted amount | S-9 |
| Delaware trustee | S-20 |
| development dealer overconcentration | S-49 |
| development dealers | S-49 |
| distribution date | S-6 |
| excess interest sharing group one | S-9, S-50 |
| FCF Corp | S-6 |
| FCF LLC | S-6 |
| fixed investor percentage | S-43 |
| fleet overconcentration | S-49 |
| floating investor percentage | S-43 |
| Ford | S-6 |
| Ford Credit | S-6 |
| FRBNY | S-11 |
| incremental subordinated amount | S-38 |
| indenture trustee | S-20 |
| in-transit period | S-24 |
| investor charge-off | S-48 |
| investor default amount | S-48 |
| investor percentages | S-43 |
| LIBOR determination date | S-33 |
| manufacturer overconcentration | S-49 |
| medium and heavy truck overconcentration | S-50 |
| monthly back-up servicing fee | S-51 |
| monthly principal amount | S-43 |
| monthly servicing fee | S-51 |
| monthly transferor servicing fee | S-51 |
| owner trustee | S-20 |
| plans | S-53 |
| principal sharing group one | S-9, S-50 |
| rating agency | S-11 |
| reallocated principal collections | S-48 |
| required pool percentage | S-38 |
| required subordinated amount | S-37 |
| reserve fund required amount | S-38 |
| Series 2009-2 excess funding amount | S-42 |
| series amortization events | S-11, S-40 |
| series cut-off date | S-43 |
| series enhancement | S-7 |
| statistical calculation date | S-8 |
| subordinated percentage | S-38 |
| subordination factor | S-38 |
| TALF | S-11 |
| third-party financed in-transit receivables | S-27 |
| transferor amount | S-45 |
| transferor interest | S-8 |
| trust | S-6 |
| U.S. Bank | S-20 |
| U.S. Bank Trust | S-20 |
| used vehicle overconcentration | S-50 |
| Wells Fargo | S-6 |
Annex A
OTHER SERIES ISSUED AND OUTSTANDING
The information in this Annex A is an integral part of this prospectus supplement and is incorporated by reference into the body of this prospectus supplement.
Series 2006-1 variable funding notes
The Series 2006-1 notes are a series of privately placed variable funding notes, the investment of which may be increased or decreased periodically at the discretion of the depositors.
Current aggregate invested amount | $0 |
Current aggregate funding commitments | $1,450,000,000 |
Series 2006-1 note interest rate | For each sub-class of the Series 2006-1 notes, the related commercial paper cost of funds rate plus 2.00% per annum (or, upon the occurrence of certain specified events, one-month LIBOR plus 3.50% per annum) plus 3.00% per annum on a subordinated basis (in each case, subject to change in connection with any extension of the related stated commitment expiration date) |
Scheduled start of controlled amortization period | For each sub-class of the Series 2006-1 notes, the close of business on the related stated commitment expiration date |
Stated commitment expiration dates | November 27, 2009 to March 26, 2010 (subject to extension with respect to each sub-class of the Series 2006-1 notes) |
Final maturity date | For any sub-class of the Series 2006-1 notes, the thirty-first distribution date following the sixth full collection period immediately following the related stated commitment expiration date |
Closing date | March 30, 2006 |
Excess interest sharing group designation | One |
Principal sharing group designation | One |
Series 2006-4 notes
Initial invested amount | $2,250,000,000 |
Initial Class A principal balance | $2,124,300,000 |
Class A note interest rate | One-month LIBOR plus 0.25% per annum |
Initial Class B principal balance | $125,700,000 |
Class B note interest rate | One-month LIBOR plus 0.55% per annum |
Scheduled start of controlled accumulation period | December 1, 2010 |
Expected final payment date | June 2011 distribution date |
Final maturity date | June 2013 distribution date |
Closing date | June 28, 2006 |
Excess interest sharing group designation | One |
Principal sharing group designation | One |
Series 2006-6 variable funding notes
The Series 2006-6 notes are a series of privately placed variable funding notes, the investment of which may be increased or decreased periodically at the discretion of the depositors.
Current aggregate invested amount | $1,500,000,000 |
Current aggregate funding commitments | $1,500,000,000 |
Series 2006-6 note interest rate | For each sub-class of the Series 2006-6 notes, the related commercial paper cost of funds rate plus 0.40% per annum or, upon the occurrence of certain specified events, one-month LIBOR plus 0.50% per annum (in each case, subject to change in connection with any extension of the related stated commitment expiration date) |
Scheduled start of controlled amortization period | For each sub-class of the Series 2006-6 notes, the close of business on the related stated commitment expiration date |
Stated commitment expiration dates | September 29, 2011 (subject to extension with respect to each sub-class of the Series 2006-6 notes) |
Final maturity date | For any sub-class of the Series 2006-6 notes, the thirty-first distribution date following the sixth full collection period immediately following the related stated commitment expiration date |
Closing date | September 29, 2006 |
Excess interest sharing group designation | One |
Principal sharing group designation | One |
Series 2008-2 notes
Initial invested amount | $645,000,000 |
Initial Class A principal balance | $645,000,000 |
Series 2008-2 note interest rate | One-month LIBOR plus 2.00% per annum |
Scheduled start of controlled accumulation period | June 1, 2011 |
Expected final payment date | December 2011 distribution date |
Final maturity date | December 2013 distribution date |
Closing date | December 10, 2008 |
Excess interest sharing group designation | One |
| Principal sharing group designation | One |
Series 2009-1 notes
Initial invested amount | $500,000,000 |
Initial Class A principal balance | $500,000,000 |
Series 2009-1 note interest rate | One-month LIBOR plus 2.00% per annum |
Scheduled start of controlled accumulation period | December 1, 2009 |
Expected final payment date | June 2010 distribution date |
Final maturity date | June 2012 distribution date |
Closing date | June 17, 2009 |
Excess interest sharing group designation | One |
| Principal sharing group designation | One |
TALF CONSIDERATIONS
The notes will constitute "eligible collateral" under TALF. The notes and the receivables will satisfy all applicable criteria for securities relating to "auto floorplan loans" under TALF, and the trust and the sponsor have certified to the FRBNY that they have satisfied, or have undertaken to satisfy, all applicable requirements under TALF, as set forth in the "Certification as to TALF Eligibility for Non-Mortgage-Backed ABS" attached as Annex C to this prospectus supplement. The applicable criteria and other requirements for "eligible collateral" are summarized below. The pricing date for the notes is expected to occur on or prior to the October TALF subscription date and the closing date for the notes is expected to be the October TALF settlement date.
As of the series cutoff date, the receivables have the following characteristics:
| · | all of the receivables are U.S. dollar-denominated, |
| · | at least 95% of the eligible receivables are auto floorplan loans (as defined in the TALF Rules) arising from revolving lines of credit used to finance dealers' inventories of cars and light trucks, and the receivables do not include exposures that are themselves cash or synthetic asset-backed securities, and the aggregate principal balance of ineligible receivables (as defined in the TALF Rules) does not exceed 5% of the total pool of eligible receivables underlying the notes, and |
| · | at least 95% of the aggregate principal balance of the receivables are both (a) originated by U.S.-organized entities and (b) made with U.S.-domiciled obligors. |
On the closing date, the notes will have the following characteristics:
| · | the notes will be U.S. dollar-denominated cash (not synthetic) asset-backed securities, |
| · | the notes will be rated in the highest long-term or short-term investment grade rating category by two or more eligible nationally recognized statistical rating organizations, or "NRSROs", and will not have a credit rating below the highest investment-grade rating category from any eligible NRSRO; "eligible nationally recognized statistical rating organization" in this context means Fitch, Moody's and S&P; these ratings will be obtained without the benefit of any third-party guarantee and will not be on review or watch for downgrade, |
| · | the notes do not bear interest payments that step up or step down to predetermined levels on specific dates. |
| · | the notes are not subject to an optional redemption other than a customary clean-up call (as defined in the TALF Rules), |
| · | the average life of the notes is less than or equal to five years, |
| · | the notes will be issued by a master trust and will be backed by a revolving pool of auto floorplan receivables; the notes will be issued to refinance existing auto floorplan ABS maturing in 2009 or the first quarter of 2010, and the aggregate amount of eligible ABS issued by the trust is no greater than the amount of the maturing ABS, and |
| · | the notes will be held in book-entry form by, and cleared through, DTC in the name of Cede & Co., as nominee of DTC and will have the following CUSIP number: Class A (CUSIP # 34528Q AH7). |
The following documents will be delivered to the FRBNY no later than four business days prior to the closing date (or such later date as may be specified by the FRBNY) or as set forth below:
| · | an attestation, in the form prescribed by the FRBNY, from a nationally recognized independent accounting firm that is registered with the Public Company Accounting Oversight Board, indicating that the sponsor's assertion that the notes are "eligible collateral" under TALF is fairly stated in all material respects, |
| · | a Certification as to TALF Eligibility for Non-Mortgage-Backed ABS, in the form attached as Annex C to this prospectus supplement, executed by the sponsor and the trust, |
| · | an undertaking, in the form prescribed by the FRBNY, executed by the sponsor, to indemnify the FRBNY and TALF LLC and their respective affiliates against losses they may suffer if the certifications in the Certification as to TALF Eligibility for Non-Mortgage-Backed ABS are untrue, and |
| · | on the closing date, the final credit rating letter for the notes from each eligible NRSRO rating the notes. |
The Certification as to TALF Eligibility for Non-Mortgage-Backed ABS requires the sponsor and the trust to notify the FRBNY and all registered holders of the notes upon a determination that certain statements relating to the eligibility of the notes are no longer correct or the occurrence of an amortization event.
This prospectus supplement does not describe all of the requirements of TALF or the associated risks of obtaining loans under TALF. If you want to obtain a loan under TALF, you should consult your financial and legal advisors regarding the advisability of obtaining a loan under TALF and the requirements of TALF, including whether you are an "eligible borrower" under TALF.
For more information about the risks associated with an investment in the notes as a result of the requirements of TALF, you should read "Risk Factors — The requirements of TALF could adversely affect the market value of your notes and/or limit your ability to resell your notes" in this prospectus supplement.
CERTIFICATION AS TO TALF ELIGIBILITY
FOR NON-MORTGAGE-BACKED ABS
The issuing entity and the sponsor (collectively, "we") hereby certify that:
| 1. | We have reviewed the terms and conditions of the Term Asset-Backed Securities Loan Facility ("TALF") provided by the Federal Reserve Bank of New York ("FRBNY"). Terms used below that are defined or explained in such terms and conditions, or in FAQs or other interpretative material issued by the FRBNY, shall have the meanings provided in such terms and conditions, FAQs or other interpretative material (such terms and conditions, FAQs or other interpretative material, the "TALF Rules"). |
| 2. | After due inquiry by our appropriate officers, agents and representatives, we have determined that the securities offered hereby designated as Class A (CUSIP # 34528Q AH7) constitute eligible collateral under TALF. In particular: |
| · | The securities are U.S. dollar-denominated cash (that is, not synthetic) asset-backed securities ("ABS") that have (or have been provided on a preliminary basis, expected to be confirmed no later than the closing date) a credit rating in the highest long-term or short-term investment-grade rating category from two or more eligible nationally recognized statistical rating organizations ("NRSROs") and do not have (including on a preliminary basis) a credit rating below the highest investment-grade rating category from an eligible NRSRO. Such ratings were obtained without the benefit of any third-party guarantee and are not on review or watch for downgrade. |
| · | The securities are cleared through The Depository Trust Company. |
| · | The securities do not bear interest payments that step up or step down to predetermined levels on specific dates. |
| · | The securities are not subject to an optional redemption other than a customary clean-up call (as defined in the TALF Rules). |
| · | The underlying credit exposures are auto floorplan loans (as defined in the TALF Rules) and do not include exposures that are themselves cash ABS or synthetic ABS. At least 95% of the dollar amount of the credit exposures underlying the securities are exposures that are both (a) originated by U.S.-organized entities or institutions or U.S. branches or agencies of foreign banks and (b) made to U.S.-domiciled obligors. The average life of the securities is less than or equal to five years. |
| · | The securities are being issued to refinance existing auto floorplan ABS maturing in 2009 or the first quarter of 2010 and have been issued in amounts no greater than the amount of the maturing ABS. |
| · | The other types of floorplan receivables underlying the securities do not exceed in the aggregate 5% of the total pool of receivables underlying the securities. |
| 3. | Pursuant to the TALF Rules, the independent accounting firm that is performing certain procedures for the benefit of the FRBNY in connection with this offering is required, in certain circumstances where fraud or illegal acts are suspected to have occurred, to make reports to the TALF Compliance fraud hotline. We hereby provide our consent to such accounting firm to make such reports and waive any client confidentiality provisions we would otherwise be entitled to under applicable law, rules of accountant professional responsibility or contract. |
| 4. | We understand that purchasers of the securities offered hereby that are affiliates of either the originators of assets that are securitized in this offering or the issuing entity or sponsor of this offering will not be able to use these securities as TALF collateral. |
| 5. | We hereby undertake that, until the maturity of the securities offered hereby, we will issue a press release and notify the FRBNY and all registered holders of the securities if we determine that the statements set forth in Item 2 above were not correct when made or have ceased to be correct. We will issue such press release and make such notification no later than 9:00 a.m. on the fourth business day after we make such determination; provided that we undertake to provide same business-day notice of any change in credit rating issued by any eligible NRSRO (including any change in the final rating compared to a preliminary rating) that occurs after pricing of this offering and on or prior to the closing date. We hereby undertake that we will promptly notify the FRBNY and all registered holders of the securities, in writing, of the occurrence of any early amortization event (as defined in the Master Loan and Security Agreement). Such notice will be delivered to the FRBNY's custodian at talf@bnymellon.com and to FRBNY at talfreports@ny.frb.org at the same time notice of the early amortization event is given to the trustee. In addition, the documents governing the securities include or, when executed, will include a provision requiring that the issuer notify the FRBNY and all registered holders of such event as contemplated in the preceding sentence, and the issuer will include the material details of any such event in periodic reports, if any, required to be delivered to registered holders pursuant to such documents. |
| 6. | We hereby undertake that, until the maturity of the securities offered hereby, we will provide, as promptly as practicable, upon the request of the FRBNY, copies of (i) the Governing Documents for the securities and (ii) the servicer and/or trustee reports or any other similar reports provided or made available to investors in connection with the securities issued. Governing Documents include the instruments and agreements (including any indenture, pooling and servicing agreement, trust agreement, servicing agreement, other similar agreement and other operative document), however denominated, pursuant to which the securities were issued, the assets backing such securities are serviced and collections on such assets are applied, remitted and distributed. |
| 7. | We hereby represent and warrant to the FRBNY and TALF LLC that (i) this prospectus and (ii) this prospectus, when taken as whole together with all information provided by us or on our behalf to any nationally recognized statistical rating organization in connection with this offering, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. |
| 8. | We acknowledge that the FRBNY and TALF LLC (in accepting the securities offered hereby as collateral), will rely upon this certification and will suffer damages if such certification is incorrect. The sponsor (and, if required by the terms of the form referred to below, the sponsor's direct or indirect ultimate parent) has executed and delivered to the FRBNY an undertaking, in the form prescribed by the FRBNY, under which the sponsor (and, if applicable, its direct or indirect ultimate parent) has agreed to indemnify FRBNY and TALF LLC and their respective affiliates against losses incurred or suffered by them arising out of any misrepresentation or breach of warranty made or to be performed by us in this certification. |
| 9. | We hereby jointly and severally agree that, should the securities be pledged to the FRBNY under the Master Loan and Security Agreement established under TALF or purchased by TALF LLC and at any time fail to constitute eligible collateral under TALF (provided that, solely for purposes of the foregoing, the only failure to satisfy the ratings eligibility criteria that shall be considered shall be a failure that arises as a result of the |
final rating on the securities, upon issuance, being lower than the required ratings for TALF eligibility, not any subsequent downgrades) under the TALF Rules as in effect at the time the securities are issued (a "Warranty Breach"), we shall permit (i) the United States Department of the Treasury ("Treasury") and its agents, consultants, contractors and advisors, (ii) the Special Inspector General of the Troubled Asset Relief Program, and (iii) the Comptroller General of the United States access to personnel and any books, papers, records or other data in our possession, custody or control to the extent relevant to ascertaining the cause and nature of the Warranty Breach, during normal business hours and upon reasonable notice to the issuing entity or the sponsor, as the case may be; provided that prior to disclosing any information pursuant to clause (i), (ii) or (iii), the Treasury, the Special Inspector General of the Troubled Asset Relief Program and the Comptroller General of the United States shall have agreed, with respect to documents obtained under this agreement in furtherance of their respective functions, to follow applicable law and regulation (and the applicable customary policies and procedures, including those for inspectors general) regarding the dissemination of confidential materials, including redacting confidential information from the public version of its reports, as appropriate, and soliciting input from the sponsor or the issuing entity, as applicable, as to information that should be afforded confidentiality. In making this agreement, we understand that Treasury has represented that it has been informed by the Special Inspector General of the Troubled Asset Relief Program and the Comptroller General of the United States that they, before making any request for access or information pursuant to their oversight and audit functions, will establish a protocol to avoid, to the extent reasonably possible, duplicative requests. Nothing in this paragraph shall be construed to limit the authority that the Special Inspector General of the Troubled Asset Relief Program or the Comptroller General of the United States have under law. |
Ford Motor Credit Company LLC, as sponsor | Ford Credit Floorplan Master Owner Trust A, as issuing entity | |||||
| By: | /s/ David M. Brandi | By: | Ford Motor Credit Company LLC, as administrator on behalf of the issuing entity | |||
Name: Title: | David M. Brandi Vice President and Assistant Treasurer | |||||
| By: | /s/ Marion B. Harris | |||||
Name: Title: | Marion B. Harris Assistant Treasurer | |||||
C-3
Prospectus
Ford Credit Floorplan Master Owner Trusts
Issuing Entities or Trusts
Asset Backed Notes
Ford Credit Floorplan Corporation Ford Credit Floorplan LLC Depositors | Ford Motor Credit Company LLC Sponsor and Servicer |
Before you purchase any notes, be sure you understand the structure and the risks. You should review carefully the risk factors beginning on page 10 of this prospectus and in the prospectus supplement.
The notes will be obligations of the issuing entity only and will not be obligations of or interests in the sponsor, the depositor or any of their affiliates.
This prospectus may be used to offer and sell the notes only if accompanied by the prospectus supplement for the issuing entity.
Each issuing entity:
• will be a master owner trust formed by an owner trustee and either or both of the depositors,
• may issue asset-backed notes in one or more series, each having one or more classes, and
• will have assets consisting of:
– a revolving pool of receivables originated in connection with the purchase and financing by motor vehicle dealers of their new and used car and truck inventory,
– collections on the receivables, and
– any other property identified in this prospectus and the prospectus supplement for a series.
The notes:
• will be asset-backed securities payable only from the assets of the trust,
• may benefit from one or more forms of series enhancement,
• will be debt obligations of the trust, and
• will be issued as part of a designated series that may include one or more classes of notes and credit enhancement.
The amount, price and terms of each offering of notes will be determined at the time of sale and will be described in the prospectus supplement accompanying this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined that this prospectus or the prospectus supplement is accurate or complete. Any representation to the contrary is a criminal offense.
___________________
The date of this prospectus is September 22, 2009
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This prospectus provides general information about the notes to be issued by the Ford Credit Floorplan Master Owner Trusts, some of which may not apply to notes issued by a particular trust, including your notes.
The prospectus supplement will describe the specific terms of your notes and the trust that will issue your notes, including:
| · | whether the trust will be newly formed or has previously issued other series that are or may be still outstanding, |
| · | information about the receivables owned and to be owned by the trust, |
| · | the timing and amount of interest and principal payments on each class of notes, |
| · | information about credit enhancement or other enhancement for each class of notes, |
| · | the credit ratings of each class of notes, and |
| · | the method for selling the notes to investors. |
You should rely solely on information provided or incorporated by reference in this prospectus and the prospectus supplement and any informational and computational material filed as part of the registration statement filed with the SEC for any particular offering of notes.
This prospectus begins with the following brief introductory sections:
| · | Summary — provides an overview of the terms of the notes. |
| · | Risk Factors — describes some of the risks of investing in the notes. |
The other sections of this prospectus contain more detailed descriptions of the notes and the structure of the trust that will issue the notes. Cross-references refer you to more detailed descriptions of a particular topic or related information elsewhere in this prospectus or the prospectus supplement. The Table of Contents on the preceding page contains references to key topics.
An index of defined terms is at the end of this prospectus.
This summary provides an overview of the most important terms of the notes. It does not contain all of the information that may be important to you. To understand fully the terms of the notes, you should read this prospectus and the prospectus supplement completely.
Transaction Parties
Sponsor, Servicer and Administrator of the Trust
Ford Motor Credit Company LLC, or "Ford Credit," is a Delaware limited liability company and a wholly-owned subsidiary of Ford Motor Company, or "Ford."
Depositor
The depositor, or "transferor," for each trust will be:
| · | Ford Credit Floorplan Corporation, or "FCF Corp," a Delaware corporation, |
| · | Ford Credit Floorplan LLC, or "FCF LLC," a Delaware limited liability company, or |
| · | both companies. |
Both depositors are special purpose entities wholly owned by Ford Credit.
The prospectus supplement will specify which of these two entities is the depositor for your trust or whether both entities are the depositors for your trust. If the prospectus supplement specifies that both entities are the depositors for your trust, all references in this prospectus to the "depositor" will mean each entity, as applicable.
Issuing Entity or Trust
Each issuing entity, or "trust," is or will be a Delaware statutory trust formed pursuant to a trust agreement between an owner trustee and the depositor. Initially, the depositor will be the beneficiary of the trust.
Each trust is or will be a master owner trust issuing its notes in series. At the time that a trust issues a series, the trust may be newly or previously formed and may have issued other series or classes of notes that remain outstanding. The prospectus supplement for your series will specify whether your trust has previously issued other series or classes that remain outstanding.
Indenture Trustee and Owner Trustee
The prospectus supplement will specify the indenture trustee for your series and the owner trustee of your trust. If so specified in the prospectus supplement, a trust may have a Delaware trustee in addition to the owner trustee. If a trust has both a Delaware trustee and an owner trustee, together the "co-trustees," all references in this prospectus to the "owner trustee" will mean each such trustee.
Back-up Servicer
The prospectus supplement will specify the back-up servicer, if any, for your series.
The Notes
Each series of notes will consist of one or more classes. The classes of a series may be issued at the same time or at different times. The notes of each series will be issued under an indenture supplement to an indenture between the trust and the indenture trustee. Some series or classes may not be offered by this prospectus. They may be retained by the depositor or offered, for example, in a private placement or other issuance exempt from registration with the Securities and Exchange Commission, or "SEC."
The terms of the notes will be described in the prospectus supplement, including, for each class of a series:
| · | the principal amount, |
| · | the interest rate or method for determining the interest rate, |
| · | the expected final payment date, |
| · | the final maturity date, |
| · | the rights to any series enhancement, and |
| · | the note ratings. |
The notes will be available only in book-entry form, except in limited circumstances described in this prospectus.
For a more detailed description of the features of the notes, you should read "Description of the Notes" in this prospectus and the prospectus supplement.
Payments on the Notes
Each note will entitle the holder to receive payments of interest and principal as described in the prospectus supplement. The timing and priority of payments among classes may differ and will be described in the prospectus supplement. The amount of principal collections allocated to a series or class will depend on whether such series or class is in a revolving period or an accumulation or amortization period.
Revolving Period. Each series of notes will begin with a "revolving period" during which the trust will not pay or accumulate principal for payment to the noteholders of that series. During the revolving period, the trust may pay available principal to the noteholders of other series that the trust has issued in the same principal sharing group or to the holders of the transferor interest. In limited circumstances described under "Description of the Notes—Application of Collections" in this prospectus, a trust may deposit available principal into the excess funding account for such trust. The revolving period for a series or class begins on its closing date and ends on the day before the start of an accumulation or amortization period for that series or class, although for some series, such as a variable funding note series, the revolving period may recommence at a later date if certain conditions are met.
Accumulation or Amortization Periods. Following the revolving period, each series or class of notes will have one or more of the following periods:
| · | a "controlled accumulation period" during which principal is accumulated in specified amounts each month and paid on an expected final payment date, |
| · | a "controlled amortization period" or "partial amortization period" during which principal is paid in fixed amounts on each distribution date, or |
| · | an "early accumulation period" or an "early amortization period" during which principal is accumulated or paid in varying amounts each month based on the amount of principal collections following an amortization event. |
For a more detailed description of the accumulation and amortization periods, you should read "Description of the Notes—Payments of Principal" in this prospectus and the prospectus supplement.
Amortization Events. An "amortization event" for any series of notes will include any of the "series amortization events" that are applicable to that series as described in the related prospectus supplement, together with the following "trust amortization events" that are applicable to all series issued by the same trust:
| · | the failure of the depositor to transfer to the trust receivables originated in connection with additional designated accounts or interests in other floorplan assets within 10 business days of when required under a transfer and servicing agreement, |
| · | the bankruptcy or dissolution of the depositor, Ford Credit or Ford, and |
| · | the trust becomes subject to regulation as an investment company under the Investment Company Act of 1940. |
For a more detailed description of the amortization events, you should read "Description of the Notes—Amortization Events" in this prospectus and the prospectus supplement.
Events of Default
The following events constitute "events of default" for each trust:
| · | failure to pay interest due on any note within the time period specified in the prospectus supplement, |
| · | failure to pay the principal of any note in full on its final maturity date, |
| · | failure to observe or perform any covenant or any agreement under the indenture and the failure continues unremedied for 60 days after written notice of the failure is given to the trust, |
| · | bankruptcy or dissolution of the trust, and |
| · | any other events of default for a series described in the prospectus supplement. |
If an event of default occurs because of the bankruptcy or dissolution of the trust, all of the notes will be automatically accelerated. If an event of default occurs for any other reason, the indenture trustee or the holders of at least a majority of the outstanding principal balance of the notes of the affected series may accelerate the notes of the affected series by declaring them to be immediately due and payable.
It is not an event of default if the principal of a note is not paid on its expected final payment date.
Events of Default Remedies
After an event of default and the acceleration of the notes of the affected series:
| · | funds on deposit in the collection account and any of the trust's bank accounts with respect to the affected series will be applied to pay principal and interest on those notes, |
| · | principal collections and interest collections allocated to the affected series will be applied monthly to pay principal and interest on those notes, and |
| · | the indenture trustee, acting on its own or at the direction of holders of a specified percentage of the principal balance of the accelerated notes of the affected series, will have a limited right to cause the trust to sell the portion of the trust assets allocable to the affected series and use the proceeds to pay principal and interest on those notes. |
For a more detailed description of the events of default, you should read "Description of the Indenture—Events of Default and Remedies" in this prospectus.
Credit Enhancement and Other Enhancement
The prospectus supplement will describe the credit enhancement or other enhancement, together referred to as "series enhancement," designed to protect noteholders against losses on the receivables and delays or defaults in payments on the notes. Series enhancement for a series or class may consist of one or more of the following:
| · | excess spread, |
| · | subordination of a portion of the transferor interest, |
| · | subordination of other series or classes of notes, |
| · | a reserve fund or spread account, |
| · | an accumulation period reserve account, |
| · | a cash collateral account or guaranty, |
| · | a letter of credit or other credit facility, |
| · | a surety bond or insurance policy, |
| · | a guaranteed investment contract or guaranteed rate agreement, or |
| · | an interest rate swap or cap. |
For a more detailed description of the series enhancements, you should read "Description of the Notes—Credit Enhancement and Other Enhancement" in this prospectus and the prospectus supplement.
Trust Assets
The primary assets of each trust will be a revolving pool of receivables originated in designated accounts selected from Ford Credit's U.S. portfolio of dealer floorplan accounts.
In addition to the receivables, the trust will own other assets related to the receivables, including:
| · | collections on the receivables, |
| · | funds and investments held in bank accounts of the trust, |
| · | security interests in the vehicles related to the receivables and in any non-vehicle related security, |
| · | an assignment of all rights related to the receivables under the relevant agreements entered into by Ford Credit or assigned to it by Ford, |
| · | all of the trust's rights under the transaction documents, and |
| · | any instruments or rights providing enhancement to a series or a class. |
In addition, each trust may own or acquire other floorplan assets, such as pooled participation receivables, purchased participation receivables, syndicated receivables, third-party purchased receivables and third-party financed in-transit receivables.
For a more detailed description of the trust assets, including other floorplan assets, you should read "Trust Portfolio" in this prospectus and the prospectus supplement.
Designated Accounts
The designated accounts giving rise to the receivables are revolving floorplan accounts established by Ford or Ford Credit with motor vehicle dealers pursuant to sales and service agreements or floorplan financing agreements, respectively.
At the time that an account is designated for a trust, the account must meet the eligibility criteria specified under "Description of the Agreements—Eligible Accounts" in this prospectus and any additional eligibility criteria for your trust specified in the prospectus supplement.
Once an account has been designated for a trust, all new eligible receivables and, at the option of the depositor, certain new ineligible receivables originated in that designated account will be transferred automatically to the trust, unless the account becomes an ineligible account or the account is otherwise redesignated from the trust. Accordingly, the total amount of receivables of each trust will fluctuate daily as new receivables are originated and are transferred to the trust and existing receivables are collected, charged off or adjusted.
Receivables
The receivables of each trust will consist primarily of:
| · | Ford's rights to receive payments from dealers for their purchase of Ford-manufactured new car and truck inventory, called "in-transit receivables," |
| · | Ford Credit's rights to receive adjustment fees from Ford for the in-transit receivables, and |
| · | Ford Credit's rights to receive payments from dealers for financing of the dealers' new and used car and truck inventory. |
Under a sale and assignment agreement, the in-transit receivables are sold by Ford to Ford Credit following shipment of the related vehicles. If Ford Credit is the dealer's finance source, upon delivery of the vehicles to the dealer, these in-transit receivables will be assigned by the trust to the depositor in exchange for the related new obligation of the dealer to repay Ford Credit under the dealer's floorplan financing agreement with Ford Credit. If a third party is the dealer's finance source, upon delivery of the vehicles to the dealer, Ford will receive payment on these third-party financed in-transit receivables from the finance source and will remit such payment to Ford Credit on the following business day.
For more information about the receivables, you should read "Sponsor and Servicer—Origination and Underwriting" and "Trust Portfolio" in this prospectus.
Transfer of Receivables
The receivables will be transferred to each trust in a two-step process. First, Ford Credit will sell the receivables to the depositor under a receivables purchase agreement. Second, the depositor will transfer the receivables to a trust under a transfer and servicing agreement.
Ford Credit will make representations about the receivables and the related designated accounts. If any representation proves to have been untrue when made and the breach has a
material adverse effect on any receivable, Ford Credit must repurchase the receivable unless it cures the breach in all material respects by the end of any applicable grace period.
The transfer and servicing agreement permits, and in some instances requires, the depositor to transfer to the trust receivables originated in additional designated accounts. Subject to limitations, the depositor may also redesignate eligible accounts from a trust, in which case all of the receivables originated in these accounts will be removed from the trust and transferred back to the depositor. In certain cases, the depositor may be required to redesignate ineligible accounts.
For more information about the transfer of receivables, you should read "Description of the Agreements—Additional Designated Accounts" and "—Redesignation of Accounts" in this prospectus.
Servicing of Receivables
Ford Credit will act as the "servicer" for the receivables. The servicer will be responsible for managing and collecting payments on the receivables for each trust. Ford Credit will also act as custodian and will maintain custody of the receivables files for each trust. Each trust will pay the servicer a fee for each series specified in the prospectus supplement.
The back-up servicer, if any, for the receivables will be specified in the prospectus supplement. The back-up servicer will confirm certain data on the monthly investor report and become the successor servicer if Ford Credit is terminated as servicer for any reason. Each trust will pay the back-up servicer a fee for each series specified in the prospectus supplement.
Collections and Allocations
For each trust, the servicer will receive collections on the receivables and, if applicable, on interests in other floorplan assets. The servicer will keep track of them as either interest collections or principal collections and will allocate these collections among each series of notes issued by the trust and the transferor interest. These allocated collections will be deposited by the servicer up to specified amounts into the collection account for each trust.
The servicer will allocate collections and defaulted receivables to each series based on varying investor percentages. The prospectus supplement will describe the investor percentages applicable to your series.
The interest in the trust assets not allocated to any series of notes is the "transferor interest." The principal amount of the transferor interest, called the "transferor amount," will fluctuate based on the principal amount of receivables and, if applicable, interests in other floorplan assets in the trust and on the amount of notes outstanding. The depositor may sell all or part of the transferor interest through the issuance of a supplemental interest.
Groups
The notes of a series may be included in one or more groups of series of notes issued by the same trust that share or reallocate interest collections, principal collections or both. The prospectus supplement will identify whether your series has been included in one or more of the following groups:
| · | an "excess interest sharing group" that shares excess interest collections, |
| · | an "interest reallocation group" that combines and reallocates interest collections and other similar amounts among the series in that group, or |
| · | a "principal sharing group" that shares excess principal collections. |
For more information about these groups, you should read "Description of the Notes—Groups" in this prospectus.
Optional Redemption or "Clean Up Call" Option
If so specified in the prospectus supplement relating to a series, the depositor will have the option to redeem the notes of any series by purchasing your series' portion of the trust assets at any time after the remaining outstanding principal balance of that series has been reduced to a certain percentage of the initial principal balance of the series. This option is referred to as a "clean up call." If applicable, the prospectus supplement will describe how the
clean up call option works, the purchase price for the trust assets and any conditions to its exercise by the depositor.
For more information about the clean up call option, you should read "Description of the Notes—Optional Redemption or "Clean Up Call" Option" in this prospectus.
Tax Status
The trust's tax counsel identified in the prospectus supplement will deliver its opinion that, for U.S. federal income tax purposes:
| · | the notes will be treated as debt, and |
| · | the trust will not be classified as an association or publicly traded partnership taxable as a corporation. |
For additional information concerning the application of U.S. federal, state and local tax laws, you should read "Material Federal Income Tax Consequences" in this prospectus and the prospectus supplement and "State and Local Tax Consequences" in this prospectus.
You should consider the following risk factors in deciding whether to purchase the notes.
| The absence of a secondary market for your notes could limit your ability to resell them | The absence of a secondary market for your notes could limit your ability to resell them. This means that if you want to sell any of your notes before they mature, you may be unable to find a buyer or, if you find a buyer, the selling price may be less than it would have been if a secondary market existed. The underwriters may assist in the resale of notes, but they are not required to do so. If a secondary market does develop, it might not continue or it might not be sufficiently liquid to allow you to resell any of your notes. If specified in the prospectus supplement for a series of notes, a trust may apply to list a series of notes on an exchange, such as the Luxembourg Stock Exchange. In such event, although the trust will apply to list the series on such exchange, there can be no assurance that the trust will be able to obtain the listing. |
| The assets of your trust are limited and are the only source of payments | The trusts will not have any assets or sources of funds other than the receivables and related property they own and any external series enhancement described in the prospectus supplement. Any series enhancement is limited. Your notes will not be insured or guaranteed by Ford Credit or any of its affiliates. If the assets of your trust allocable to your notes prove to be insufficient, you could incur losses on your notes. |
Subordination will cause some classes of notes to bear additional credit risk, which could result in losses on those notes | The rights of the holders of any class of notes to receive payments of interest and principal may be subordinated to one or more other classes of notes. If you hold notes of a subordinated class, you will bear more credit risk than holders of more senior classes of notes and you will incur losses, if any, prior to holders of more senior classes of notes. |
| Amortization events could result in accelerated payments on your notes | If an amortization event occurs, it may shorten the average term and date of final payment of your notes. You may not be able to reinvest the principal repaid to you earlier than expected at a rate of return that is equal to or greater than the rate of return on your notes. |
For more information about amortization events, you should read "Description of the Notes—Amortization Events" in this prospectus. |
A decline in Ford Credit's ability to generate new receivables or a decline in payment rates could result in accelerated payments on your notes | Each trust depends on Ford Credit for the generation of new receivables. The ability of Ford Credit to generate receivables, in turn, depends to a large extent on the sale and lease of vehicles manufactured and distributed by Ford, because the receivables owned by each trust will be originated primarily out of financing provided by Ford Credit to Ford-franchised dealers, and a dealer's willingness to purchase new vehicle inventory depends to a large extent on the sale and lease of its existing vehicle inventory. The ability of a dealer to sell or lease its vehicle inventory is directly affected by a variety of economic, market and social factors, including competition in the automobile industry. The ability of Ford Credit to generate receivables also depends on the number of dealers and the amount of vehicle inventory each dealer is willing to hold. A reduction in the number of dealers and the total amount of vehicle inventory held by the dealers will decrease the amount of receivables Ford Credit is able to generate. Examples of factors which could negatively impact Ford Credit's ability to generate new receivables are: |
· A decline in the manufacture and sale of Ford vehicles due to an economic downturn, a labor disruption, competitive pressure, changes in the preferences of buyers of cars and trucks, or any other factors, | |
· A change in Ford's vehicle marketing or purchase incentive programs, | |
· Seasonal fluctuations in the sale and leasing of vehicles, | |
· A decline in the number of dealer franchises, | |
· Changes in the terms offered by Ford Credit to dealers, including the interest rates charged by Ford Credit to dealers and/or the amounts of the credit lines offered by Ford Credit to dealers, | |
· Competition from banks or other financing sources available to dealers, or | |
· Government actions, including actions that encourage consumers to purchase certain types of vehicles. | |
| There can be no assurance that Ford Credit will continue to generate receivables at rates similar to those in past years or that payment rates will remain at levels similar to those in past years. A significant reduction in the rate at which Ford Credit generates new receivables or in the payment rate could lead to an amortization event, resulting in accelerated payments on your notes. |
| Ford's failure to pay adjustment fees or to remit amounts in respect of third-party financed in-transit receivables could result in reduced or delayed payments on your notes | Ford will be obligated to pay adjustment fees to the servicer with respect to any in-transit receivables held by the trust and to remit to the servicer principal collections that it receives from the third-party finance sources in respect of third-party financed in-transit receivables. Each adjustment fee will be calculated based on an agreed upon rate and the number of days elapsed during the "in-transit period," which is generally the period from shipment to delivery of the vehicle, and will be treated by the trust as interest collections on the related receivable. Failure by Ford to pay adjustment fees or to remit principal collections in respect of third-party financed in-transit receivables for any reason could result in shortfalls in amounts available to pay your notes and could result in reduced or delayed payments on your notes. |
| Ford's termination of dealer financial assistance could result in losses on your notes | Ford has periodically instituted programs under which it has provided financial assistance to Ford-franchised dealers. This financial assistance includes incentive programs, marketing support programs, interest reimbursement programs, Ford's purchase of new, current model year vehicles in the dealer's inventory upon the termination of a dealership and capital contributions to development dealers. The termination of such financial assistance could have an adverse effect on certain dealers or on the market value of the finance vehicles. If Ford was unable to provide, or elected to terminate, this financial assistance, losses on the receivables could increase and you could incur losses on your notes. |
For more information about the financial assistance provided by Ford, you should read "Sponsor and Servicer—Servicing and Dealer Relations—Relationship with Ford and Other Manufacturers" in this prospectus. | |
| Failure by Ford Credit, the depositor or the servicer to honor their repurchase obligations could result in accelerated, reduced or delayed payments on your notes | Ford Credit, the depositor and the servicer generally are not obligated to make any payments on your notes or the receivables. However, if the representations made with respect to a receivable or a designated account prove to be untrue or incorrect, Ford Credit may be required to repurchase the affected receivable from the depositor, and the depositor may be required to repurchase the affected receivable from the trust. Ford Credit, as servicer, may also be required to repurchase receivables from a trust if it breaches its servicing obligations with respect to those receivables. If Ford Credit, the depositor or the servicer fails to repurchase the affected receivable, an amortization event will occur, and you could experience accelerated, reduced or delayed payments on your notes. |
Ford Credit's ability to change the terms of the receivables could result in accelerated, reduced or delayed payments on your notes | Ford Credit has the ability to change the terms of the receivables, including the applicable interest rates or adjustment fees and the payment terms. Ford Credit's ability to change the terms of the receivables could result in accelerated, reduced, or delayed payments on your notes. |
Bankruptcy of Ford Credit or the depositor could result in accelerated, reduced or delayed payments on your notes | Ford Credit will treat the transfer of receivables to the depositor as a sale, and the depositor will treat the transfer of the receivables to a trust as a valid transfer. However, if Ford Credit or the depositor were to become subject to bankruptcy proceedings, a bankruptcy court could conclude that the sale of receivables to the depositor or the transfer of receivables to the trust should be recharacterized as a pledge of the receivables to secure a borrowing of Ford Credit or the depositor, as applicable, or that the assets and liabilities of the depositor or the trust should be consolidated with those of Ford Credit or the depositor, respectively, for bankruptcy purposes. In either case, the trust could experience delays in receiving collections on the receivables and you could experience delayed payments on your notes. In addition, if the bankruptcy court were to conclude that the transfers of the receivables were pledges or that the assets of the depositor should be consolidated, some liens on the property of Ford Credit or the depositor arising before new receivables come into existence could have priority over the trust's interest in the receivables. Those liens include a tax or government lien or other liens permitted under law without the consent of Ford Credit or the depositor. In such an event, the trust could receive less than the full amount of collections and you could experience reduced or delayed payments on your notes. Alternatively, if a bankruptcy or similar event occurs with respect to Ford Credit or the depositor, an amortization event will occur, and you could experience accelerated payments on your notes. |
For more information about the possible consequences of a bankruptcy of Ford Credit or the depositor, you should read "Some Important Legal Issues Relating to the Receivables—Matters Relating to Bankruptcy" in this prospectus. | |
The servicer's commingling of collections it holds with its own funds could result in reduced or delayed payments on your notes | The servicer will be required to remit collections on the receivables to the related trust within two business days or on a monthly basis, depending on its credit ratings. Prior to remittance, the servicer may commingle collections it receives on the receivables with its own funds and may invest such collections at its own risk and for its own benefit. If the servicer does not pay these amounts to your trust by the related deposit date (which could occur if the servicer were to become subject to bankruptcy proceedings), you could experience reduced or delayed payments on your notes. |
Delays in collecting payments could occur if Ford Credit ceases to be the servicer | If Ford Credit resigns or is terminated as servicer, the processing of payments on the receivables and information relating to collections could be delayed, which could result in delayed payments on your notes. Ford Credit may be removed as servicer if it defaults on its servicing obligations or upon the bankruptcy of Ford Credit. |
| For more details about the servicer defaults, you should read "Description of the Agreements—Servicer Default" in this prospectus. |
Loss of security in the underlying vehicle and the junior status of a trust's interest in non-vehicle related security could result in reduced or delayed payments on your notes | Each trust will initially have a first priority security interest in the underlying vehicle securing each receivable transferred to such trust. However, in certain limited circumstances, this security interest may terminate, or the underlying vehicle may become subject to a competing security interest, prior to the repayment of the related receivable, which could result in reduced or delayed payments on your notes. |
In particular, at the time that a dealer sells or leases a financed vehicle, the trust's security interest in the vehicle will generally terminate, regardless of whether the dealer repays the related receivable. Consequently, if a dealer sells or leases a vehicle and fails to repay the related receivable, which is known as a "sale out of trust," your trust will no longer be able to look to that vehicle as security for the receivable. Alternatively, from time to time a dealer may deliver a financed vehicle to a third party, such as a chassis upfitter or converter, that is also a vehicle dealer or otherwise a seller of similar vehicles, at which time the underlying vehicle could potentially be sold out of trust by such third party or become subject to a competing security interest of the finance source for such third party. Consequently, if the underlying vehicle is sold out of trust or any such finance source enforces its security interest and seizes the underlying vehicle, your trust may not be able to look to that vehicle as security for the receivable, although the dealer would remain liable to repay the receivable. | |
Each trust will also have junior security interests in any non-vehicle related security granted by some of the dealers in order to secure the receivables transferred to the trust. These security interests, however, will be subordinate to the senior interests of Ford Credit in the non-vehicle related security. Accordingly, any non-vehicle related security owned by your trust may not be available to support your notes if the dealer sells or leases the underlying vehicle and fails to pay the related receivable, which could result in reduced or delayed payments on your notes. | |
| For more information about the security interests in vehicles and non-vehicle related security, you should read "Sponsor and Servicer—Origination and Underwriting—Security Interests in Vehicles and Non-Vehicle Related Security" and "Description of the Agreements—Sale and Transfer of Assets" in this prospectus. |
The addition or removal of trust assets may decrease the credit quality of the trust assets securing your notes and could result in accelerated, reduced or delayed payments on your notes | The depositor may periodically choose, or be obligated, to transfer to your trust receivables originated in additional designated accounts. While each additional designated account must be an eligible account at the time of its designation, additional designated accounts may not be of the same credit quality as the accounts currently designated for your trust. For example, additional designated accounts may have been originated or acquired by Ford Credit using credit criteria different from those applied by Ford Credit to the initial accounts designated for your trust. Conversely, the depositor may periodically choose to redesignate accounts from your trust and remove the related receivables. Consequently, we cannot assure you that the accounts designated for your trust at any time in the future will have the same credit quality as those currently designated for your trust. If the addition or removal of trust assets reduces the credit quality of the trust assets, it will increase the likelihood of accelerated, reduced or delayed payments on your notes. |
Issuance of additional series by your trust could affect the timing and amounts of the payments on your notes | Each trust may issue additional series of notes from time to time. Your trust may issue series with terms that are different from your series without your consent. The terms of a new series could affect the timing and amounts of payments on any other outstanding series. In addition, some actions require the consent of a majority of the noteholders of all outstanding series. The interests of the holders of any new series of notes issued by your trust could be different from your interests. |
For more information about the issuance of new series, you should read "Description of the Notes—New Issuances" in this prospectus. | |
| Failure to pay principal on a note will not constitute an event of default until its final maturity date | Your trust does not have an obligation to pay a specified amount of principal on any note on any date other than its outstanding amount on its final maturity date. Failure to pay principal on a note will not constitute an event of default until its final maturity date. |
| You may have limited or no ability to control actions under the indenture | Your remedies will be limited if an event of default with respect to your series or class of notes occurs. Under the indenture for each trust, noteholders holding a specified percentage of the outstanding principal balance of notes of a series or class or all the notes issued by the trust may take actions, or may direct the indenture trustee to take various actions, following an event of default, including accelerating the notes. The actions taken or not taken by the controlling noteholders may be contrary to the actions that you determine to be in your best interest. In the case of votes by series, the most senior class of notes will generally be substantially larger than the subordinate classes of notes. The holders of the most senior class of notes will therefore generally have the ability to control the actions to be taken, and these actions may be contrary to the interests of the holders of the subordinate classes of notes. |
| For more details about your rights upon an event of default, you should read "Description of the Indenture—Events of Default and Remedies" in this prospectus. |
Ford Credit was established in 1959 to provide financing for Ford vehicles and support Ford dealers. Ford Credit is a Delaware limited liability company and an indirect, wholly owned subsidiary of Ford. Ford was incorporated in Delaware in 1919 and is one of the world's largest producers of cars and trucks combined. Ford's automotive vehicle brands include Ford, Lincoln, Mercury and Volvo.
Ford Credit provides a wide variety of automotive financing products to and through automotive dealers throughout the world. Ford Credit's primary financing products are:
| · | Retail financing — purchasing retail installment sale contracts and retail leases from dealers, and offering financing to commercial customers, primarily vehicle leasing companies and fleet purchasers, to lease or purchase vehicle fleets, |
| · | Wholesale financing — making loans to dealers to finance the purchase of vehicle inventory, also known as floorplan financing, and |
| · | Other financing — making loans to dealers for working capital, improvements to dealership facilities, and to purchase and finance dealership real estate. |
Ford Credit also services the finance receivables and leases it originates and purchases, makes loans to Ford affiliates, purchases certain receivables of Ford and its subsidiaries and provides insurance services related to its financing programs.
Ford Credit earns its revenue primarily from:
| · | payments on retail installment sale contracts and leases that it purchases, |
| · | interest supplements and other support payments from Ford and affiliated companies, and |
| · | payments made under wholesale and other dealer loan financing programs. |
Ford Credit will be the sponsor of the securitization transaction in which your notes will be issued. Ford Credit will be the servicer of the receivables and the securitization transaction and the administrator for each trust. Ford Credit will be responsible for structuring each securitization transaction and selecting the transaction parties. Ford Credit will be responsible for paying the costs of forming each trust, legal fees of certain transaction parties, rating agency fees for rating the notes and other transaction costs.
Ford Credit and its subsidiaries provide floorplan and capital financing to automobile dealers throughout the world and provide credit to these dealers' customers by purchasing retail installment sale contracts and leases from dealers. Most of the dealers are privately owned and financed and are Ford-franchised dealers that sell or lease vehicles manufactured by Ford under the Ford, Lincoln and Mercury brands. A substantial majority of all new vehicles financed by Ford Credit are manufactured by Ford.
Under the Ford Credit brand name, Ford Credit provides financing services to and through dealers of Ford, Lincoln and Mercury brand vehicles and non-Ford vehicles also sold by these dealers and their affiliates. Ford Credit also provides similar financial services under the Volvo brand name to and through Volvo dealers.
Ford Credit establishes floorplan finance accounts with dealers in the ordinary course of its business and will select the accounts to be designated to each trust from its U.S. dealer floorplan portfolio. The
criteria used by Ford Credit to select the accounts and related receivables for securitization will be described in the prospectus supplement.
Ford Credit will make representations about the receivables and the related designated accounts. If any representation proves to have been untrue when made and the breach has a material adverse effect on any receivable, Ford Credit must repurchase the receivable from the depositor, unless it cures the breach in all material respects by the end of any applicable grace period.
For more information about the representations and repurchase obligations, you should read "Description of the Agreements—Representations of Ford Credit and the Depositor" in this prospectus.
Ford Credit has been securitizing its assets since 1988.
Ford Credit's securitization programs are diversified among asset classes and markets. Ford Credit sponsors securitization programs for retail installment sale contracts, dealer floorplan receivables and operating leases and the related vehicles. Ford Credit regularly participates in a number of international securitization markets, including the United States, Canada, Europe (including the United Kingdom, Germany, Spain, Italy and France) and Mexico and has participated in the securitization markets in Japan and Australia.
In the U.S., Ford Credit sponsors a number of securitization and structured financing programs in which it sells receivables in the public markets and in private transactions. In addition to selling receivables to trusts making registered public offerings, Ford Credit regularly sells retail installment sale contracts to a large number of multi-seller asset-backed commercial paper conduits and other purchasers, to special purpose entities that sell asset-backed securities to Ford Credit's single-seller asset-backed commercial paper program and to third party securitizers on a whole loan basis.
Ford Credit securitizes its assets because the market for securitization of financial assets provides the company with a lower cost source of funding than other alternatives, diversifies funding, among different markets and investors, and provides additional liquidity. Ford Credit meets a significant portion of its funding requirements through securitizations for these reasons.
For more information about Ford Credit's securitization programs and its funding strategy, please read Ford Credit's Annual Report on Form 10-K which is available on Ford Credit's website at www.fordcredit.com.
Ford Credit has had a publicly registered securitization program for dealer floorplan receivables since 1992. Ford Credit's first master trust was established that year and issued seven series of publicly registered asset-backed securities through 1997. Ford Credit's current master trust was established in 2001 and has previously issued six series of publicly registered asset-backed term notes, one of which remains outstanding, seven series of privately placed asset-backed term notes and variable funding notes, four of which remain outstanding, and one series of extendible asset-backed commercial paper issued to qualified institutional buyers, which is no longer outstanding. If your trust has other series or classes of notes outstanding at the time it issues your notes, the prospectus supplement for your series will list the main characteristics of those other series in an annex to the prospectus supplement. The asset-backed securities offered by the prospectus supplement accompanying this prospectus are part of this program. None of the asset-backed securities offered in this program have experienced any losses or events of default and Ford Credit has never taken any action out of the ordinary in any transaction to prevent such an occurrence.
Ford Credit will service the receivables and the securitization transactions. Ford Credit has been the servicer for its U.S. dealer floorplan securitization program since its inception. None of the asset-backed securities in this program have experienced any losses or events of default and there are no instances of material noncompliance with the servicing criteria in this program.
Ford Credit will be responsible for all servicing functions for the receivables. As servicer of the receivables, Ford Credit will collect and record payments, make any required adjustments to the receivables, monitor dealer payments and dealer inventories, evaluate increases in credit limits and maintain books and records relating to the accounts and receivables.
Ford Credit will service the receivables in accordance with the customary policies and procedures that it uses in servicing dealer floorplan receivables for its own account or for others. Ford Credit has comprehensive web-based servicing policies and procedures that ensure common servicing practices are used for all receivables. These policies and procedures are described below under "—Servicing and Dealer Relations." Ford Credit's servicing and collections systems maintain records for all accounts and receivables, track application of payments and maintain relevant information on the dealers and account status.
As servicer of the securitization transaction, Ford Credit will prepare monthly servicing reports, provide payment instructions to the indenture trustee and prepare annual compliance reports.
For a more detailed discussion of the servicing activities to be performed by the servicer in respect of the securitization transaction, you should read "Description of the Agreements—Collection and Other Servicing Procedures" in this prospectus.
Ford Credit is the primary source of financing for Ford-franchised dealers that sell vehicles manufactured by Ford under the Ford, Lincoln and Mercury brands. Using the same credit criteria, Ford Credit also provides financing for dealers of vehicles built by non-Ford manufacturers and those built by Ford-owned or -associated manufacturers.
Ford Credit categorizes the financed vehicles as new or used for a variety of purposes, including setting the applicable financing terms and establishing the amount of credit lines. Ford Credit permits certain previously titled vehicles to be treated as new vehicles for the purpose of setting the applicable financing terms. The term "new vehicles" means those vehicles that are:
| · | currently untitled vehicles, or |
| · | previously titled vehicles, including vehicles previously subject to Ford Credit's retail lease programs, purchased by a dealer at market prices established by Ford Credit or at an auction conducted by Ford, referred to as "program vehicles". |
The term "used vehicles" means those vehicles other than new vehicles. The categorization of new and used vehicles may change in the future based on Ford Credit's policies and procedures.
Origination of Receivables. Each receivable represents the right to receive payments in connection with a dealer's financing of a vehicle for its inventory. A dealer's inventory may include new and used cars and light-, medium- and heavy-duty trucks, including vans and other vehicle classifications, such as sport utility vehicles and crossover vehicles. Medium- and heavy-duty trucks are typically delivered in the form of incomplete vehicles or chassis cabs which may be sent by the dealer to a third-party upfitter or converter for completion. A dealer's inventory may also include vehicles intended for fleet sales, generally defined as sales of ten or more vehicles to a corporation or governmental agency, and
demonstrator and service loaner vehicles. Each receivable is secured by the related vehicle and, in some cases, may be secured by non-vehicle related security, such as vehicle parts inventory, equipment, fixtures, service accounts, real estate and/or personal guarantees of the related dealer, as described below under "—Security Interests in Vehicles and Non-Vehicle Related Security."
Under the sales and service agreements between dealers and Ford-owned and -associated manufacturers and distributors, each dealer is legally obligated to purchase the vehicle when the vehicle is released by the manufacturer or distributor for shipment to the dealer and must pay for a vehicle either at that time or at the time when the vehicle is delivered to the dealer. In the case of new vehicles manufactured by Ford under the Ford, Lincoln and Mercury brands, payment is due when the vehicle is delivered, and during the period from the date of vehicle shipment to the date of delivery to the dealer (or, if later, the date when the invoice price is finalized), referred to as the "in-transit period," Ford retains an interest in the vehicle securing the dealer's obligation to pay Ford. Each of these payment obligations, together with Ford's security interest in the related vehicle and Ford's rights under its sales and service agreement with the dealer, is sold by Ford to Ford Credit under a sale and assignment agreement at a price equal to 100% of the invoice price of the vehicle. Ford also agrees to pay Ford Credit an "adjustment fee" on the invoice price based on an agreed upon rate (currently, the prime rate plus 0.30% per annum) and the number of days elapsed during the in-transit period. Upon delivery of the vehicle to the dealer, the dealer's financing source will make an advance to Ford on behalf of the dealer equal to 100% of the invoice price, and Ford will transfer such amount to Ford Credit pursuant to the sale and assignment agreement.
A dealer's financing source may be Ford Credit or another financial institution. If Ford Credit is the financing source, the dealer's obligation to pay Ford for the purchased vehicle will be exchanged at the time of vehicle delivery for the related new obligation of the dealer to repay Ford Credit under the dealer's floorplan financing agreement with Ford Credit.
Ford Credit generally finances 100% of the wholesale invoice price of new vehicles, which includes destination charges, a dealer holdback amount (currently approximately 3% of the manufacturer's suggested retail price) and other miscellaneous amounts. The holdback amount is later returned to the dealer by the manufacturer, but the dealer is required to repay the entire wholesale invoice price for the vehicle notwithstanding the obligation of the manufacturer to return the holdback amount. Sometimes, the wholesale invoice price for new model vehicles may not be finalized until after vehicle delivery or may be updated after vehicle delivery to reflect a change in the vehicle purchase program (i.e., retail vs. fleet purchase programs) or other pricing changes. In this case, the related receivable will be adjusted as necessary to reflect the final invoice price as determined by Ford and the related dealer. The amount advanced by Ford Credit for new vehicles is generally equal to:
| · | the wholesale invoice price, in the case of untitled vehicles, or |
| · | the purchase price (including buyer fees, transportation costs and/or auction fees, if applicable), in the case of program vehicles. |
For used vehicles, Ford Credit generally finances up to 100% of each used vehicle's wholesale book value as shown in selected trade publications such as the Kelley Blue Book®.
Credit Lines. Ford Credit extends floorplan financing under established credit lines. A dealer may have multiple credit lines, such as new, used, program vehicle, medium and heavy truck, fleet, demonstrator or service loaner credit lines. The typical dealer will have new, used and program vehicle credit lines for its car and light truck inventory. Medium and heavy truck and fleet credit lines are established for dealers who engage in significant medium and heavy truck or fleet business, although dealers without medium and heavy truck or fleet credit lines may also have medium and heavy truck or fleet inventory on their new or used credit lines. A dealer may also have a demonstrator or a service loaner credit line, although dealers without such credit lines may have demonstrator vehicles or service loaner vehicles on their new or used credit lines.
Ford Credit also extends floorplan financing to development dealers, which are dealers in which Ford holds an equity interest, as described below under "—Servicing and Dealer Relations—Relationship with Ford and Other Manufacturers." The credit underwriting process, payment terms and conditions and dealer monitoring procedures for all types of credit lines, as well as for development dealers, are generally the same as those for new and used credit lines and for other dealers.
Credit Underwriting Process; Dealer Risk Rating. A dealer wishing to establish a credit line with Ford Credit must submit a request for financing to Ford Credit. The dealer credit department will review the prospective dealer's credit information, financial statements and bank references and evaluate the dealer's marketing capabilities, financing resources and credit requirements. The dealer credit department then prepares a written recommendation approving or denying the request for financing. Credit lines over a designated amount require senior management or credit committee approval. Ford Credit generally applies the same underwriting standards to both Ford-franchised dealers and dealers franchised by other manufacturers.
Ford Credit uses a proprietary model to assign each dealer a risk rating. Ford Credit assigns a risk rating to each dealer at the inception of the dealer relationship. Ford Credit performs a credit review of each dealer at least annually and adjusts the dealer's risk rating, if necessary. In creating this model, Ford Credit used its historical performance data to identify key financial indicators that it considers to be the most significant in predicting a dealer's ability to meet financial obligations. These indicators include various objective and subjective factors, such as:
| · | capitalization and leverage, |
| · | liquidity and cash flow, |
| · | profitability, and |
| · | credit history with Ford Credit and others. |
Dealers are assigned a risk rating based on a graduated scale ranging in degree from a low risk borrower to a defaulted borrower. For purposes of this prospectus and the prospectus supplement, these dealer risk ratings are described in the following groups:
| Group I | – | Dealers in this group demonstrate strong to superior financial metrics. |
| Group II | – | Dealers in this group demonstrate fair to favorable financial metrics. |
| Group III | – | Dealers in this group demonstrate marginal to weak financial metrics. |
| Group IV | – | Dealers in this group demonstrate poor financial metrics and may be classified as uncollectible. |
The size of a credit line that Ford Credit offers a dealer is based on the dealer's historical sales rate. In the case of a new dealer, the credit line is based on the dealer's expected sales rate. The amount of a dealer's credit line is reviewed periodically. Currently, a new vehicle credit line is generally an amount sufficient to finance a 60-day supply of new vehicles. As more fully described below under "—Dealer Monitoring," the credit lines are guidelines, not absolute limits, and Ford Credit typically permits dealers to exceed their credit lines for business reasons, including for seasonal variations in sales patterns.
Once a dealer begins to floorplan vehicles from a particular manufacturer or distributor, Ford Credit generally will finance all purchases of vehicles by the dealer from the manufacturer or distributor, subject to the dealer's credit line. However, credit lines do not represent commitments, and Ford Credit may limit or cancel a credit line if, in its judgment, a dealer's inventory is significantly overstocked or a dealer is
experiencing financial difficulties. In these circumstances, referred to as a "suspended" condition, Ford Credit may approve additional financing on a vehicle-by-vehicle basis.
Security Interests in Vehicles and Non-Vehicle Related Security. The floorplan financing arrangements grant Ford Credit a security interest in the related vehicles and in any non-vehicle related security, such as vehicle parts inventory, equipment, fixtures, service accounts, realty and/or personal guarantees of the dealer. In its other lending activities, Ford Credit may make capital loans, real estate loans or other advances to dealers or their parent holding companies or other affiliates that are also secured by a security interest in the vehicles and in any non-vehicle related security.
The security interest in a vehicle generally terminates at the time the vehicle is sold or leased by the dealer, although the security interest continues in the proceeds from that sale or lease that are identifiable. Therefore, if a dealer sells or leases a vehicle and subsequently fails to pay the related receivable, Ford Credit does not have any recourse to the vehicle and must seek payment from the dealer or from the proceeds of any non-vehicle related security. In addition, if a dealer delivers a financed vehicle to a third party, such as a chassis upfitter or converter that is also a vehicle dealer or otherwise a seller of similar vehicles, the underlying vehicle could potentially be sold out of trust by such third party or become subject to a competing security interest of the finance source for such third party. In such event, Ford Credit may not have any recourse to the vehicle and would have to seek payment from the dealer.
Ford Credit services its dealer floorplan accounts in accordance with policies and procedures established by Ford Credit. These policies and procedures may change from time to time.
Payment Terms. Under Ford Credit's current floorplan financing agreements, dealers are charged interest on each credit line at a floating rate that can change as often as daily. The standard interest rate for dealers is currently based on the "prime rate" designated from time to time by selected financial institutions, currently subject to a floor of 4.00%, although certain dealers may have a different base rate. The base rate for each credit line is generally increased by a spread that may be established for certain credit lines based on a variety of factors, including the dealer's vehicle brand and whether the credit line is for new or used vehicles. Dealers also pay flat charges established by Ford Credit to cover miscellaneous costs. The interest rate for dealers is not reduced by any rebates that may be earned by dealers under Ford Credit incentive programs that are in effect from time to time. Any such rebates are solely the obligation of Ford Credit and are paid to dealers separately from the interest charges paid by dealers. Under the sale and assignment agreement between Ford and Ford Credit, the adjustment fee rate applicable to the in-transit period is currently based on the prime rate plus a spread of 0.30% per annum.
Ford Credit may demand payment of interest and principal on a floorplan loan at any time. However, unless Ford Credit terminates the credit line or the dealer has been classified as "status," as described below under "—Dealer Status," Ford Credit generally bills dealers for interest and other non-principal charges monthly in arrears. A statement setting forth billing and related account information for the preceding calendar month is prepared and made available to the dealers electronically by the first calendar day of each month. Interest and other non-principal charges are generally due on such first day, although Ford Credit will typically allow a grace period of up to 15 days for processing. Adjustment fees are paid by Ford monthly in arrears for the number of days in the calendar month that the related vehicles were in-transit to the dealers.
Dealers are required to pay principal in full promptly upon the sale or lease of the related vehicle to a customer, but Ford Credit will typically allow up to a five day grace period for processing. For new vehicles, the dealer is obligated to repay to Ford Credit the entire wholesale invoice price of the vehicle, notwithstanding the amount of any holdback or incentive payments that may be owing to the dealer by the manufacturer. In addition, Ford Credit may require a dealer to make periodic principal payments, or "curtailments," prior to the sale or lease of the related vehicle. Ford Credit typically does not require low risk dealers to make curtailment payments, but typically does require higher risk dealers to make monthly
curtailment payments of 10% of the outstanding balance of a financed vehicle, starting a specified period of time after the related vehicle is financed, which is generally over a year for new vehicles, and less than a year for program vehicles and used vehicles. In certain limited circumstances, Ford Credit may agree with a dealer to delay the payment of principal for a specified period following the sale or lease of the vehicle. Ford Credit may allow payment to be delayed up to 30 days (which may be renewed for additional 30-day periods with specified credit approval) if the dealer sells vehicles to organizations, such as large corporations or governmental agencies, whose payable systems delay payment to the dealer. Also, Ford Credit may allow payment to be delayed up to 15 days if competitive practices, such as spot-delivery promotions in which the dealer permits the customer to take delivery of the vehicle before a finance source is in place, make it necessary for the dealer to accept delayed payment. In each case, the dealer remains obligated to pay the full amount of outstanding principal, even if the buyer fails to pay, and Ford Credit receives additional security from the dealer in the form of an assignment of proceeds or a security interest in all of the dealer's assets. These arrangements are subject to increased monitoring and specified credit limits.
Each dealer generally has the option to enter into a cash management agreement with Ford Credit under which the dealer may, subject to certain limitations, effectively prepay its wholesale obligations and thereby reduce its interest charges. If a dealer elects to make a payment under a cash management agreement, the dealer's interest charges will be offset, in whole or in part, by the amount of interest that accrues on that payment. A dealer also may request a new advance of amounts previously paid under the cash management agreement. Any such request is treated as a new advance to the dealer and the amount payable by the dealer in respect of its receivables will increase by the amount of the new advance.
Insurance Coverage. Under Ford Credit's floorplan financing agreements, comprehensive coverage for the financed vehicles is included with the financing. Ford Credit has obtained this insurance from The American Road Insurance Company, an affiliated insurance company. The American Road Insurance Company is currently rated "B+" by A.M. Best. The insurance coverage is subject to deductibles of $250 per vehicle and $3,000 per occurrence.
Collision coverage for the financed vehicles is generally covered by a dealer's garage-keepers policy or by collision coverage obtained by the dealer. Ford Credit offers collision coverage through The American Road Insurance Company, and approximately half of the dealers purchase this coverage from them.
Relationship with Ford and Other Manufacturers. Ford has historically provided financial assistance to Ford-franchised dealers from time to time, but in many instances has no obligation to do so. This assistance may take the form of guarantees and agreements to repurchase inventory, equity investments or capital loans, marketing support and financial and sales incentives. Ford may also provide incentives or other support to encourage dealers to set aside a portion of their inventory for use as service loaners for customers whose vehicles are in for service or repairs.
In addition, under the sales and service agreement between Ford and each Ford-franchised dealer, if the dealer terminates its Ford franchise, Ford commits to repurchase new vehicles in inventory at the wholesale price of the vehicles, less certain specified amounts, such as holdback. Ford only repurchases current year models that are new, undamaged and untitled. If the dealer terminates its Ford dealership voluntarily, Ford also agrees to repurchase the dealer's vehicle parts inventory at specified percentages of the invoice price.
These types of assistance are provided by Ford for the benefit of its dealers but they do not relieve the dealers of any of their obligations to Ford Credit. Many of these types of assistance are provided at the option of Ford, and Ford may terminate these programs at any time. If Ford is unable or elects not to provide assistance, Ford Credit could experience increased losses on its U.S. dealer floorplan portfolio.
Some of the manufacturers and distributors other than Ford have similar commitments to repurchase unsold vehicles in the dealer's inventory upon termination of the dealer franchise, whether voluntary or
otherwise, and/or provide similar financial assistance to their dealers. If these manufacturers or distributors are unable or elect not to provide assistance, Ford Credit could experience increased losses on its U.S. dealer floorplan portfolio.
Ford holds an equity interest in a small number of dealerships, known as "development dealers." While Ford may provide capital periodically at its option, the obligations of development dealers are not guaranteed by Ford, and Ford has no obligation to provide further capital or funding to the development dealer after its initial capital contribution.
Dealer Monitoring. Ford Credit periodically monitors the level of each floorplan credit line. However, new vehicle credit lines are treated as guidelines and not absolute limits, so Ford Credit typically permits dealers to exceed these credit lines for business reasons. For example, before a seasonal peak, a dealer may purchase more vehicles than its credit lines would otherwise permit. Alternatively, if a dealer has slow inventory turnover, its credit lines may be reduced until a portion of its vehicle inventory is liquidated. Also, notwithstanding a dealer's credit line, Ford Credit may implement systematic procedures so that approval is required for any advances to the dealer. Ford Credit reviews exception reports for dealers that have exceeded their credit lines by a specified percentage on a weekly basis. Ford Credit purposely sets credit lines at a level lower than the anticipated peak level of usage. Ford Credit typically increases its dealer monitoring procedures whenever a dealer exceeds its credit line. Ford Credit may evaluate a dealer's financial position and may classify the dealer as "suspended," as described above under "—Origination and Underwriting—Credit Underwriting Process; Dealer Risk Rating."
Ford Credit electronically monitors dealer payment activities and trends on a daily, weekly, monthly, quarterly and annual basis. This monitoring includes daily payment verifications and monthly analysis of payoffs, aged inventory, over credit line and delinquency reports. Dealers that exhibit adverse payment patterns or trends may be placed on monthly or quarterly early warning or watch reports, which result in higher levels of monitoring and review. Ford Credit has the option to require the payoff, or curtailment, of all or a portion of the principal amount relating to any vehicle at any time.
Ford Credit reviews dealer financial statements and audits dealer inventory and dealer sales records regularly to evaluate the dealer's financial position and to verify that the dealer is in possession of the financed vehicles and is promptly paying each receivable following the sale or lease of the vehicle. Dealers submit financial statements monthly. Ford Credit performs a credit review for each dealer at least annually, and more frequently reviews certain dealers based upon the dealer's risk rating and total exposure. Ford Credit engages a third-party vendor to perform on-site wholesale inventory audits. The vendor performs the audits in accordance with established Ford Credit policies and procedures and provides the results of the audits to Ford Credit, and Ford Credit regularly monitors the vendor for compliance with the policies and procedures. The frequency of on-site vehicle inventory audits depends on the dealer's risk rating. Under Ford Credit's current policies, on-site audits of vehicle inventories for low risk dealers are conducted only as circumstances warrant, but audits of higher-risk dealers are conducted at least once a year and as often as once every four weeks, and additional audits may be conducted at any time as circumstances warrant. Overall, a greater number of physical audits are performed on the higher-risk dealers than the minimum number of audits required by Ford Credit's procedures. The dealer receives no advance notice of any visit. In every audit, the auditor reviews the dealer's sales records and conducts a physical inventory of the financed vehicles using handheld devices and vehicle identification number scanners which immediately reconcile vehicle inventories with Ford Credit's records of financed vehicles. An audit cannot be completed or closed, and the auditors generally cannot leave the dealership, until all financed vehicles are properly accounted for or payment is received for the related receivables. Audits are intended to identify instances where a dealer has sold or leased a vehicle without repaying the related receivable within the applicable grace period for payment. Dealer repayments are monitored daily to detect adverse deviations from typical payment patterns, in which case appropriate actions are taken, such as contacting the dealer, conducting an audit or classifying the dealer as "suspended" or "status."
Dealer Status. In some circumstances, Ford Credit will classify a dealer as "status." These circumstances include the dealer's failure to make principal or interest payments when due or within the applicable grace period under the floorplan financing agreement or the occurrence of bankruptcy or similar events relating to the dealer. Ford Credit works with dealers to resolve the circumstances that led to the status classification.
When the dealer account has been declared status, Ford Credit may take any of the following actions to mitigate loss exposure:
| · | suspend the dealer's credit lines, |
| · | place Ford Credit employees or hired security personnel at the dealership, |
| · | hold the vehicle keys and titles, |
| · | require certified funds for all sold vehicles, or |
| · | initiate legal actions to exercise rights under the financing agreements. |
If a loss appears imminent, Ford Credit performs an analysis of its security, attempts to liquidate all remaining collateral, enforces any third party guarantees and charges off any remaining amounts as uncollectible. Liquidation of the dealer's inventory may be accomplished in one or more of the following manners:
| · | a voluntary liquidation in which the dealer reduces its inventory through ordinary course sales to retail customers, |
| · | a forced liquidation in which the dealer's inventory is transferred to another dealer, returned to the manufacturer or auctioned, or |
| · | a voluntary surrender of the dealer's inventory. |
The depositor of receivables to each trust will be Ford Credit Floorplan Corporation or Ford Credit Floorplan LLC or both. The prospectus supplement will specify which of the two entities will be the depositor for the related trust or whether both entities will be depositors for the trust.
Ford Credit Floorplan Corporation, or "FCF Corp," is a wholly-owned subsidiary of Ford Credit. It was incorporated under the laws of the State of Delaware on February 13, 1991. Ford Credit Floorplan LLC, or "FCF LLC," is a wholly-owned subsidiary of Ford Credit. It was organized under the laws of the State of Delaware on August 18, 1997.
FCF Corp and FCF LLC were formed for limited purposes, including purchasing receivables and interests in other floorplan assets from Ford Credit and others, transferring these receivables and interests in other floorplan assets to the trusts and to other third parties and engaging in any activities incidental or necessary to accomplish these purposes. In addition to purchasing receivables and interests in other floorplan assets in connection with the issuance of the notes by the trusts, the depositor may purchase receivables and interests in other floorplan assets from Ford Credit and others in connection with other funding transactions.
The depositor may designate one or more of its affiliates as a subsequent depositor of receivables or interests in other floorplan assets to the trust. So long as the conditions described under "Description of
the Agreements—Subsequent Depositors" in this prospectus are met, the designation of a subsequent depositor will not be subject to your consent.
The depositor will make representations about the receivables and the related designated accounts. If any representation proves to have been untrue when made and the breach has a material adverse effect on any receivable, the depositor must repurchase the receivable from the trust, unless it cures the breach in all material respects by the end of any applicable grace period. In addition, the depositor must enforce Ford Credit's repurchase obligation described under "Sponsor and Servicer—General Securitization Experience" in this prospectus.
For more information about the representations and repurchase obligations, you should read "Description of the Agreements—Representations of Ford Credit and the Depositor" in this prospectus.
The depositor will be responsible for filing any required income tax or franchise tax returns for the trust and for filing and maintaining the effectiveness of the financing statements that perfect the trust's security interest in the receivables and other trust assets.
The depositor will pay the administrator's fees and indemnify the underwriters against certain civil liabilities as described under "Plan of Distribution" in this prospectus. If either the owner trustee or the indenture trustee resigns or is removed, the depositor will reimburse any expenses associated with its replacement.
Each trust will be a Delaware statutory trust formed under a trust agreement between the depositor and the owner trustee. The principal offices of each trust will be located in care of its owner trustee as specified in the prospectus supplement.
Each trust will be structured to permit it to periodically issue notes in series. Each series of notes will consist of one or more classes, which may be issued at the same time or at different times. If your trust has other series or classes of notes outstanding at the time it issues your notes, the prospectus supplement for your series will list the main characteristics of those other series in an annex to the prospectus supplement.
The purposes of each trust will be to:
| · | acquire and hold the receivables and other trust assets, |
| · | issue the notes and pledge the trust assets to the indenture trustee to secure payments on the notes, |
| · | make payments on the notes, and |
| · | engage in any other related activities to accomplish these purposes. |
The trusts may not engage in any other activities and may not invest in any other securities or make loans to any person.
The trust agreement for a trust may be amended:
| · | without the consent of the related noteholders, if the depositor (a) provides an officer's certificate that the amendment will not materially and adversely affect the interest of the noteholders and (b) delivers a required federal income tax opinion; |
| · | without the consent of the related noteholders, if (a) the depositor provides an officer's certificate that the amendment is necessary to enable the trust to avoid the imposition of certain state or local taxes and (b) the rating agency condition is satisfied for each rating agency then rating any series or class; and |
| · | with the consent of the holders of a majority of the outstanding amount of the related notes (unless the amendment relates to the amount or timing of distributions or the percentage of noteholders required to consent to such an amendment, in which case all noteholders must consent), if the depositor delivers a required federal income tax opinion. |
A "required federal income tax opinion" means, with respect to a trust as to any action, an opinion of counsel to the effect that, for U.S. federal income tax purposes (a) the action will not cause the notes to fail to qualify as debt, and (b) the action will not cause that trust to be treated as an association (or publicly traded partnership) taxable as a corporation.
Unless otherwise specified in any prospectus supplement, "rating agency condition" means, for any action or request and any outstanding series or class of notes rated by a rating agency, that (a) for Standard & Poor's and DBRS, Inc., such rating agency has provided confirmation that such action or request will not result in a reduction or withdrawal of its then-current rating of any such series or class of notes and (b) for Moody's and Fitch, the depositor has provided at least ten business days' notice and such rating agency has not provided notice that such action or request will result in such rating agency reducing or withdrawing its then-current rating of any such series or class of notes.
No trust may dissolve, merge with or sell its assets to any other entity, impair the first priority lien of the indenture trustee in the trust assets or take any other action that would harm the noteholders, except as permitted by the transaction documents.
The depositor and the servicer will indemnify each trust for liabilities and damages caused by any acts or omissions of such person in connection with the transfer and servicing agreement. The administrator will indemnify each trust for losses, liabilities, expenses or damages caused by any violation by the depositor or the trust of federal or state securities laws in connection with the offering and sale of the notes or any breach by the depositor of any of the provisions of the transfer and servicing agreement.
Ford Credit will act as administrator of each trust under an administration agreement. The administrator will provide the notices on behalf of each trust and perform all administrative obligations of each trust under its transaction documents. These obligations include obtaining and preserving the trust's qualification to do business where necessary, notifying the rating agencies and the indenture trustee of events of default, preparing and filing reports with the SEC, monitoring the trust's obligations as to the satisfaction and discharge of the indenture, causing the servicer to comply with its duties and obligations under the transfer and servicing agreement, causing the indenture trustee to notify the noteholders of the redemption of their notes, and preparing and filing the documents necessary to release property from the lien of the indenture. The servicer will pay, from its servicing compensation, the administrator's fees and will reimburse the administrator for any of its liabilities and out-of-pocket expenses related to its performance under the administration agreement.
The identity of the owner trustee and the Delaware trustee, together the "co-trustees," and a description of its experience as an owner trustee or Delaware trustee, as applicable, in securitization transactions will be included in the prospectus supplement.
The owner trustee's main duties will be:
| · | creating the trust by filing a certificate of trust with the Delaware Secretary of State, along with the Delaware trustee, |
| · | maintaining an account for the benefit of the holders of the transferor interest, and |
| · | executing documents on behalf of the trust. |
The Delaware trustee's duties are limited to:
| · | creating the trust by filing a certificate of trust with the Delaware Secretary of State, along with the owner trustee, |
| · | accepting legal process served on the trust in the state of Delaware, and |
| · | executing and filing any certificates with the Delaware Secretary of State required pursuant to the Delaware Statutory Trust Statute. |
Neither co-trustee will be liable for any action, omission or error in judgment unless it constitutes willful misconduct or negligence or in the case of the inaccuracy of any representation contained in the trust agreement made by such co-trustee. Neither co-trustee will be required to exercise any of its rights or powers under the transaction documents or to institute, conduct or defend any litigation on behalf of the trust at the direction of the holders of the transferor interest unless such holders have offered indemnity or security satisfactory to such co-trustee to protect it against the costs and liabilities that such co-trustee may incur.
The depositor and the servicer will indemnify each co-trustee for all liabilities and damages arising out of any acts or omissions of the depositor or the servicer, as applicable, in connection with the transfer and servicing agreement or the acceptance or performance by such co-trustee of the trust duties contained in the transaction documents, unless such liability arises from the willful misconduct or negligence of such co-trustee. The administrator will indemnify each co-trustee for losses, liabilities, expenses or damages caused by any violation by the depositor or the trust of federal or state securities laws in connection with the offering and sale of the notes or any breach by the depositor of any of the provisions of the transfer and servicing agreement.
If Ford Credit is the servicer, it will pay, from its servicing compensation, the fees of the co-trustees and will reimburse the co-trustees for expenses incurred in performing their duties. The fees of the co-trustees will be separately agreed between the depositor and each co-trustee. If the fees and expenses of the co-trustees are not paid by the servicer or the administrator, they will be paid by the trust in accordance with the priority of payments described in the prospectus supplement for your series.
Either co-trustee may resign at any time by notifying the administrator. The administrator may remove either or both co-trustees if, at any time, either co-trustee ceases to be eligible in accordance with the trust agreement, fails to resign after written request from the administrator to resign, or is legally unable to act or becomes subject to a bankruptcy or similar event. Upon the resignation or removal of a co-trustee, the administrator will appoint a successor. No resignation or removal of either co-trustee will be effective until a successor owner trustee or Delaware trustee, as appropriate, is in place.
The trust agreement will terminate upon the earlier of a date specified in the trust agreement, and at the option of the depositor, the day after all rights of all series of notes to receive payments from the trust has terminated. Upon termination of the trust agreement, any remaining trust assets will be distributed to the depositor and the trust will be terminated.
The identity of the indenture trustee and a description of its experience as an indenture trustee in securitization transactions will be included in the prospectus supplement.
The indenture trustee's main duties will be:
| · | holding the security interest in the receivables and other trust assets on behalf of the noteholders, |
| · | administering the trust's bank accounts, |
| · | enforcing remedies following an event of default and acceleration of the notes, |
| · | acting as note registrar to maintain a record of noteholders and provide for the registration, transfer, exchange and replacement of notes, and |
| · | acting as note paying agent to make payments from the trust's bank accounts to the noteholders and others. |
If the indenture trustee knows of an amortization event, event of default or servicer default, it must provide written notice to all noteholders and the rating agencies within 30 days after it occurs or, if later, within 10 business days after the indenture trustee receives notice or obtains actual knowledge of such event. If the notes have been accelerated, the indenture trustee may institute proceedings for the collection of amounts payable on the notes and enforce any judgment obtained, institute foreclosure proceedings and, in certain circumstances, sell the receivables.
The indenture trustee's standard of care changes depending on whether an event of default or amortization event has occurred. Prior to an event of default or an amortization event, the indenture trustee will not be liable for any action, omission or error in judgment unless it constitutes willful misconduct, negligence or bad faith by the indenture trustee. Following the occurrence and continuation of an event of default or an amortization event, the indenture trustee must exercise its rights and powers under the indenture using the same degree of care and skill that a prudent person would use under the circumstances in conducting his or her own affairs.
For a description of the rights and duties of the indenture trustee after an event of default and upon acceleration of the notes, you should read "Description of Indenture—Events of Default and Remedies" in this prospectus.
The indenture trustee must mail an annual report to the noteholders if certain events specified in the Trust Indenture Act of 1939 have occurred during the preceding calendar year, including a change to the indenture trustee's eligibility under the Trust Indenture Act, a conflict of interest specified in the Trust Indenture Act, a release of trust assets from the lien of the indenture and any action taken by the indenture trustee that has a material adverse effect on the notes.
The indenture trustee will not be required to exercise any of its rights or powers, expend or risk its own funds or otherwise incur financial liability in the performance of its duties if it has reasonable grounds to believe that repayment of such funds or adequate indemnity is not reasonably assured to it. The indenture trustee also will not be required to take action in response to requests or directions of the noteholders unless the noteholders have offered reasonable security or indemnity satisfactory to it from the costs and expenses that the indenture trustee may incur in complying with the request or direction.
The depositor and the servicer will indemnify the indenture trustee for all liabilities and damages arising out of any acts or omissions of the depositor or the servicer, as applicable, in connection with the transfer and servicing agreement or the acceptance or performance by the indenture trustee of the trust
duties contained in the transaction documents, unless caused by the willful misconduct or negligence of the indenture trustee. The administrator will indemnify the indenture trustee for losses, liabilities, expenses or damages caused by any violation by the depositor or the trust of federal or state securities laws in connection with the offering and sale of the notes or any breach by the depositor of any of the provisions of the transfer and servicing agreement.
If Ford Credit is the servicer, it will pay, from its servicing compensation, the fees of the indenture trustee and will reimburse the indenture trustee for expenses incurred in performing its duties. The fees of the indenture trustee will be separately agreed between the depositor and the indenture trustee. If the fees and expenses of the indenture trustee are not paid by the servicer or the administrator, they will be paid by the trust in accordance with the priority of payments described in the prospectus supplement for your series.
Under the Trust Indenture Act, the indenture trustee may be deemed to have a conflict of interest and be required to resign as indenture trustee for any class of notes if a default occurs under the indenture and such class is subordinated to other classes. In these circumstances, separate successor indenture trustees will be appointed for each such class of notes and may provide for rights of senior noteholders to consent or direct actions by the indenture trustee that are different from those of subordinated noteholders.
The indenture trustee may resign at any time by notifying the trust. Noteholders representing a majority of the outstanding amount of the notes may remove the indenture trustee at any time and for any reason by notifying the indenture trustee. The servicer must remove the indenture trustee if the indenture trustee fails to satisfy the requirements of the Trust Indenture Act, becomes subject to a bankruptcy or dissolution or otherwise becomes legally unable to act. Upon the resignation or removal of the indenture trustee, the administrator will appoint a successor. No resignation or removal of the indenture trustee for any series of notes will become effective until a successor indenture trustee is in place.
The identity of the back-up servicer, if any, and a description of its experience as a back-up servicer in securitization transactions will be included in the prospectus supplement.
The back-up servicer, if any, will conduct annual on-site visits of the servicer's servicing operations, receive monthly receivables data and confirm certain information on the monthly investor reports. If Ford Credit is terminated or resigns as servicer, the back-up servicer will be the successor servicer.
The back-up servicer may not resign except:
| · | upon a determination that performance of its duties is no longer permissible under applicable law and there is no reasonable action that the back-up servicer could take to make the performance of its duties permissible under applicable law, or |
| · | with the consent of the servicer. |
The servicer may terminate the back-up servicer if it breaches its representations, warranties and covenants, fails to perform its obligations, ceases to have a long-term, unsecured debt rating of at least "BBB-" from S&P or "Baa3" from Moody's, or becomes subject to a bankruptcy or dissolution. Upon the resignation or removal of the back-up servicer, the servicer will appoint a successor back-up servicer that satisfies the eligibility criteria for a successor servicer under the transfer and servicing agreement. No resignation or removal of the back-up servicer will become effective until a successor back-up servicer is in place.
The servicer may also terminate the back-up servicer, without being required to appoint a successor back-up servicer, if the long-term, unsecured debt ratings of the servicer are at least "BBB-" from S&P and "Baa3" from Moody's.
The net proceeds from the sale of each series of notes issued by a trust will be used by the depositor for that trust to purchase the receivables and any interests in other floorplan assets from Ford Credit and for any other purposes specified in the prospectus supplement. Ford Credit will use any proceeds that it receives for its general corporate purposes and for any other purposes specified in the prospectus supplement.
The primary assets of each trust will be a revolving pool of receivables transferred to it by the depositor under the related transfer and servicing agreement. The revolving pool of receivables constituting each trust portfolio will be those originated in designated accounts selected from Ford Credit's U.S. portfolio of dealer floorplan accounts. Only the receivables relating to designated accounts will be sold by Ford Credit to the depositor, and then transferred by the depositor to the related trust. The designated accounts themselves will not be sold or transferred to any trust. Ford Credit will continue to own the designated accounts and will remain obligated under the terms of the dealer financing agreement to make all related advances. When an account is designated for a trust, all eligible receivables in that account at that time will be transferred to the trust. Afterwards, all new eligible receivables originated in that designated account will be transferred automatically to the trust, unless the account becomes an ineligible account or the account is otherwise redesignated from the trust. The depositor also has the option to transfer ineligible receivables originated in designated accounts to the trust. From time to time, a designated account may have an outstanding balance of zero. This may occur for a number of reasons, such as if the dealer has been newly set up for financing, if the dealer only has in-transit financing and has not ordered new vehicles recently, or if the financing for the dealer is in the process of being terminated. Any dealer may have one or more accounts, depending on how many dealership locations the dealer has, the number of credit lines (e.g., new, used, medium and heavy truck or fleet credit lines) or both. The depositor may choose to designate all or only a portion of the accounts relating to any dealer to a trust. The pool of receivables originated in the designated accounts for a trust and, if applicable, any interests in other floorplan assets owned by that trust are referred to as the "trust portfolio."
At the time a dealer's floorplan financing account is designated for a trust, the account must meet specified eligibility criteria in order to be an eligible account. If an account subsequently fails to satisfy any of the eligibility criteria, it must be redesignated by the depositor. The criteria for eligible accounts may differ among the trusts. The criteria applicable to each trust are set forth under "Description of the Agreements—Eligible Accounts" in this prospectus, and the prospectus supplement for your notes will specify whether any additional eligibility criteria will be applicable for your trust's designated accounts.
The composition of the accounts designated for a trust may change over time. The transfer and servicing agreement will permit the depositor to transfer receivables originated under additional eligible accounts, and will require the depositor to transfer receivables originated under additional eligible accounts in certain situations. The transfer and servicing agreement also will permit the depositor to redesignate eligible accounts, the receivables of which will be removed from the trust in limited circumstances, and will require the depositor to redesignate ineligible accounts.
For more information about the designation and redesignation of accounts, you should read "Description of the Agreements—Additional Designated Accounts" and "—Redesignation of Accounts" in this prospectus.
In addition to receivables originated in designated accounts, the trust portfolio may include "other floorplan assets," such as:
| · | participation interests in pooled participation receivables, |
| · | participation interests in purchased participation receivables, |
| · | syndicated receivables, |
| · | third-party financed in-transit receivables, and |
| · | third-party purchased receivables. |
Ford Credit may directly or indirectly deposit receivables in connection with various dealer floorplan financing arrangements originated by Ford Credit or one of its affiliates into pools of assets existing outside the trust. The receivables included in these pools are called "pooled participation receivables." Typically, the ownership interest in one of these pools of assets will be in the form of an undivided participation interest issued under agreements similar to those governing the issuance of your notes. Any such participation interest will entitle its holder to various percentages of the collections generated from the related pool of assets. These participation interests may have their own credit enhancement or other enhancement, amortization events, servicing obligations and servicer defaults, all of which are likely to be enforceable by a separate trustee under the agreements governing the issuance of these interests and may be different from those specified in this prospectus. The rights and remedies of the trust as the holder of participation interests in pooled participation receivables and, therefore, the noteholders will be subject to those governing agreements.
Ford Credit may participate in dealer floorplan financing arrangements originated by a third party by purchasing a participation interest under a separate participation agreement between Ford Credit and the third party. The receivables originated under these arrangements are called "purchased participation receivables." In some cases, purchased participation receivables may be serviced by a person other than Ford Credit. The rights and remedies of the trust as the holder of participation interests in purchased participation receivables and, therefore, the noteholders will be subject to the participation agreements between the third party and Ford Credit. Participation interests in receivables that constitute pooled participation receivables or purchased participation receivables are referred to as "interests in other floorplan assets."
Ford Credit may be a member of a syndicate of lenders under a dealer floorplan financing arrangement. The receivables originated by Ford Credit under these arrangements are called "syndicated receivables." Typically each syndicate lender, including Ford Credit, will make advances in connection with the related dealer's purchase of specified vehicles. In some cases, syndicated receivables may be serviced by a person other than Ford Credit. The rights and remedies of the trust as the holder of syndicated receivables and, therefore, the noteholders will be subject to the agreements governing the syndicated financing arrangement.
Ford Credit may acquire the right to receive payments from dealers in connection with their purchases of Ford-manufactured or -distributed new vehicles and for which the financing source is other than Ford Credit. These rights are called "third-party financed in-transit receivables." Third-party financed in-transit receivables will be assigned by Ford to Ford Credit and are payable generally upon delivery of the vehicles to the dealers. As a result, third-party financed in-transit receivables will not be
exchanged for any new obligations and the payment of such receivables will be included as part of principal collections.
Ford Credit may purchase receivables that are originated by a third-party under a dealer floorplan financing agreement. These receivables are called "third-party purchased receivables."
The prospectus supplement will specify whether any other floorplan assets are included in your trust. If the prospectus supplement does not specify that any other floorplan assets are included in your trust, your trust may nonetheless acquire them at a later date without your consent so long as the rating agency condition is satisfied for each rating agency then rating any series or class. If any other floorplan assets are added to your trust after your series was issued, the agreements governing the issuance of your notes may be amended to set forth any requirements and conditions that will apply to those other floorplan assets.
Any other floorplan assets included in a trust will be transferred to it by the depositor under the transfer and servicing agreement. The depositor, in turn, may have acquired these assets from Ford Credit or one of its affiliates. As in the case of receivables originated under designated accounts, any other floorplan assets may be limited to related dealers located in specified states. After an interest in one of the other floorplan assets is included in the trust, the transfer and servicing agreement may permit or require the depositor to transfer additional interests in the same or similar types of other floorplan assets to the trust and may permit or require the depositor to remove from the trust interests in these other floorplan assets.
The prospectus supplement will contain additional information regarding the receivables and related accounts designated to your trust as of a specified statistical calculation date, including:
| · | the number and total outstanding principal balance of the receivables, |
| · | the average outstanding balance of principal receivables per designated account, |
| · | the weighted average spread over the prime rate charged on the receivables, |
| · | the total outstanding balance of ineligible receivables, |
| · | the geographic concentration of the receivables, and |
| · | the distribution of account balances. |
If a trust was previously formed, Ford Credit will provide static pool information about the pool of receivables held by the trust in the prospectus supplement.
The notes of each trust will be issued in series. Each series will represent an obligation of the issuing trust only and not of any other trust. Although the following discussion summarizes the terms generally applicable to the notes of any series that any trust may issue, all references in this discussion to "notes," "noteholders" and "series" relate only to those notes issued by a single trust. Accordingly, you should read this discussion and the provisions that it summarizes only in the context of that single trust.
The notes will be secured by and paid from the assets of the trust. Each series will be allocated a portion of collections from the assets in the trust based on the applicable investor percentages for that series. The investor percentages for a series will be based on that series' invested amount.
Each series may consist of one or more classes. Some classes may be senior to other classes.
Each class of a series will evidence the right to receive a specified portion of each distribution of principal or interest or both. Each class of a series may differ from other classes in some aspects, including, for each class of a series:
| · | the principal amount, |
| · | the interest rate or method for determining the interest rate, |
| · | the expected final payment date, |
| · | the final maturity date, |
| · | the rights to any series enhancement, and |
| · | the note ratings. |
The trust will make interest and principal payments on each distribution date to the holders of record of the notes of a series on the day before the distribution date (or, if definitive notes are issued, the last day of the preceding month). Interest will be distributed to noteholders in the amounts, for the periods and on the dates specified in the prospectus supplement.
During the revolving period, the invested amount of a series or class will remain constant except under limited circumstances described below under "—Investor Default Amount and Reallocated Principal Collections." The pool balance of a trust, however, will vary each day as new principal receivables or principal interests in other floorplan assets are created and others are paid, charged off or otherwise adjusted. In addition, the pool balance will increase when receivables originated in additional accounts or interests in other floorplan assets are added to the trust and will decrease when receivables or interests in other floorplan assets are removed from the trust.
The depositor initially will own the "transferor interest" for a trust, which represents the right to receive all cash flows from the trust assets not required to make payments on the notes or to enhancement providers. The holder of the transferor interest, subject to limitations, will have the right to the applicable transferor percentage of collections from the assets in the trust portfolio. The "transferor amount" for a trust will be that portion of the transferor interest that equals the excess of the adjusted pool balance over the sum of the adjusted invested amounts of all series issued by that trust. As a result, the transferor amount will generally increase to reflect reductions in the invested amount when a series or class is amortizing and will also change as the pool balance changes. The transferor amount will also be reduced as the result of new issuances, as described below under "—New Issuances."
If the servicer adjusts the amount of any receivable because of a rebate to the dealer, billing error or certain other non-cash items, the pool balance and the transferor amount will be increased or decreased by the amount of the adjustment. If any decrease in the transferor amount would cause it to fall below the trust's required transferor amount for the prior determination date (after giving effect to the allocations, distributions, withdrawals and deposits to be made on the next distribution date), the depositor will be required to deposit the deficiency into the excess funding account on the day of the adjustment. These deposits are referred to as "adjustment payments."
The "required transferor amount" for any trust on any date is the sum of:
| · | the sum of the products for all series issued by that trust of (a) the excess of the required pool percentages for each of these series over 100%, times (b) their initial invested amounts or, in the case of a series of variable funding notes, their invested amount as of the end of their most recent revolving period, plus |
| · | if applicable, the sum of the required subordinated amounts for each series issued by that trust. |
The indenture provides that the depositor may cause the trust to issue a new series of notes under an indenture supplement without the consent of any noteholder of any other series previously issued by the trust. Each series may have different terms and enhancements than any other series. The trust may offer any series under a prospectus or other disclosure document in offerings under this prospectus or a similar prospectus or in transactions either registered under the Securities Act of 1933 or exempt from registration, directly, through one or more other underwriters, initial purchasers or placement agents, in fixed-price offerings or in negotiated transactions or otherwise.
A new series may be issued only if the conditions provided in the indenture are satisfied. The depositor may cause the trust to issue new series of notes by notifying the owner trustee, the indenture trustee, the servicer and each rating agency at least two business days in advance of the date upon which the new issuance will occur.
The owner trustee will execute, and the indenture trustee will authenticate, the notes of any series only upon delivery to them of the following items, or satisfaction of the following conditions, among others:
| · | an indenture supplement specifying the principal terms of the new series, |
| · | a required federal income tax opinion, |
| · | an enhancement agreement for any enhancement required by the related indenture supplement executed by the depositor and the series enhancer, |
| · | the rating agency condition is satisfied for each rating agency then rating any series or class, |
| · | a certificate of an authorized officer of the depositor to the effect that such officer reasonably believes the new issuance will not have a "significant adverse effect" on any outstanding series or class, meaning that it will not cause an amortization event or an event of default to occur, or materially and adversely effect the amount or timing of payments to be made to the noteholders of any outstanding series or class, and |
| · | after giving effect to the new issuance, the net adjusted pool balance exceeds the required pool balance. |
To the extent set forth in the prospectus supplement, additional notes of the same series may be issued subject to the conditions set forth in the applicable indenture supplement.
Each class of notes will pay interest on the dates and at the interest rate specified in the prospectus supplement. Interest will be paid monthly, quarterly, semiannually or on other scheduled dates over the life of the notes. The interest rate on any class of notes may be a fixed or floating rate as specified in the
prospectus supplement. If a class of notes bears interest at a floating or variable rate, the prospectus supplement will describe how that rate is calculated.
Each class of fixed rate notes will bear interest at the interest rate specified in the prospectus supplement. Interest on fixed rate notes typically will be computed on the basis of a 360-day year of twelve 30-day months, but the prospectus supplement may specify a different day count basis.
Each class of floating rate notes will bear interest determined by reference to the London Inter-Bank Offering Rate, or "LIBOR," plus a spread as specified in the prospectus supplement. The trust will appoint a calculation agent to calculate the interest rate on each class of floating rate notes. The prospectus supplement will identify the calculation agent for any floating rate notes. All determinations of interest by the calculation agent, in the absence of manifest error, will be conclusive and binding on the noteholders. Interest on floating rate notes typically will be computed based on the actual number of days in an interest period and a year of 360 days, but the prospectus supplement may specify a different day count basis.
For each series of notes and each related class, interest will accrue from its closing date on the applicable principal balance at the applicable interest rate. Interest on the notes generally will be paid to noteholders on the distribution dates specified in the prospectus supplement.
Interest payments or deposits on any distribution date will be paid out of:
| · | interest collections allocated to the invested amount during the preceding collection period or periods, except that if the notes are included in an interest reallocation group, interest collections that would otherwise be allocated to them will instead be combined with those of other series in the group and made available for all series in that interest reallocation group, |
| · | net investment earnings on any funds held in the trust's bank accounts, |
| · | any excess interest collections from other series in the same excess interest sharing group, and |
| · | any series enhancement, including amounts available from any swap counterparty, to the extent described in the prospectus supplement, |
If interest payments will be made less frequently than monthly, an interest funding account may be established to accumulate the required interest amount. If a series has more than one class of notes, that series may have more than one interest funding account.
The timing and priority of principal payments among series and classes may differ and will be described in the prospectus supplement. The amount of principal collections allocated to a series or class will depend on whether such series or class is in a revolving period or an accumulation or amortization period.
Revolving Period. Generally, each series or class of notes will begin with a "revolving period" during which the related trust will not accumulate or pay principal for payment to the noteholders of that series or class. The revolving period for a series or class will end on the day before the start of an accumulation period or an amortization period for that series or class, although for some series, such as a variable funding note series, the revolving period may recommence at a later date if certain conditions are met. Following its revolving period, each series or class will begin to accumulate principal or begin to distribute principal to noteholders. The prospectus supplement will describe the conditions under which an accumulation or amortization period will begin for your series or class.
Accumulation Periods. Principal payments for any series or class of notes will be paid from principal collections allocated to that series or class and/or from amounts on deposit in the excess funding account allocated to that series or class. Principal will accumulate in a principal funding account if your series or class of notes features a controlled accumulation period or an early accumulation period and one of these accumulation periods begins.
A "controlled accumulation period" means the period during which principal is accumulated in specified amounts per month for a series or class and paid on an expected final payment date. If applicable, the controlled accumulation period for a series or class will begin on the date specified in the related prospectus supplement and end on the earlier of:
| · | the end of the collection period preceding the distribution date on which the notes of that series or class will be paid in full, and |
| · | the day before the start of an early amortization period or an early accumulation period for that series or class. |
An "early accumulation period" means the period during which principal is accumulated in varying amounts each month based on the amount of principal receivables collected following an amortization event. The early accumulation period for a series or class will begin on the first day of the collection period in which an amortization event occurs, unless the servicer is required to make daily deposits of collections into the collection account, in which case the early accumulation period will begin on the day an amortization event occurs. The early accumulation period will end on the earliest of:
| · | the end of the collection period preceding the distribution date on which the notes of that series or class will be paid in full, |
| · | the final maturity date for that series or class, and |
| · | the trust termination date. |
As described in the prospectus supplement, during a controlled accumulation period, on each distribution date an amount of principal, up to the amount specified, will be deposited in a principal funding account. If your series or class of notes features an early accumulation period, after an amortization event the amount of principal available to your series or class of notes will be deposited into the principal funding account, up to the amount specified in the prospectus supplement. This accumulated principal will be paid to those noteholders on the "expected final payment date" specified in the prospectus supplement, or earlier if an amortization period begins before your expected final payment date. Although your series or class of notes may feature an accumulation period, your series or class of notes might not make use of it.
Funds on deposit in any principal funding account for a series or class of notes may be subject to a guaranteed rate agreement or guaranteed investment contract to assure a minimum rate of return on the investment of those funds. In order to enhance the likelihood of the payment in full of the principal balance of a series or class of notes at the end of an accumulation period, that series or class of notes may be subject to a principal guaranty.
Amortization Periods. If your series or class of notes features a controlled amortization period and this amortization period begins, principal will be paid to you in installments. Your series or class of notes might also begin to pay principal to you if the prospectus supplement specifies that your series or class features an early amortization period and an amortization event occurs.
A "controlled amortization period" means the period during which principal is paid in fixed amounts at scheduled intervals for a series or class. If applicable, the controlled amortization period for a series or class will begin on the date specified in the related prospectus supplement and ends on the earlier of:
| · | the end of the collection period preceding the distribution date on which the notes of that series or class will be paid in full, and |
| · | the day before the start of an early amortization period or an early accumulation period for that series or class. |
A "partial amortization period" means the period during which principal is accumulated up to a specified portion of the invested amount for the series, then paid on the following distribution date. If applicable, the partial amortization period for a series or class will begin on the date specified in the related prospectus supplement and ends on the earlier of:
| · | the end of the collection period preceding the distribution date on which the specified portion of the invested amount of the notes of that series or class will be paid in full, and |
| · | the day before the start of an early amortization period or an early accumulation period for that series or class. |
An "early amortization period" means the period during which principal is paid in varying amounts each month based on the amount of principal receivables collected following an amortization event. The early amortization period for a series or class will begin on the first day of the collection period in which an amortization event occurs, unless the servicer is required to make daily deposits of collections into the collection account, in which case the early amortization period will begin on the day an amortization event occurs. The early amortization period will end on the earliest of:
| · | the end of the collection period preceding the distribution date on which the notes of that series or class will be paid in full, |
| · | the final maturity date for that series or class, and |
| · | the trust termination date. |
If your series has multiple classes, each class may have differing priorities for the accumulation or payment of principal. This means that noteholders of other classes could begin to receive payments of principal before you do. The prospectus supplement will specify the manner, timing and priority of principal payments to noteholders of each class.
There can be no assurance that principal will be available when expected, either to accumulate or to pay to you. Collections can vary seasonally and are also affected by general economic conditions. The prospectus supplement will provide historical payment rates, losses and other information relating to Ford Credit's U.S. dealer floorplan portfolio and relating to your trust's portfolio. There can be no assurance that the performance of your trust's portfolio will be consistent with this historical performance of either that portfolio or Ford Credit's U.S. dealer floorplan portfolio. The average life of your notes might be longer than expected if principal is collected more slowly. Alternatively, the occurrence of an amortization event may substantially shorten the average life of your notes.
The revolving period will continue through the date specified in the prospectus supplement unless an amortization event occurs before that date. An "amortization event" for any series of notes will include any of the "series amortization events" that are applicable to that series described in the related prospectus supplement, together with the following "trust amortization events" which are applicable to all series issued by a trust:
| · | a failure by the depositor to transfer to the trust receivables originated in additional eligible accounts or, if applicable, interests in other floorplan assets within ten business days after the date required to do so by the transfer and servicing agreement, |
| · | the bankruptcy or dissolution of the depositor, Ford Credit or Ford, unless with respect to Ford Credit or Ford, the rating agency condition is satisfied for each rating agency then rating any series or class, or |
| · | the trust becomes subject to regulation as an "investment company" within the meaning of the Investment Company Act of 1940. |
The early amortization period or, if so specified in the prospectus supplement, the early accumulation period will begin on the first day of the collection period in which an amortization event occurs or, if the servicer is required to make daily deposits into the collection account, on the day an amortization event occurs. If the early amortization period begins, the noteholders will begin receiving distributions of principal earlier than they otherwise would have, which may shorten the average life of the notes.
In addition, if the amortization event is the bankruptcy or dissolution of the depositor or Ford Credit, on the day of that event the depositor will immediately cease to transfer principal receivables to the trust and promptly notify the indenture trustee and the owner trustee of this event. Any principal receivables transferred to the trust before the bankruptcy, as well as collections on those principal receivables and interest receivables accrued at any time with respect to those principal receivables, will continue to be part of the trust assets and will be applied as described below under "Description of the Notes—Application of Collections" in the prospectus supplement.
If the only amortization event to occur is a bankruptcy of the depositor, the bankruptcy court may have the power to require the continued transfer of principal receivables to the trust.
Credit enhancement and other enhancement for your series or class of notes, referred to as "series enhancement," is designed to protect noteholders against losses on the receivables and delays and defaults in payments on the notes. Series enhancement for a series or class may be in the form of excess spread, subordination of a portion of the transferor interest, subordination of other series or classes of notes, a reserve fund or spread account, an accumulation period reserve account, a cash collateral account or guaranty, a letter of credit or other credit facility, a surety bond or insurance policy, a guaranteed investment contract or guaranteed rate agreement, an interest rate swap or cap or any combination of such enhancements. The prospectus supplement for each series will specify the form, amount, limitations and provider of any series enhancements available to that series or, if applicable, to particular classes of that series. Any provider of series enhancement is a "series enhancer" and will be identified in the related prospectus supplement.
Excess Spread. For any distribution date with respect to a series or a class of notes, the amount, if any, by which interest collections during the related collection period exceeds the senior fees and expenses of the trust, interest payments on the notes and, if applicable, payments to the related swap counterparty, is referred to as "excess spread." Any excess spread with regard to a series or class of notes on a distribution date, will be available on that distribution date to cover investor default amounts and investor charge-offs and to make required deposits to the reserve fund, as described in the related prospectus supplement.
Subordination of Transferor Interest. A portion of the transferor interest, referred to as the "available subordinated amount," may be subordinated to the noteholders' interest of the related series. In this case, the prospectus supplement will describe the amount of the available subordinated amount for a series, whether the available subordinated amount for a series may be decreased and increased, the manner in which the available subordinated amount for a series may be used for the benefit of the
noteholders of such series and whether the available subordinated amount for a series may be available to more than one series of notes. The sum of the available subordinated amounts for all series as of any date is referred to as the "trust available subordinated amount" for that date.
Subordination of Other Series or Classes. A series or one or more classes of that series may be subordinated to other series or to the senior notes within that series. In that case, the prospectus supplement will set forth information concerning:
| · | the extent to which the rights of the holders of these subordinated notes to receive distributions of principal and/or interest on any distribution date for that series will be subordinated to the rights of the holders of other senior series or senior notes within that series, |
| · | if subordination will apply in all cases or only in specified types of losses or shortfalls not covered by other series enhancement, |
| · | the manner, if any, in which the amount of subordination will change over time, and |
| · | the conditions under which amounts available from payments that would otherwise be made to holders of those subordinated notes will be distributed to holders of other senior series or senior notes of that series. |
Reserve Fund or Spread Account. A series or one or more classes of that series may have the benefit of a reserve fund or a spread account funded through an initial deposit and/or through periodic deposits of available cash from the trust assets. In that case, the prospectus supplement will set forth information concerning the funding of the reserve fund or spread account and the circumstances under which payments of interest and principal on the notes of the series or the related classes and other expenses and amounts of that series or classes will be made from the reserve fund or spread account.
Accumulation Period Reserve Account. A series or one or more classes of that series may have the benefit of an accumulation period reserve account funded by an initial cash deposit and/or through periodic deposits of available cash from the trust assets. In that case, the prospectus supplement will set forth information concerning the funding of the accumulation period reserve account and the circumstances under which payments of interest on the notes of that series or the related classes and other expenses or amounts of the series or classes during an accumulation period will be made from the accumulation period reserve account.
Cash Collateral Account or Guaranty. A series or one or more classes of a series may have the benefit of a cash collateral account or a guaranty secured by the cash collateral account. In that case, the prospectus supplement will set forth information concerning the funding of the cash collateral account and the circumstances under which payments will be made from the cash collateral account or guaranty.
Letter of Credit. A series or one or more classes of that series may have the benefit of a letter of credit that may provide limited protection against specified losses or shortfalls. In that case, the prospectus supplement will set forth information concerning the payment obligations of the issuer of the letter of credit and the maximum amount available at any time to be paid under a letter of credit.
Surety Bond or Insurance Policy. A series or one or more classes of that series may have the benefit of a surety bond or an insurance policy provided by one or more insurance companies. In that case, the prospectus supplement will set forth information concerning the distributions of interest and principal and the payment of other expenses and amounts insured by the surety bond or insurance policy.
Guaranteed Investment Contract or Guaranteed Rate Agreement. A series or one or more classes of that series may have the benefit of a guaranteed investment contract or guaranteed rate agreement under which in exchange for either a fixed one-time payment or a series of periodic payments
the trust will receive specified payments from a counterparty either in fixed amounts or in amounts sufficient to achieve the returns specified in the agreement and described in the prospectus supplement
Interest Rate Swap, Cap or Floor. A series or one or more classes of that series may have the benefit of interest rate swap under which the trust makes payments based on a specified rate, such as the prime rate, on a monthly or quarterly basis to a swap counterparty and receives payments based on LIBOR from the swap counterparty, or an interest rate cap or floor under which the trust makes an upfront payment to a counterparty and receives a payment on a monthly or quarterly basis to the extent LIBOR or another referenced rate specified in the cap or floor exceeds a stated cap rate or is less than a stated floor rate, as applicable.
If so specified in the prospectus supplement relating to a series, the depositor will have the option to redeem the notes of any series by purchasing your series' portion of the trust assets at any time after the remaining outstanding principal balance of that series has been reduced to a certain percentage of the initial principal balance of the series. This option is referred to as a "clean up call" option, and may only be exercised by the depositor by paying the outstanding principal balance of the notes of that series plus accrued and unpaid interest through the day immediately preceding the redemption date.
The notes of each series will be retired on the day on which the final payment of principal is made to the noteholders, whether as a result of optional redemption by the depositor or otherwise. Each prospectus supplement will specify the latest date on which principal and interest for the series of notes can be paid, or the "final maturity date." The trust's failure to pay the principal of any series of notes in full on the related final maturity date will be an event of default under the indenture. In this event, the indenture trustee or the holders of a specified percentage of the notes of that series will have the rights described below under "Description of the Indenture—Events of Default and Remedies" in this prospectus.
Unless the servicer and the holders of the transferor interest instruct the indenture trustee otherwise, the trust will terminate on the "trust termination date" specified in the related prospectus supplement. Upon the termination of the trust, the indenture trustee will convey the trust assets to the holders of the transferor interest.
If so specified in the prospectus supplement relating to a series, the depositor may terminate its obligations in respect of that series or the trust by depositing with the indenture trustee, amounts sufficient to make all remaining scheduled interest and principal payments on that series or all outstanding series of notes of the trust, as the case may be, on the dates scheduled for those payments and to pay all amounts owing to any credit enhancement provider with respect to that series or all outstanding series, as the case may be, if that action would not result in an amortization event for any series. The depositor will not exercise its right to substitute money or eligible investments for receivables, unless the rating agency condition has been satisfied for each rating agency then rating any series or class and the depositor has delivered to the indenture trustee:
| · | a statement from a firm of nationally recognized independent public accountants, to the effect that the deposit is sufficient to make all the payments specified above, |
| · | an officer's certificate stating that the depositor reasonably believes that the deposit and termination of obligations will not, based on the facts known to that officer at the time of the certification, cause an event of default or an amortization event with respect to any series, |
| · | a legal opinion that the deposit and termination of obligations will not result in the trust being required to register as an "investment company" within the meaning of the Investment Company Act of 1940, and |
| · | a required federal income tax opinion. |
Noteholders of each series issued by a trust will receive reports with information about the series and the trust. The indenture trustee, as "paying agent," will forward to each noteholder of record the reports, prepared by the servicer, for its series on the distribution dates for that series. Unless and until definitive notes are issued, these reports will be sent to Cede & Co. which is the nominee of the DTC and the registered holder of the notes, as described below under "—Book Entry Registration."
For a description of the reports prepared by the servicer, you should read "Description of the Agreements—Reporting Obligations of the Servicer" in this prospectus.
To the extent required by law, by January 31 of each year, the paying agent will also provide to each person who at any time during the preceding calendar year was a noteholder of record a statement, prepared by the servicer, containing the type of information presented in the periodic reports, aggregated for that calendar year or the portion of that calendar year that the notes were outstanding, together with other information that is required to be provided to holders of debt, to assist noteholders in preparing their United States tax returns.
The notes of a series may be included in one or more groups of series that share or reallocate specified interest collections and/or principal collections. The prospectus supplement will identify whether your series will be included in one or more of the following groups. Other series issued in the future may also be included in any such group.
Excess Interest Sharing Groups. If a series is included in an "excess interest sharing group," interest collections allocated to that series in excess of the amount needed to make required deposits or distributions for that series, referred to as the "excess interest collections," may be applied to cover shortfalls in required deposits and distributions for other series in the same excess interest sharing group. Similarly, such series may benefit from excess interest collections from other series in the same excess interest sharing group.
Interest Reallocation Groups. If a series is included in an "interest reallocation group," interest collections that would otherwise be allocated to each series in the interest reallocation group will instead be combined and will be available for required deposits and distributions to other series in the same interest reallocation group. Any issuance of a new series in an interest reallocation group may reduce or increase the amount of interest collections allocated to any other series in that group.
For more information on the risks caused by the issuance of additional series, you should read "Risk Factors—Issuance of additional series by your trust could affect the timing and amounts of the payments on your notes" in this prospectus.
Principal Sharing Groups. If a series is included in a "principal sharing group," principal collections allocated to that series in excess of the amount needed to make required principal deposits or distributions for that series may be shared with other series in the same principal sharing group. If available principal allocated to a series is shared with another series, the invested amount of the series from which available principal was shared will not be reduced.
The indenture trustee will establish and maintain in the name of the indenture trustee, for the benefit of noteholders of all series of a trust, a "collection account" and an "excess funding account."
Funds in the collection account and the excess funding account will be assets of the trust and will be invested, at the direction of the servicer, in highly rated investments that mature on or before the day the funds are required to be available for distribution.
The servicer will have no access to the funds in the trust bank accounts. Only the indenture trustee may withdraw funds from these accounts to pay trust obligations, including payments to the noteholders or to pay net investment earnings to the servicer. The indenture trustee will make payments from the collection account to the noteholders and others based on information provided by the servicer.
The servicer will allocate all interest collections, principal collections and defaulted amounts among each series, the transferor interest and, if the related prospectus supplement so states, any credit enhancement providers.
All allocations will be made by reference to the investor percentages for each series, the transferor percentage and, where applicable, the "credit enhancement percentage" for each series. The related prospectus supplements will set forth how the investor percentages and credit enhancement percentages are calculated.
The "investor percentage" for a series generally will be based on that series' invested amount compared to the pool balance for the trust. The "invested amount" for a series or a class of notes is an amount equal to:
| · | the initial principal balance of the notes of that series or class, minus |
| · | the amount of principal previously paid to the noteholders of that series or class, minus |
| · | the cumulative amount of unreimbursed reallocated principal collections for that series or class, minus |
| · | the cumulative amount of unreimbursed investor charge-offs for that series or class, plus |
| · | in the case of a series of variable funding notes, the principal amount of any advances in respect of such notes. |
If so specified in the prospectus supplement relating to any series of notes, under limited circumstances the invested amount may be further adjusted to the "adjusted invested amount," which is an amount equal to that series' invested amount, minus the amount on deposit in that series' principal funding account (other than net investment earnings), minus, for the purpose of calculating the transferor amount during an accumulation period or amortization period for that series, the amount of any principal collections on deposit in the collection account allocable to that series.
The "transferor percentage" for a trust is a percentage equal to:
| · | 100%, minus |
| · | the sum of the investor percentages for all series issued by that trust, minus |
| · | the sum of the credit enhancement percentages for all series issued by that trust, if applicable. |
The servicer will deposit into the collection account a portion of the payments received on the receivables and, if applicable, interests in other floorplan assets in the trust portfolio during each calendar month, or "collection period. " The amount of the required deposit will be specified in the indenture for such trust and will depend upon, among other things, whether the series in such trust are in their revolving periods or accumulation or amortization periods. Each date on which the servicer is required to make deposits is referred to as a "deposit date." So long as Ford Credit is the servicer, it will be able to make these deposits on a monthly basis if any of the following conditions is met:
| · | Ford Credit's short-term debt is rated at least A-1 by Standard & Poor's, F1 by Fitch and P-1 by Moody's, |
| · | Ford Credit maintains a letter of credit or other form of enhancement acceptable to the rating agencies to support Ford Credit's obligation to deposit collections into the collection account, or |
| · | Ford Credit otherwise satisfies each rating agency's requirements. |
In these circumstances, Ford Credit may use collections for its own benefit and will not be required to deposit the collections that it receives during any collection period until the distribution date occurring in the following calendar month. On that distribution date, Ford Credit will deposit into the collection account funds only to the extent that such funds are required for deposit into other trust accounts or for distribution to the noteholders and other parties pursuant to the terms of any indenture supplement, the transfer and servicing agreement or any series enhancement agreement. If the collection account balance ever exceeds this amount, the servicer may withdraw the excess. The servicer may retain its servicing fee with respect to any series and will not be required to deposit such fee into the collection account.
If Ford Credit is no longer the servicer or if none of the conditions specified above is satisfied, then the servicer will deposit collections into the collection account no later than two business days after processing in accordance with the terms specified in the indenture.
The servicer will allocate collections as indicated below:
| (1) | The transferor percentage of interest collections and principal collections will be: |
| · | paid to the holders of the transferor interest to the extent that these collections are not attributable to the trust available subordinated amount, |
| · | deposited into the excess funding account in order to maintain the net adjusted pool balance at the required pool balance, or |
| · | available for deposit into the collection account to the extent that these collections are attributable to the trust available subordinated amount for application and payment as set forth in the prospectus supplement, except that such amounts may be deposited into the excess funding account in order to maintain the net adjusted pool balance at the required pool balance. |
| (2) | The investor percentage of interest collections allocated to each series will be available for deposit into the collection account for application and payment as set forth in the prospectus supplement. |
| (3) | The investor percentage of principal collections allocated to each series that is in its revolving period will be: |
| · | available to make principal payments or deposits required by noteholders of one or more series in the same principal sharing group if those collections are required to be treated as shared principal collections, |
| · | deposited into the excess funding account in order to maintain the net adjusted pool balance at the required pool balance, or |
| · | paid to the holders of the transferor interest. |
| (4) | The investor percentage of principal collections allocated to each series that is in its controlled accumulation period, controlled amortization period or early accumulation period up to the amount, if any, specified in the prospectus supplement will be deposited into the collection account or a principal funding account, as applicable, for application and payment to noteholders as described in the prospectus supplement. However, if principal collections exceed the principal payments required to be allocated or distributed to noteholders, the excess will be paid to other noteholders or to the holders of the transferor interest, subject to the limitations described in clauses (1) and (3) above. |
| (5) | The investor percentage of principal collections allocated to each series that is in its early amortization period will be deposited into the collection account for application and payment as provided in the prospectus supplement. |
Principal payments may also be funded from proceeds from the issuance of notes in the same principal sharing group.
"Interest collections" means, with respect to a trust, the sum of:
| · | all collections of interest receivables owned by that trust and, if applicable, the non-principal portion of the trust's interests in other floorplan assets, plus |
| · | all net investment earnings on amounts on deposit in the collection account and the excess funding account, plus |
| · | all amounts recovered, including any insurance proceeds, on defaulted receivables or on any interests in other floorplan assets that have defaulted. |
"Principal collections" means, with respect to a trust, the sum of:
| · | all collections of principal receivables owned by that trust and, if applicable, the principal portion of the trust's interests in other floorplan assets, plus |
| · | all amounts representing payments by related dealers under cash management agreements, entered into by such dealers with Ford Credit as described under "Sponsor and Servicer—Servicing and Dealer Relations—Payment Terms" in this prospectus. |
excluding, in all cases, all amounts recovered on defaulted receivables and on any interests in other floorplan assets that defaulted.
Assignments by a trust to the depositor of the rights to receive payments from dealers upon delivery of purchased Ford-manufactured new vehicles in exchange for related advances made by Ford Credit under the related floorplan financing agreements will not be included as a part of principal collections and will be disregarded for purposes of determining the monthly principal payment rate of the receivables
owned by any trust. As described in clause (2) above, if a dealer elects to make a payment under a cash management agreement, principal collections in the same amount will be remitted to the trust. The effect of any payment under a cash management agreement is to accelerate the trust's receipt of principal collections relative to the rate at which principal collections would have been received in the absence of any such payments.
"Interest receivables" are:
| · | all amounts billed and payable by the dealer pursuant to the related floorplan financing agreement with Ford Credit that constitute (a) interest and (b) other non-principal and non-interest charges, including flat charges established by Ford Credit from time to time to cover miscellaneous costs, and |
| · | all adjustment fees payable by Ford to Ford Credit under the sale and assignment agreement. |
"Principal receivables" are the amounts, other than interest receivables, that are payable by the dealer under the sales and service agreement with Ford or under the related floorplan financing agreement with Ford Credit.
In the case of a series of notes having more than one class, the amounts in the collection account will be allocated and applied to each class in the manner and order of priority described in the prospectus supplement.
Collections deposited into the excess funding account on any date because the net adjusted pool balance is less than the required pool balance will be withdrawn from the excess funding account and paid to the holders of the transferor interest on any later date on which the net adjusted pool balance exceeds the required pool balance. The "required pool balance" means, for any trust as of any date, the sum of: (a) the sum of their required pool percentages for each series issued by that trust, times their initial invested amounts, plus (b) the sum of the required subordinated amounts for each series issued by that trust.
If an amortization period or accumulation period has begun, the amounts described in the preceding paragraph will be held for distribution to the noteholders on the dates specified in the prospectus supplement or accumulated for distribution on the expected final payment date, as applicable, and distributed to the noteholders of each class or held for and distributed to the noteholders of other series of notes issued by the trust in the manner and order of priority specified in the prospectus supplement.
For each series of notes, on the determination date, the servicer will calculate the "investor default amount" for the preceding collection period, which will equal the investor percentage of defaulted amounts allocated to that series. An amount equal to the investor default amount for any collection period may be funded from interest collections allocable to that series and other amounts specified in the prospectus supplement, including credit enhancement, and applied to pay principal to noteholders or, subject to limitations, the holders of the transferor interest.
For each series of notes, the series' invested amount will be reduced by unfunded investor default amounts, called an "investor charge-off" and equal to the excess of the investor default amount for that series over the amount available to reimburse such investor default amount as described in the prospectus supplement. In addition, a series' invested amount may decrease by the amount of any principal collections reallocated to pay interest on senior classes of notes and other amounts of such series in excess of the available subordinated amount, called an "uncovered reallocated principal collection". Reductions in a series' invested amount due to investor charge-offs and uncovered reallocated principal collections will be reimbursed on any subsequent distribution date to the extent that
interest collections on deposit in the collection account exceed the interest owed on the notes, the investor default amount and any other fees specified in the prospectus supplement that are payable on that date. This reimbursement will increase the invested amount with respect to that series.
The notes will be available only in book-entry form except in the limited circumstances described under "—Definitive Notes Only in Limited Circumstances" in this prospectus. All notes will be held in book-entry form by The Depository Trust Company, or "DTC," in the name of Cede & Co., as nominee of DTC. Investors' interests in the notes will be represented through financial institutions acting on their behalf as direct and indirect participants in DTC. Investors may hold their notes through DTC, Clearstream Banking Luxembourg S.A. or Euroclear Bank S.A./N.V. which will hold positions on behalf of their customers or participants through their respective depositories, which in turn will hold such positions in accounts as DTC participants. The notes will be traded as home market instruments in both the U.S. domestic and European markets. Initial settlement and all secondary trades will settle in same-day funds.
Investors electing to hold their notes through DTC will follow the settlement practices applicable to U.S. corporate debt obligations. Investors electing to hold global notes through Clearstream or Euroclear accounts will follow the settlement procedures applicable to conventional eurobonds, except that there will be no temporary global notes and no "lock-up" or restricted period.
Actions of noteholders under the indenture will be taken by DTC upon instructions from its participants and all payments, notices, reports and statements to be delivered to noteholders will be delivered to DTC or its nominee as the registered holder of the book-entry notes for distribution to holders of book-entry notes in accordance with DTC's procedures.
The prospectus supplement may state that application will be made to list your series or class of notes on the Luxembourg Stock Exchange or another exchange.
Investors should review the procedures of DTC, Clearstream and Euroclear for clearing, settlement and withholding tax procedures applicable to their purchase of the notes.
Notes may be issued in physical form to noteholders only if:
| · | the noteholder is the depositor or one of its affiliates, |
| · | the administrator determines that DTC is no longer willing or able to discharge properly its responsibilities as depository for the notes and the administrator or the depositor is unable to reach an agreement with a qualified successor, |
| · | the administrator elects to terminate the book-entry system through DTC, or |
| · | after the occurrence of an event of default or a servicer default, note owners of a class representing at least a majority of the outstanding principal balance of that class of notes advise the indenture trustee and the DTC in writing that they elect to terminate the book-entry system through DTC for that class of notes. |
Payments of principal and interest on definitive notes will be made by the indenture trustee on each payment date to registered holders of definitive notes as of the end of the preceding month. The payments will be made by check mailed to the address of the holder as it appears on the register maintained by the indenture trustee. The final payment on any definitive notes will be made only upon presentation and surrender of the definitive note at the address specified in the notice of final payment to the noteholders.
Definitive notes will be transferable and exchangeable at the offices of the indenture trustee or a note registrar. No service charge will be imposed for any registration of transfer or exchange, but the indenture trustee may require payment of an amount sufficient to cover any tax or other governmental charge imposed in connection with any transfer or exchange.
Each trust will be a party to a separate indenture with an indenture trustee, under which the trust will issue notes in one or more series, the terms of which will be specified in an indenture supplement to that indenture. The following summarizes the material terms of each indenture. We have filed forms of the indenture and the indenture supplement as exhibits to the registration statement filed with the SEC that includes this prospectus.
Events of Default. With respect to the notes of any series, an "event of default" under the indenture will be any of the following:
| · | failure to pay the principal of any note in full on its final maturity date, |
| · | failure to pay interest due on any notes within the time period specified in the prospectus supplement, |
| · | bankruptcy or dissolution of the trust, |
| · | failure by the trust to observe or perform any covenant or agreement made in the indenture and the failure continues or is not cured for a period of 60 days after written notice was given to the trust by the indenture trustee or to the trust and the indenture trustee by at least 25% of the outstanding principal balance of the affected series, or |
| · | any other events of default for a series described in the prospectus supplement. |
Failure to pay the full principal balance of a note on its expected final payment date will not constitute an event of default. An event of default with respect to one series of notes will not necessarily be an event of default with respect to any other series of notes.
The holders of at least a majority of the outstanding principal balance of the notes of the affected series may waive any default before the declaration of the acceleration of the notes, except for a default in the payment of principal or interest or a default relating to a covenant or provision of the indenture that cannot be modified without the waiver or consent of the noteholders of each affected note.
Acceleration of the Notes. If an event of default occurs with respect to the notes because of bankruptcy or dissolution the trust, the notes will be accelerated automatically. If an event of default occurs with respect to the notes for any other reason, the indenture trustee or the holders of at least a majority of the outstanding principal balance of the notes of the affected series may accelerate the notes of that series and declare them to be immediately due and payable. Any acceleration of the notes may, under limited circumstances, be rescinded by the holders of at least a majority of the outstanding principal balance of the notes of that series.
Upon any such acceleration of the notes, the revolving period, or other period of principal payment or accumulation, other than an early amortization period, for the affected series will terminate and an early amortization period will commence and principal collections and interest collections allocated to those notes will be applied to make monthly principal and interest payments on the notes until the earlier of the date the notes are paid in full or the final maturity date of the notes. Funds in the collection account and
other trust accounts for the accelerated notes will be applied immediately to pay principal of and interest on those notes.
Remedies Following Acceleration. If the notes of a series have been accelerated following an event of default, and the indenture trustee has not received any directions from the noteholders regarding the time, method and place of conducting any proceeding for any remedy available to the indenture trustee, the indenture trustee may elect to continue to hold the portion of the trust assets securing those notes and apply collections on such trust assets to make payments on those notes.
If an event of default has occurred and is continuing, the indenture trustee:
| · | may institute proceedings in its own name for the collection of all amounts then payable on the accelerated notes, |
| · | may take any other appropriate action to protect and enforce the rights and remedies of the indenture trustee and the noteholders of the accelerated notes, |
| · | may, at its own election or at the direction of the holders of at least a majority of the outstanding principal balance of the accelerated notes of a series, foreclose on and cause the trust to sell the portion of the trust assets securing the accelerated notes, but only if the indenture trustee determines that the proceeds of the sale of such assets will be sufficient to pay the principal of and interest on the accelerated notes in full, or |
| · | must, at the direction of the holders of at least 66-2/3% of the outstanding principal balance of the notes of each class of the accelerated series, foreclose on and cause the trust to sell the portion of the trust assets securing the accelerated notes, regardless of the sufficiency of the proceeds from the sale of such assets to pay the principal of and interest on the accelerated notes in full. |
Following the foreclosure and sale of the portion of the trust assets securing the accelerated notes and the application of the proceeds of that sale and of the amounts then held in the collection account, the excess funding account and any trust accounts for that series and any amounts available from credit enhancement for that series, that series will no longer be entitled to any allocation of collections or other trust assets under the indenture or the indenture supplement, and those notes will no longer be outstanding.
Standard of Care of the Indenture Trustee Following an Event of Default. If an event of default has occurred and is continuing, the indenture trustee must exercise its rights and powers under the indenture using the same degree of care and skill that a prudent person would use under the circumstances in conducting his or her own affairs. The holders of at least a majority of the outstanding principal balance of the notes of the affected series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the indenture trustee following an event of default and acceleration of the affected series of notes.
Upon acceleration of the notes of a series, the indenture trustee will have a lien on the trust assets for those notes for its unpaid fees and expenses that ranks senior to the lien of those notes on the trust assets.
Limitation on Suits. No noteholder will have the right to institute any legal proceeding for any remedy under the indenture unless:
| · | the noteholders of at least 25% of the outstanding principal balance of the affected series have requested the indenture trustee in writing to institute such legal proceeding, |
| · | the noteholders give the indenture trustee written notice of a continuing event of default, |
| · | the noteholders offer reasonable security or indemnity to the indenture trustee against any costs, expenses and liabilities that the indenture trustee may incur in complying with the request, |
| · | the indenture trustee fails to institute the legal proceeding within 60 days after its receipt of the notice, request and offer of indemnity, and |
| · | the holders of at least a majority of the outstanding principal balance of the notes of that series have not given the indenture trustee any inconsistent direction during the 60-day period. |
A noteholder, however, has the absolute right to institute at any time a proceeding to enforce its right to receive all amounts of principal and interest due and owing to it under its note, and such right may not be impaired without the consent of such noteholder.
The indenture trustee and the noteholders will agree not to institute a bankruptcy proceeding against the trust.
Notes owned by the trust, the depositor, the servicer or any of their affiliates will not be included for purposes of determining whether a specified percentage of any class of notes have taken any action under the indenture or any other transaction document.
The trust and the indenture trustee may enter into one or more supplemental indentures:
| · | without the consent of any noteholders, to correct or enhance the description of any property subject to the lien of the indenture, to reflect the agreement of another person to assume the role of the trust, to surrender certain rights of the trust, to transfer or pledge property to the indenture trustee, to maintain qualification under the Trust Indenture Act (or any other statute), to permit the issuance of one or more new series of notes, to terminate a credit enhancement arrangement, in each case, upon satisfaction of the rating agency condition for each rating agency then rating any series or class, |
| · | without the consent of any noteholders and, to cure any ambiguity, to correct or supplement any inconsistent provision in the indenture or to make any other provisions with respect to matters or questions arising under the indenture, upon receipt of an officer's certificate of the depositor that, in the depositor's reasonable belief, the action will not have a significant adverse effect, |
| · | without the consent of any noteholders, to add provisions to, change in any manner or eliminate any provision of the indenture, or to change the rights of the noteholders under the indenture, upon (a) receipt of an officer's certificate of the depositor that, in the depositor's reasonable belief, the action will not have a significant adverse effect, (b) satisfaction of the rating agency condition for each rating agency then rating any series or class, and (c) receipt of a required federal income tax opinion, |
| · | without the consent of any noteholders, to add, modify or eliminate any provisions to avoid the imposition of state or local income or franchise taxes on the trust's property or its income, upon (a) receipt of an officer's certificate of the depositor that the requirements under the indenture applicable to the proposed amendments have been met and (b) satisfaction of the rating agency condition for each rating agency then rating any series or class, |
| · | with the consent of the holders of at least 66-2/3% of the outstanding principal balance of the notes of each adversely affected series, to change in any manner or eliminate any provision of the indenture, or to change the rights of the noteholders under the indenture, except as described in the next paragraph. |
| · | with the consent of each noteholder affected, to: |
| — | change the due date of any installment of principal of or interest on any note or the note interest rate, |
| — | reduce the principal balance or change the redemption price of a note, or change the place of payment or the currency in which any note is payable, |
| — | impair the right to institute suit for the enforcement of specified payment provisions of the indenture, |
| — | reduce the percentage of the outstanding principal balance of the notes of any series necessary to (a) direct the indenture trustee to liquidate the trust assets if proceeds would be insufficient to pay the principal balance and interest due on the notes, (b) amend certain sections of the indenture and (c) enter into certain supplemental indentures, |
| — | modify any provisions regarding the voting of notes held by the trust, the depositor, the servicer or any of their affiliates, |
| — | permit the creation of any lien superior or equal to the lien of the indenture with respect to any of the collateral for any notes, or |
| — | terminate the lien on the collateral or deprive any noteholder of the security provided by the lien of the indenture. |
The trust will be required to furnish to the indenture trustee each year a written statement as to the performance of its obligations under the indenture.
The noteholders of at least 10% of the outstanding principal balance of the notes of any series or three or more noteholders of any series may, by written request to the indenture trustee, obtain a copy of the list of noteholders maintained by the indenture trustee for the purpose of communicating with other noteholders with respect to their rights under the indenture or the notes.
The indenture will be discharged with respect to the notes of any series upon, among other things, the delivery to the indenture trustee for cancellation of all the notes or, with specific limitations, upon irrevocable deposit by the trust with the indenture trustee of funds sufficient for the payment in full of all the notes not delivered to the indenture trustee for cancellation.
Each trust will be a party to one or more separate transfer and servicing agreements under which the depositor will transfer receivables and, if applicable, any interests in other floorplan assets to the trust. The depositor will enter into a receivables purchase agreement with Ford Credit, under which Ford Credit
will sell receivables and, if applicable, interests in any other floorplan assets to the depositor. If a trust has more than one depositor, each depositor will enter into a separate transfer and servicing agreement with that trust and the servicer and a separate receivables purchase agreement with Ford Credit. In each transfer and servicing agreement, Ford Credit will agree to service the receivables and, if applicable, any interests in other floorplan assets for the related trust. The following summarizes the material terms of each transfer and servicing agreement and each receivables purchase agreement. We have filed forms of these agreements as exhibits to the registration statement filed with the SEC that includes this prospectus.
Sale and Transfer of Receivables and Related Security. Under each receivables purchase agreement, Ford Credit will sell to the related depositor on a daily basis all of its rights in:
| · | receivables in the designated accounts as of the "series cut-off date" specified in the related prospectus supplement for the first series issued by the related trust and receivables in additional accounts as of the applicable "additional cut-off date" specified in the addition notice for such additional accounts, |
| · | receivables originated in the designated accounts after the series cut-off date or the additional cut-off date, as applicable, |
| · | all related security consisting of: |
| — | the security interests granted by the dealers in the related vehicles, |
| — | the junior security interests granted by some of the dealers in non-vehicle related security, such as vehicle parts inventory, equipment, fixtures, service accounts and, in some cases, real property and a personal guarantee, and |
| — | all related rights under the sale and assignment agreement between Ford and Ford Credit, and |
| · | the proceeds of all of the above. |
Under each transfer and servicing agreement, the depositor will transfer to the related trust on a daily basis all of its rights in the assets acquired from Ford Credit under the receivables purchase agreement described in the preceding paragraph, together with all of the depositor's rights relating to the receivables under the receivables purchase agreement.
Ford Credit, as servicer, will indicate in its computer records that the receivables and related security have been sold to the depositor, have been transferred in turn by that depositor to the related trust, and have been pledged by the trust to the indenture trustee under the indenture. Ford Credit will provide the depositor and the related owner trustee with one or more account schedules showing each designated account, identified by account number and by outstanding principal amount. At the time that the depositor designates any additional accounts for a trust as described below under "—Additional Designated Accounts" or redesignates any accounts as described below under "—Redesignation of Accounts," the depositor will provide a new account schedule specifying the applicable additional accounts or redesignated accounts, as the case may be.
As servicer, Ford Credit will retain records and agreements relating to the receivables transferred to each trust. The records and agreements relating to the accounts and receivables will not be segregated by Ford Credit from other documents and agreements relating to other accounts and receivables not relating to the trust and will not be stamped or marked to reflect the sale or transfer of the receivables to the depositor. However, the computer records of Ford Credit will be marked to evidence this sale. Ford
Credit and the depositor, however, will file one or more UCC financing statements to perfect the trust's interest in the receivables, the related security, the receivables purchase agreement and their proceeds. Neither the owner trustee nor the indenture trustee will be required to make periodic examinations of the receivables transferred to the trust or any records relating to them. However, the servicer will deliver to the indenture trustee once each year an officer's certificate affirming that no further action is necessary to maintain the trust's perfected security interest in the receivables.
In its other lending activities, Ford Credit may make capital loans, real estate loans or other advances to dealers or their parent holding companies or other affiliates that are also secured by a security interest in the vehicles and in any non-vehicle related security. Although the trust in each case will have a first-priority perfected security interest in the related vehicles, a default under any such loans made to a dealer's parent holding company or other affiliates may result in a default in respect of such dealer's receivables that have been transferred to the trust. At Ford Credit's sole discretion, the security interests transferred to a trust in non-vehicle related security may be subordinate to a senior security interest that it or other lenders retain in the security. In each receivables purchase agreement, Ford Credit will agree not to assert its security interest in any vehicle until the trust has been paid in full on the receivables secured by the vehicle. However, Ford Credit, in its sole discretion, may enforce its remedies on the non-vehicle related security for its own benefit before any trust is permitted to do so. Because each trust will have a subordinate position in the non-vehicle related security, the trust may not realize any proceeds from any non-vehicle related security.
For more information concerning the security interests in trust assets, you should read "Risk Factors—Bankruptcy of Ford Credit or the depositor could result in accelerated, reduced or delayed payments on your notes," "Sponsor and Servicer—Origination and Underwriting—Security Interests in Vehicles and Non-Vehicle Related Security" and "Some Important Legal Issues Relating to the Receivables" in this prospectus.
Sale and Transfer of Other Floorplan Assets. If the prospectus supplement provides that any other floorplan assets are included in a trust, the depositor will transfer these interests to the trust under the transfer and servicing agreement. The depositor, in turn, may have acquired these interests from Ford Credit or one of its affiliates. Even if the prospectus supplement specifies that other floorplan assets are not included in a trust, that trust may nonetheless acquire them at a later date without your consent so long as the rating agency condition is satisfied for each rating agency then rating any series or class.
When a trust issues a series of notes, Ford Credit will represent to the depositor, and the depositor will represent to the trust that the receivables purchase agreement and the transfer and servicing agreement, as applicable, constitute a valid transfer and assignment of all rights in the receivables, the related security and, if applicable, interests in any other floorplan assets, and the depositor or the trust, as applicable, will have a first priority perfected ownership interest in those transferred assets, except as otherwise permitted under the transaction documents.
Ford Credit and the depositor will make representations as to the receivables and designated accounts transferred to the trust, including the following:
| · | at the time of transfer, each receivable and its related security is transferred free and clear of any liens, except as otherwise permitted by the transaction documents, and Ford Credit or the depositor, as applicable, has obtained all governmental consents required to transfer that receivable and related security, |
| · | at the time of designation for the trust and as of each series cut-off date, each designated account is an eligible account, and |
| · | at the time of transfer, each receivable being transferred is (a) an eligible receivable or (b) if the related prospectus supplement permits, an ineligible receivable originated in an eligible account, so long as the available subordinated amount for each series is increased as specified in the related prospectus supplement. |
If any representation is not true and correct when made and such breach has a material adverse effect on the related receivable or receivables, then the depositor will be required to accept reassignment of those receivables after the depositor discovers the breach or receives written notice of the breach and the end of a specified cure period, or such longer period agreed to by the indenture trustee and the servicer. The cure period is generally 30 days, unless the breach relates to the valid transfer and ownership interest in the receivables, in which case the cure period is 60 days, or the breach relates to impermissible liens or failure to obtain required governmental consents, in which case the cure period is five business days. If the breach relates to the eligibility of a designated account, the account will be redesignated and all the receivables originated in that account will be reassigned to the depositor.
In accepting reassignment of an ineligible receivable, the depositor will direct the servicer to deduct the principal amount of the ineligible receivable from the pool balance. If the deduction would cause the transferor amount to fall below the required transferor amount for any series, the depositor must make a cash deposit to that trust's excess funding account in an amount equal to the shortfall. If the depositor fails to make the cash deposit, the principal balance of the related receivables will be deducted from the pool balance only to the extent that the transferor amount is not reduced below the required transferor amount. Any principal balance not deducted will not be reassigned and will remain part of the trust. The reassignment of each ineligible receivable to the depositor and the deposit of any funds into the excess funding account are the only remedies for any breach of the representations and warranties concerning eligibility of receivables.
If, as a result of a breach of a representation, the depositor is required to accept reassignment of the affected receivables, Ford Credit will repurchase the receivables for an amount equal to the amount the depositor is required to pay under the applicable transfer and servicing agreement.�� Ford Credit will indemnify the depositor against any and all losses, damages and expenses incurred by the depositor if the foregoing representations are materially false.
The prospectus supplement may specify additional representations to be made by Ford Credit and the depositor when your notes are issued.
In the receivables purchase agreement, Ford Credit will make the following covenants:
| · | that it will perform its obligations under the agreements relating to the receivables and the accounts in conformity with its customary policies and procedures relating to dealer floorplan accounts, |
| · | that, except for the sale of receivables under the receivables purchase agreement and the interests created under the related transfer and servicing agreement, it will not sell or pledge any interest in the receivables to any other person, |
| · | to defend and indemnify the depositor for any loss, liability or expense incurred by the depositor in connection with a breach by Ford Credit of any of its representations or covenants contained in the receivables purchase agreement, and |
| · | not to realize upon any security interest in a vehicle that it may have in respect of advances or loans made in connection with the designated accounts other than the related receivable until the related trust has fully realized on its security interest in that receivable, as described |
above under "—Sale and Transfer of Assets—Sale and Transfer of Receivables and Related Security."
Under each transfer and servicing agreement, the depositor may designate one or more of its affiliates as a subsequent depositor so long as the subsequent depositor enters into a transfer and servicing agreement with the trust and the servicer and the designating depositor directs the owner trustee to make the appropriate entries in its books to reflect the subsequent depositor's transferor interest. The transfer and servicing agreement permits the designation of these subsequent depositors and the issuance of subsequent transferor interests without noteholder consent upon (a) receipt of a required federal income tax opinion, and (b) satisfaction of the rating agency condition for each rating agency then rating any series or class.
An "eligible account" means a floorplan financing account established with a motor vehicle dealer under a floorplan financing agreement in the ordinary course of business and relating to car and truck inventory that, as of the date on which eligibility is determined:
| · | is in existence and maintained and serviced by or on behalf of Ford Credit, |
| · | relates to a dealer showroom located in the geographical regions specified in the applicable transfer and servicing agreement, |
| · | is in favor of a dealer that has not been classified by the servicer as "status" (or other comparable classification) by reason of (a) the dealer's failure to make any principal or interest payments when due under the floorplan financing agreement or (b) the bankruptcy or dissolution of the dealer, and |
| · | is an account as to which no material amounts have been charged off as uncollectible at any time within the previous 24 months. |
Under the transfer and servicing agreement, the definition of eligible account may be changed without the consent of the noteholders if (a) the depositor delivers to the owner trustee and the indenture trustee an officer's certificate to the effect that, in such officer's reasonable belief, the change will not result in a significant adverse effect and (b) the rating agency condition is satisfied for each rating agency then rating any series or class.
An "eligible receivable" means a receivable that:
| · | was originated or acquired by Ford Credit in the ordinary course of business and was originated or acquired on or after the date specified in the related addition notice, |
| · | except for any adjustment fees payable by Ford, is secured by a perfected first priority interest in the related vehicle, |
| · | relates to a car or light-, medium- or heavy- duty truck, including a van or other vehicle classification such as a sport utility vehicle or crossover vehicle, |
| · | is the subject of a valid transfer and assignment from the depositor to the trust of all the depositor's rights and interest in the receivable, and all related security, |
| · | is created in compliance with all requirements of applicable law and pursuant to, as applicable, the sales and service agreement, the sale and assignment agreement or the floorplan financing agreement, |
| · | as to which Ford, Ford Credit and the depositor, as applicable, have obtained all material consents and governmental authorizations required to be obtained by them, |
| · | as to which the trust will at all times have good and marketable title to the receivable, free and clear of all liens, other than the liens permitted under the transfer and servicing agreement, |
| · | except for any adjustment fees payable by Ford, will at all times be the legal and assignable payment obligation of the related dealer, enforceable against the dealer in accordance with its terms, except as enforceability may be limited by applicable bankruptcy or other similar laws, |
| · | as to any adjustment fees payable by Ford, will at all times be the legal and assignable payment obligation of Ford, enforceable against Ford in accordance with its terms, except as enforceability may be limited by applicable bankruptcy or other similar laws, |
| · | is not subject to any right of rescission, setoff or any other defense, |
| · | as to which Ford, Ford Credit and the depositor have satisfied in all material respects all of their obligations relating to the receivable required to be satisfied by them, |
| · | as to which none of Ford, Ford Credit or the depositor has taken or failed to take any action that would materially impair the rights of the trust or the noteholders in the receivable, and |
| · | constitutes either a "general intangible," an "account," a "payment intangible" or "tangible chattel paper," each as defined in Article 9 of the Uniform Commercial Code, or "UCC" as in effect in the applicable jurisdiction. |
Under the transfer and servicing agreement, the definition of eligible receivables may be changed without the consent of the noteholders if (a) the depositor delivers to the owner trustee and the indenture trustee an officer's certificate to the effect that, in such officer's reasonable belief, the change will not result in a significant adverse effect and (b) the rating agency condition is satisfied for each rating agency then rating any series or class.
The depositor for a trust will have the right to designate additional eligible accounts, the receivables relating to which will be transferred to the trust. In certain cases, the depositor will also be required to designate additional eligible accounts for a trust under the circumstances and in the amounts specified in the prospectus supplement. Upon designation of any additional accounts, the depositor will transfer to the trust the receivables originated in connection with such additional accounts, whether the receivables are then existing or subsequently created. The date on which the receivables originated in such additional account are first transferred to the trust is called the "addition date."
Each additional account will be selected from eligible accounts in Ford Credit's portfolio of U.S. dealer floorplan accounts. However, it is possible that any additional accounts designated for your trust may not be of the same credit quality as those accounts initially designated for your trust. Additional accounts may have been originated using credit criteria different from those applied to the initial designated accounts or may have been acquired by Ford Credit from an institution with different credit criteria.
Additional accounts may be designated for a trust subject to the satisfaction of the conditions set forth in the transfer and servicing agreement, including:
| · | the depositor has delivered: |
| — | an "addition notice" specifying the additional cut-off date and the addition date, |
| — | an assignment of the related receivables and an account schedule listing the additional accounts, |
| — | all collections relating to the additional accounts since the additional cut-off date to the servicer, and |
| — | one or more opinions of counsel with respect to the transfer of the receivables originated in the additional accounts, |
| · | the depositor has represented that: |
| — | each additional account is an eligible account, |
| — | no selection procedures reasonably believed by the depositor to be adverse to the interests of the noteholders and any series enhancers were used in selecting the additional accounts, |
| — | the account schedule is true and correct in all material respects, |
| — | none of Ford Credit, the depositor or the servicer is insolvent or will be made insolvent by the transfer, and |
| — | the addition of the related receivables will not, in the depositor's reasonable belief, cause an amortization event to occur, and |
| · | the depositor has delivered an officer's certificate confirming that each of the above conditions has been satisfied, |
In addition, the rating agency condition must be satisfied for each rating agency then rating any series or class if, as a result of such designation, either:
| · | the aggregate number or aggregate amount of principal receivables of such additional accounts in any calendar quarter exceeds 10% of the number of all designated accounts or the pool balance, respectively, or |
| · | the aggregate number or the aggregate amount of principal receivables of such additional accounts in any twelve-month period commencing on July 1 of each year exceeds 20% of the number of all designated accounts or the pool balance, respectively. |
Eligible Accounts. The transfer and servicing agreement permits the depositor to redesignate eligible accounts and remove from a trust all the receivables originated in those accounts. The redesignation of eligible accounts may occur for various reasons. For example, the depositor may determine that a trust contains more receivables than the depositor is obligated to retain in that trust and that the depositor does not desire to obtain additional financing through that trust at that time. Any removal of receivables through the redesignation of accounts will reduce the transferor amount for the
trust. In addition, any redesignated accounts may be of higher or lower credit quality than the remaining accounts designated for the trust.
The depositor's right to redesignate eligible accounts and to remove all the related receivables from a trust is subject to the satisfaction of the conditions set forth in the transfer and servicing agreement, including:
| · | the depositor has delivered: |
| — | a notice specifying the redesignation date, |
| — | a notice directing the servicer to select for redesignation eligible accounts whose principal receivables approximately equal the amount specified by the depositor in such notice for removal from the trust, |
| — | a redesignated account schedule, and |
| — | a required federal income tax opinion, |
| · | the depositor has represented that: |
| — | the redesignation will not, in the depositor's reasonable belief, cause an amortization event to occur or cause the net adjusted pool balance to be less than the required pool balance, |
| — | the redesignated accounts were not chosen through a selection process that was materially adverse to the interests of the noteholders, any series enhancer or the holders of the transferor interest, and |
| — | the redesignated account schedule is true and correct in all material respects, and |
| · | the depositor has delivered an officer's certificate confirming that each of the above conditions has been satisfied. |
Beginning on the date of redesignation, the depositor will cease to transfer to the trust any receivables originated in a redesignated eligible account, and the related receivables, including all amounts received by the trust in respect of such receivables, will be deemed removed from the trust for all purposes.
Ineligible Accounts. On the first day of the collection period following the date on which the servicer's records indicate that an account has become an ineligible account, the depositor will redesignate that account and will:
| · | deliver a notice specifying the redesignation date (which may be incorporated in the monthly servicer report), |
| · | deliver a redesignated account schedule, and |
| · | represent that the redesignated account schedule is true and correct in all material respects. |
Beginning on the date of redesignation, the receivables originated in the ineligible redesignated account will be transferred to the depositor and the depositor will cease to transfer to the trust any receivables originated in such account. However, in the case of an ineligible account that is performance impaired, the related receivables that had previously been transferred to the trust may, at the sole option of the depositor:
| · | remain in the trust, or |
| · | be transferred to the depositor to the extent they do not exceed 3.0% of the pool balance on a rolling 12-month basis. |
Collections on each such account after the date of redesignation generally will be allocated between those receivables that remain in the trust and those receivables that are originated in the redesignated account on or after the redesignation date as follows:
| · | principal collections will be allocated to the receivable that relates to the vehicle whose sale or lease generated such collections, and |
| · | interest collections will be allocated between the trust and the depositor on the basis of the ratio of the principal receivables owned by the trust originated in such account to the total amount of principal receivables originated in such account. |
In the case of ineligible accounts that are not performance impaired, the related receivables, including all amounts received by the trust in respect of such receivables, will be removed from the trust on the redesignation date.
In addition, for administrative convenience, if the financing for a dealer has been terminated and the account has an outstanding balance of zero, the depositor may remove the account from the trust without delivery of a redesignation notice or redesignated account schedule. The depositor will reflect such removals on the account schedules delivered to the owner trustee.
The servicer will receive a fee for its servicing activities and reimbursement of expenses incurred in administering each trust. This servicing fee accrues for each outstanding series in the amounts and is calculated on the balances specified in the related prospectus supplement. Each series' servicing fee is payable periodically from interest collections allocable to that series in the priority described in the prospectus supplement for that series. No trust or noteholder will be responsible for any servicing fee allocable to the transferor interest, unless such servicing fee is allocated to the related series from the amounts otherwise distributable to the holders of the transferor interest. The servicer may elect to lower the percentage used to calculate the servicing fee.
Under the transfer and servicing agreement, the servicer will service the receivables in accordance with the customary policies and procedures that it uses in servicing dealer floorplan receivables for its own account or for others. In servicing the receivables, the servicer will agree that it may only change the terms relating to the accounts designated for the trust if:
| · | it will not have an adverse effect on the noteholders, |
| · | the change is made applicable to the comparable segment of the dealer floorplan accounts owned or serviced by the servicer, and |
| · | in the case of a reduction in the rate of interest charges, the reduction will not cause the interest earned on the receivables to be less than the sum of the interest payable on the notes and the servicing fee. |
In the transfer and servicing agreement, the servicer will agree that it will:
| · | satisfy all of its obligations in connection with the receivables and accounts, maintain in effect all qualifications required to service the receivables and accounts and comply in all material respects with all requirements of law in connection with servicing the receivables and the accounts, the failure to comply with which would have a material adverse effect on the noteholders, the holders of the transferor interest or any series enhancers, |
| · | not permit any rescission or cancellation of a receivable, except as ordered by a court or other government authority, |
| · | not do anything to impair the rights of the noteholders, the holders of the transferor interest or any series enhancers in the receivables, |
| · | not reschedule, revise or defer payments due on any receivable, except in accordance with its customary policies and procedures, and |
| · | except for the liens permitted by the transaction documents, not sell, transfer or pledge to any other person or permit the creation or existence of any lien on the receivables transferred to the trust. |
If Ford Credit is the servicer and the depositor or the servicer discovers, or receives written notice, that any of the servicer's covenants set forth above has not been complied with in all material respects, and such noncompliance has a material adverse effect on the related receivable or receivables, then, unless cured, the servicer will purchase that receivable or all the receivables in that account, as applicable. The purchase will be made on the determination date after the end of the 30-day, or longer, cure period, and the servicer will deposit into the collection account an amount equal to the amount of the affected receivable or receivables plus accrued and unpaid interest. The "determination date" for any distribution date is the day two business days before that distribution date. If Ford Credit is the servicer, this purchase by the servicer constitutes the sole remedy available to the noteholders in case of a breach by the servicer of its covenants.
The servicer may not resign except:
| · | upon a determination that performance of its duties is no longer permissible under applicable law and there is no reasonable action that the servicer could take to make the performance of its duties permissible under applicable law, or |
| · | upon assumption of its obligations and duties by a successor in compliance with the requirements relating to the servicer's consolidation, merger or sale of its assets to another person as described below. |
If the servicer ceases to act as servicer, the back-up servicer, if any, will become the successor servicer. If there is no back-up servicer in place at the time the servicer is terminated, the indenture trustee will as promptly as possible appoint a successor to the servicer and, if a successor servicer has not yet been appointed, the indenture trustee will act as servicer. If the indenture trustee is legally unable to act as servicer, it will petition an appropriate court to appoint a successor.
The servicer may delegate certain of its duties with respect to the receivables and the accounts to any person who agrees to conduct these duties in accordance with its customary policies and procedures for servicing dealer floorplan accounts and the transfer and servicing agreement.
The servicer will not be liable to the trust, the noteholders or any other person for any action or omission taken in good faith. However, the servicer will not be protected against any liability resulting from willful wrongdoing, bad faith or negligence in the performance of its duties or by reason of reckless disregard of obligations and duties. The servicer will be under no obligation to appear in, prosecute or defend any legal action that is not incidental to its servicing responsibilities and that may expose it to any expense or liability.
The depositor will be liable for all of its obligations, covenants and representations under the transfer and servicing agreement. The depositor will not be liable to the trust, the noteholders or any other person for any action or omission taken in good faith. However, the depositor will not be protected against any liability resulting from willful wrongdoing, bad faith or negligence in the performance of its duties or by reason of reckless disregard of obligations and duties.
The trust agreement provides that the depositor may transfer its interest in all or a portion of the transferor interest by exchanging its transferor interest for a certificated or uncertificated "supplemental interest" in the transferor interest. The terms of the supplemental interest will be set forth in a supplement to the trust agreement. Before a supplemental interest is issued, certain conditions set forth in the supplement to the trust agreement must be satisfied, including delivery of a required federal income tax opinion.
The depositor or the servicer may consolidate with, merge into, or sell its assets to, another person in accordance with the transfer and servicing agreement, and the surviving person or successor by transfer will be the successor to the depositor or servicer, as the case may be, subject to various conditions, including:
| · | execution of a supplement to the transfer and servicing agreement, |
| · | in the case of a succession relating to the depositor: |
| — | delivery to the owner trustee and the indenture trustee of (a) an officer's certificate and an opinion of counsel, each addressing compliance with the transfer and servicing agreement and the validity and enforceability of the supplemental agreement and (b) a required federal income tax opinion, and |
| — | the satisfaction of the rating agency condition for each rating agency then rating any series or class. |
| · | in the case of a succession relating to the servicer: |
| — | delivery to the owner trustee and the indenture trustee of (a) an officer's certificate and an opinion of counsel, each addressing compliance with the transfer and servicing agreement and the validity and enforceability of the supplemental agreement and (b) an officer's certificate of stating that the successor is eligible to act as servicer under the transfer and servicing agreement, and |
| — | delivery to each rating agency of a notice informing it of the succession. |
The transfer and servicing agreement specifies the duties and obligations of the servicer. A failure by the servicer to perform its duties or fulfill its obligations can result in a servicer default.
A "servicer default" means any of the following:
| (1) | failure by the servicer to make any payment, transfer or deposit, or to give instructions or notice to the indenture trustee to make any payment, transfer or deposit, on the required date or within the applicable grace period not exceeding five business days, |
| (2) | failure by the servicer to observe or perform in any material respect any of its other covenants or agreements if the failure: |
| · | has a significant adverse effect, and |
| · | continues unremedied for a period of 60 days after notice to the servicer by the owner trustee or the indenture trustee, or to the servicer, the owner trustee and the indenture trustee by noteholders of 10% or more of the outstanding principal balance of all of all the series affected, |
or the assignment or the delegation by the servicer of its duties, except as specifically permitted under the transfer and servicing agreement,
| (3) | any representation made by the servicer in the transfer and servicing agreement, or in any certificate delivered as required by the transfer and servicing agreement, proves to have been materially incorrect when made and it: |
| · | has a significant adverse effect, and |
| · | continues unremedied for a period of 60 days after notice to the servicer by the owner trustee or the indenture trustee, or to the servicer, the owner trustee and the indenture trustee by noteholders of 10% or more of the outstanding principal balance of all of all series affected, |
| (4) | bankruptcy of the servicer, or |
| (5) | any other event for a series described in the applicable prospectus supplement. |
A delay in or failure of performance referred to in clause (1) above for a period of 10 business days after the applicable grace period, or referred to under clause (2) or (3) for a period of 60 business days after the applicable grace period, will not constitute a servicer default if the delay or failure could not be prevented by the exercise of reasonable diligence by the servicer and the delay or failure was caused by an act of god or other similar occurrence outside the reasonable control of the servicer. Upon the occurrence of any of these events, the servicer will not be relieved from using all commercially reasonable efforts to perform its obligations in a timely manner and the servicer must provide the indenture trustee, the owner trustee, the depositor and any series enhancer with an officer's certificate giving prompt notice of its failure or delay, together with a description of its efforts to perform its obligations.
As long as a servicer default remains unremedied, the indenture trustee or the holders of at least a majority of the outstanding principal balance of all of the trust's outstanding series may terminate the servicer. If the servicer is terminated, the back-up servicer, if any, will become the successor servicer. If there is no back-up servicer in place at the time the servicer is terminated, the indenture trustee will as promptly as possible appoint a successor to the servicer. If no successor has been appointed or has accepted the appointment by the time the servicer ceases to act as servicer, the indenture trustee will automatically become the successor. If the indenture trustee is unable to obtain bids from eligible servicers and the servicer cannot cure the servicer default that gave rise to a transfer of servicing, and if the indenture trustee is legally unable to act as successor, then the indenture trustee will give the depositor a right of first refusal to purchase the interests of the noteholders in the trust on the distribution
date in the next calendar month at a price equal to the sum of the amounts specified for each series in the related indenture supplement.
If the servicer is in bankruptcy proceedings, the bankruptcy court may have the power to prevent either the indenture trustee or the noteholders from appointing a successor servicer.
Any successor servicer will be entitled to be reimbursed by the trust for its reasonable out-of-pocket costs and expenses incurred in the transition of the servicing of the receivables from the servicer to the successor servicer, referred to as "transition costs." The related prospectus supplement will specify how the transition costs allocated to any series will be reimbursed.
The servicer will prepare monthly and annual reports that will contain information about the related trust as specified in the related prospectus supplement. If a series has multiple classes, the servicer will provide information for each class, as specified in the prospectus supplement. The paying agent will forward to each noteholder of record these reports as described under "Description of the Notes—Reports to Noteholders" in this prospectus.
Monthly Investor Report. The servicer will prepare a monthly investor report, containing information about payments to be made on the notes and the performance of the receivables, as described in the prospectus supplement. Information regarding any additional series of notes issued by the related trust will be included in the monthly investor report for the distribution date following the calendar month in which such additional series was issued. The monthly investor report generally will include:
| · | the total amount distributed, |
| · | the amount of principal and interest for distribution, |
| · | if the series or a class of the series bears interest at a floating or variable rate, information relating to that rate, |
| · | interest collections and principal collections allocated to the series, |
| · | the amount of new principal receivables transferred to the related trust during the related collection period, |
| · | the "defaulted amount", which is the principal amount of defaulted receivables owned by the trust, allocated to the series, |
| · | reductions of the invested amount of the series and any reimbursements of previous reductions of the invested amount, |
| · | the monthly servicing fee for the series, |
| · | the "pool balance," which is the amount of the principal receivables and, if applicable, the principal portion of the trust's interests in other floorplan assets, as of any determination date, |
| · | the "adjusted pool balance," which is the sum of the pool balance as of any determination date, plus the amount then on deposit in the excess funding account (excluding net investment earnings), |
| · | the "net adjusted pool balance," which is the sum of (a) the adjusted pool balance as of any determination date (determined after giving effect to any principal receivables or, if applicable, interests in other floorplan assets sold to the issuer (or, in the case of principal |
receivables, coming into existence) on such date), plus (b) during an accumulation period or amortization period for any series, principal collections on deposit in the collection account (excluding any net investment earnings) allocable to any such series (determined after giving effect to any deposits and withdrawals to be made on such date), plus (c) the aggregate funds on deposit in the principal funding account (excluding any net investment earnings) for all outstanding series (determined after giving effect to any deposits or withdrawals to be made on such date),
| · | the outstanding principal balance of the notes, |
| · | the invested amount and adjusted invested amount, |
| · | the amount of net swap payments paid to or received from, the swap counterparty, if any, during the related collection period, and |
| · | the amount available under any other series enhancement for the series or for each class of the series. |
A "defaulted receivable" means each receivable that (a) has been charged off as uncollectible in accordance with the servicer's customary policies and procedures, or (b) remains outstanding and owned by the trust after the expiration of six consecutive calendar months from the date on which the account giving rise to such receivable was redesignated pursuant to the transfer and servicing agreement after the account became performance impaired.
Annual Compliance Reports. The servicer will prepare a number of reports, statements or certificates for each trust. No later than April 30 of each year, the servicer will provide to the depositor, the owner trustee, the indenture trustee and the rating agencies for each trust:
| · | Compliance Certificate: a certificate stating that the servicer has fulfilled all of its obligations under the transfer and servicing agreement in all material respects throughout the preceding calendar year or, if there has been a failure to fulfill any such obligation in any material respect, specifying the nature and status of each failure, |
| · | Assessment of Compliance: a report on an assessment of compliance with the minimum servicing criteria regarding general servicing, cash collection and administration, investor remittances and reporting and pool asset administration during the preceding calendar year, including disclosure of any material instance of noncompliance identified by the servicer, and |
| · | Attestation Report: a report by a registered public accounting firm that attests to, and reports on, the assessment made by the servicer of compliance with the minimum servicing criteria described above, which must be made in accordance with standards for attestation engagements issued or adopted by the Public Company Accounting Oversight Board. |
For so long as the trust is required to report under the Securities Exchange Act of 1934, the servicer will file the compliance certificate, the assessment report and the attestation report with the SEC as exhibits to the trust's annual report on Form 10-K by 90 days after the end of the calendar year. A copy of any of these items may be obtained by any noteholder by request to the indenture trustee.
The transfer and servicing agreements and the receivables purchase agreements may be amended:
| · | without the consent of any noteholders, if (a) the depositor delivers an officer's certificate stating that, in such officer's reasonable belief, the amendment will not have a significant |
adverse effect and (b) the rating agency condition is satisfied for each rating agency then rating any series or class,
| · | without the consent of any noteholders, in order to cure any ambiguity, to correct or supplement any inconsistent provision upon receipt of an officer's certificate of the depositor that, in such officer's reasonable belief, the action will not have a significant adverse effect, |
| · | without the consent of any noteholders, to add, modify or eliminate any provisions to avoid the imposition of certain state or local income or franchise taxes if (a) the depositor delivers an officer's certificate that the requirements under the transfer and servicing agreement applicable to the amendment have been met and (b) the rating agency condition is satisfied for each rating agency then rating any series or class, |
| · | without the consent of any noteholders, for the addition or a sale of receivables to the trust portfolio, |
| · | with the consent of the holders of at least 66-2/3% of the outstanding principal balance of the notes of each adversely affected series, to make any other change, except as described in the next paragraph; and |
| · | with the consent of each noteholder affected, to (a) reduce the amount or delay the timing of any payment or deposit, (b) change the manner of calculating the interests of a noteholder in the trust assets, and (c) reduce the percentage of the outstanding principal balance of the notes required to consent to any amendment. |
The receivables purchase agreement will terminate immediately after the related trust terminates. In addition, if Ford Credit becomes subject to any bankruptcy proceeding and if such proceeding is not dismissed within 60 days, Ford Credit will immediately cease to sell or transfer receivables to the depositor and will promptly notify the depositor, the owner trustee and the indenture trustee of such event.
Ford will sell the in-transit receivables to Ford Credit. Ford Credit will sell the receivables to the depositor, and the depositor will in turn transfer the receivables to a trust. The depositor will represent on each closing date, that:
| · | its transfer to the related trust constitutes a valid transfer and assignment to the trust of the receivables, and |
| · | under the UCC, the trust has: |
| — | a valid and enforceable first priority perfected ownership interest in the receivables, in existence at the time the receivables are sold and assigned to the trust or at the date of addition of any additional accounts, and |
| — | a valid and enforceable first priority perfected ownership interest in the receivables created thereafter, in existence at and after their creation. |
For a discussion of the trust's rights arising from these representations not being satisfied, you should read "Description of the Agreements—Representations of Ford Credit and the Depositor" in this prospectus.
Ford Credit and the depositor will represent that the receivables are "tangible chattel paper," "accounts," "payment intangibles" or "general intangibles" for purposes of the UCC. To the extent the receivables are deemed to be:
| · | tangible chattel paper, accounts or payment intangibles and the transfer of the receivables by Ford Credit to the depositor or by the depositor to the trust is deemed to be a sale or to create a security interest, or |
| · | general intangibles and the transfer of the receivables by Ford Credit to the depositor or by the depositor to the trust is deemed to create a security interest, |
then the UCC will apply and, except in the case of the sale of payment intangibles, the transferee must file appropriate financing statements (or as an alternative in the case of tangible chattel paper, take possession thereof) in order to perfect its interest in the receivables. Each of Ford Credit, the depositor and the trust will file financing statements covering the applicable receivables under the UCC in order to perfect their respective interests in the receivables and they will file continuation statements as required to continue the perfection of their interests. However, the in-transit receivables will not be stamped to indicate the interest of Ford Credit, and the receivables on the whole will not be stamped to indicate the interest of the depositor or the trustee.
Under the UCC and applicable federal law, there are limited circumstances in which prior or subsequent transferees of receivables could have an interest that has priority over the trust's interest in the receivables. A purchaser of the receivables who gives new value and takes possession of the instruments which evidence the receivables (i.e., the tangible chattel paper) in the ordinary course of business may, under certain circumstances, have priority over the interest of the trust in the receivables. A tax or other government lien on property of Ford or Ford Credit or the depositor that arose before the time a receivable is conveyed to the trust may also have priority over the interest of the trust in that receivable. Ford will represent to Ford Credit, Ford Credit will represent to the depositor, and the depositor will represent to the trust, that the applicable receivables have been transferred free and clear of the lien of any third party. Ford, Ford Credit and the depositor will also covenant that they will not sell or pledge any receivable or, except as described under "Description of the Agreements—Matters Regarding the Servicer and the Depositor" in this prospectus, on the transferor interest other than to the trust. In addition, so long as Ford Credit is the servicer, collections on the receivables may, under certain circumstances, be commingled with Ford Credit's own funds before each distribution date and, in the event of the bankruptcy of Ford Credit, the trust may not have a perfected interest in these collections.
Sale of the Receivables. The sale of the in-transit receivables by Ford to Ford Credit and of the receivables by Ford Credit to the depositor are each structured to minimize the possibility that a bankruptcy proceeding of Ford or Ford Credit will adversely affect the trust's rights in the receivables. Ford and Ford Credit intend that the sale of the in-transit receivables by Ford to Ford Credit constitute a "true sale" and Ford Credit and the depositor intend that the sale of the receivables by Ford Credit to the depositor constitute a "true sale." In the sale and assignment agreement, Ford has represented that its sale of the in-transit receivables to Ford Credit is a valid sale. Similarly, in each receivables purchase agreement, Ford Credit will represent that its sale of the receivables to the depositor is a valid sale. The depositor will have no recourse to Ford or Ford Credit other than the limited obligation to repurchase receivables for breaches of representations. Additionally, all actions required under applicable law to perfect the depositor's ownership interest in the receivables will be taken.
On the closing date for your notes, the depositor will receive a reasoned legal opinion that in a bankruptcy of Ford or Ford Credit:
| · | the in-transit receivables and the collections on the in-transit receivables would not be property of Ford's bankruptcy estate under U.S. federal bankruptcy laws, |
| · | the receivables and the collections on the receivables would not be property of Ford Credit's bankruptcy estate under U.S. federal bankruptcy laws, and |
| · | the automatic stay under U.S. federal bankruptcy laws would not apply to prevent payment of the collections on the receivables to the depositor or the trust. |
This opinion will be subject to certain assumptions and qualifications, and a court in a Ford or Ford Credit bankruptcy proceeding may not reach the same conclusion.
Nonetheless, if Ford or Ford Credit were to become a debtor in a bankruptcy case and a creditor or a trustee in bankruptcy were to take the position that the sale of in-transit receivables from Ford to Ford Credit or the sale of the receivables from Ford Credit to the depositor should be recharacterized as a pledge of the in-transit receivables or the receivables, as applicable, to secure a borrowing, then delays in payments of collections on the receivables could occur. Moreover, if the bankruptcy court were to rule in favor of the trustee, debtor-in-possession or creditor, reductions in the amount of payments of collections on the receivables could result.
Structure of Depositor; Risk of Substantive Consolidation. The depositor is organized as a special purpose entity and is restricted by its organizational documents, to activities designed to make it "bankruptcy-remote." These restrictions limit the nature of its activities, prohibit the incurrence of additional indebtedness and make it unlikely that the depositor will have any creditors. The organizational documents restrict the depositor from commencing a voluntary bankruptcy proceeding without the unanimous consent of its board of managers or directors, as applicable, including independent managers or directors, as applicable, who are specifically instructed to take into account the interests of creditors of the depositor and trusts created by the depositor in any vote to allow the depositor to file for bankruptcy. The organizational documents also contain covenants meant to preserve the separate identity of the depositor from Ford Credit and to avoid substantive consolidation of Ford Credit and the depositor. The most important of these covenants require each company to maintain its separate existence, maintain separate books and bank accounts, prepare separate financial statements and not hold itself as liable for debts of the other and not commingle the depositor's assets with the assets of Ford Credit or its affiliates.
In addition, in the transaction documents, the owner trustee, the indenture trustee and the noteholders will agree not to institute a bankruptcy proceeding against the depositor in connection with any obligations under the notes or the transaction documents.
On the closing date for your notes, Ford Credit and the depositor will obtain a reasoned legal opinion that in a bankruptcy of Ford Credit, a creditor or bankruptcy trustee of Ford Credit (or Ford Credit as debtor-in-possession) would not have valid grounds to request a court to disregard the separate legal existence of the depositor and consolidate the assets and liabilities of the depositor with the assets and liabilities of Ford Credit in a manner prejudicial to the noteholders. This opinion will be subject to certain assumptions and qualifications, including an assumption that the depositor and Ford Credit comply with the depositor's organizational documents. However, a court in a Ford Credit bankruptcy proceeding may not reach the same conclusion. If the separate legal existence of Ford Credit and the depositor were disregarded and the assets and liabilities of Ford Credit and the depositor were consolidated, assets of the depositor could be used to satisfy Ford Credit's creditors instead of the noteholders or the trust. This consolidation of assets and liabilities generally is referred to as "substantive consolidation."
If, in a bankruptcy of Ford Credit, the court was requested to order that Ford Credit should be consolidated with the depositor, delays in payments on the notes could result. If the bankruptcy court were to rule in favor of the request to consolidate Ford Credit and the depositor, reductions in such payments to the noteholders could result.
Transfer of Receivables by the Depositor to the Trust; Perfection of Security Interests. The transfer of the receivables by the depositor to the trust is structured as a valid transfer. Unlike the sale by Ford Credit to the depositor, the depositor initially will retain an interest in the receivables it sells in the form of a transferor interest in the trust. Because of this retained interest, this sale may not constitute a "true sale" that removes the receivables from the bankruptcy estate of the depositor. The depositor will grant a back-up security interest in the receivables to the trust and will file UCC financing statements to perfect the trust's ownership interest and security interest in the receivables. The trust agreement contains provisions similar to those in the depositor's organizational documents designed to make it "bankruptcy-remote" by limiting the trust's activities and requiring creditors to agree not to institute a bankruptcy proceeding against the trust.
Assuming that the sale of the receivables by Ford Credit to the depositor is a "true sale," the depositor is not consolidated with Ford Credit in a bankruptcy of Ford Credit and the depositor is not in bankruptcy, the trust's perfected security interest in the receivables generally will provide the trust with uninterrupted access to collections on the receivables (other than any collections held by Ford Credit as servicer at the time a bankruptcy proceeding is commenced). The trust will grant a security interest in the receivables and other trust assets to the indenture trustee for the benefit of the noteholders, and the administrator will file UCC financing statements to perfect and maintain the perfection of the security interest.
Bankruptcy Proceedings of Ford Credit, the Depositor or the Servicer. No depositor intends to commence, and Ford Credit will agree that it will not cause any depositor to commence, a voluntary bankruptcy proceeding so long as the depositor is solvent.
If Ford Credit or the depositor were to become a debtor in a bankruptcy case that caused an amortization event to occur:
| · | the transfer of new receivables to that depositor would be prohibited under the receivables purchase agreement, and |
| · | only collections on receivables previously sold to the depositor and transferred to the trust would be available to pay interest and principal on the notes. |
The bankruptcy of the servicer will result in a servicer default which, in turn, will result in an amortization event. If no other servicer default other than a bankruptcy exists, a trustee-in-bankruptcy of the servicer may have the power to prevent either the trustee or the noteholders from appointing a successor servicer.
Payments made by Ford Credit or the depositor to repurchase receivables pursuant to the transfer and servicing agreement may be recoverable by Ford Credit or the depositor, as debtor-in-possession, or by a creditor or a trustee-in-bankruptcy of Ford Credit or of the depositor as a preferential transfer from Ford Credit or the depositor if the payments were made within one year before the filing of a bankruptcy case in respect of Ford Credit.
Set forth below is a discussion of the anticipated material U.S. federal income tax consequences of the purchase, ownership and disposition of the notes offered by this prospectus. This discussion is based upon current provisions of the Internal Revenue Code, existing and proposed Treasury regulations, current administrative rulings, judicial decisions and other applicable authorities. There are no cases or Internal Revenue Service, or "IRS," rulings on similar transactions involving debt issued by a trust with terms similar to those of the notes. We cannot assure you that the IRS will not challenge the conclusions
reached in this discussion, and no ruling from the IRS has been or will be sought on any of the issues discussed below. Furthermore, legislative, judicial or administrative changes may occur, perhaps with retroactive effect, which could affect the accuracy of the statements and conclusions set forth in this prospectus.
This discussion does not deal with all aspects of federal income taxation that may be relevant to the holders of notes in light of their personal investment circumstances nor, except for specific limited discussions of particular topics, to noteholders subject to special treatment under the federal income tax laws, such as financial institutions, broker-dealers, life insurance companies and tax-exempt organizations. This information is directed only to prospective purchasers who:
| · | purchase notes in the initial distribution of the notes, |
| · | are citizens or residents of the United States, including domestic corporations, limited liability companies and partnerships, and |
| · | hold the notes as "capital assets" within the meaning of Section 1221 of the Internal Revenue Code. |
As used in this discussion, the term "U.S. noteholder" means a beneficial owner of a note that is for U.S. federal income tax purposes:
| · | a citizen or resident of the United States, |
| · | a corporation created or organized in or under the laws of the United States, any state thereof or the District of Columbia, |
| · | an estate whose income is subject to U.S. federal income tax regardless of its source, or |
| · | a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or that has made a valid election under applicable Treasury Regulations to be treated as a United States person. |
Moreover, in this discussion, the term "U.S. noteholder" includes any noteholder whose income or gain in respect to its investment in a note is effectively connected with the conduct of a U.S. trade or business. As used in this discussion the term "non-U.S. noteholder" means a beneficial owner of a note other than a U.S. noteholder and other than a partnership.
Prospective investors are encouraged to consult with their tax advisors as to the U.S. federal, state and local, foreign and any other tax consequences to them of the purchase, ownership and disposition of notes.
At the time a series of notes is issued by a trust, tax counsel to the depositor identified in the prospectus supplement will opine that, assuming that the terms of the applicable trust agreement and related documents are complied with, a trust that issues one or more classes of notes to investors and the transferor interest which is retained by the depositor and/or one of its affiliates will not be an association or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.
Except as specified in the related prospectus supplement, tax counsel will also opine that the notes will be characterized as debt for U.S. federal income tax purposes. If, contrary to the opinion of tax counsel, the IRS successfully asserted that one or more classes of notes did not represent debt for U.S. federal income tax purposes, such class or classes of notes might be treated as equity interests in the
trust. If so treated, the trust might be treated as a publicly traded partnership taxable as a corporation with potentially adverse tax consequences, including by not being able to reduce its taxable income by deductions for interest expense on notes recharacterized as equity). Alternatively, the trust could be treated as a publicly traded partnership that would not be taxable as a corporation because it would meet an applicable safe harbor. Nonetheless, treatment of notes as equity interests in such a partnership could have adverse tax consequences to certain noteholders. For example, income to certain tax-exempt entities (including pension funds) would be "unrelated business taxable income," income to non-U.S. noteholders may be subject to United States withholding tax and United States tax return filing requirements, and individual holders might be subject to certain limitations on their ability to deduct their share of trust expenses.
Characterization as Debt. For each series of notes, except for any series which is specifically identified as receiving different tax treatment in the related prospectus supplement, tax counsel will deliver its opinion that the notes will be treated as debt for U.S. federal income tax purposes. The depositor(s), the servicer and each noteholder, by acquiring an interest in a note, will agree to treat the notes as debt for U.S. federal, state and local income and franchise tax purposes.
For a discussion of the potential federal income tax consequences to noteholders if the IRS were successful in challenging the characterization of the notes for U.S. federal income tax purposes, you should read "—Tax Characterization of the Trusts" above.
Treatment of Stated Interest. Based on tax counsel's opinion that the notes will be treated as debt for U.S. federal income tax purposes, and assuming the notes are not issued with original issue discount or "OID," the stated interest on a note will be taxable to a noteholder as ordinary income when received or accrued in accordance with each noteholder's method of tax accounting.
Original Issue Discount. If provided in the prospectus supplement that a class of notes is to be treated as issued with OID, a holder of any such notes must include OID in its gross income as ordinary interest income as it accrues, regardless of the holder's regular method of accounting, under a constant yield method.
Disposition of Notes. If a noteholder sells or otherwise disposes of a note, the holder will recognize gain or loss in an amount equal to the difference between the amount realized on the sale or disposition and the holder's adjusted tax basis in the note. The holder's adjusted tax basis will equal the holder's cost for the note, increased by any OID and market discount previously included by such noteholder in income with respect to the note and decreased by any bond premium previously amortized and any payments of principal and OID previously received by such noteholder with respect to such note. Any gain or loss on sale or disposition will be capital gain or loss if the note was held as a capital asset, except for gain representing accrued interest or accrued market discount not previously included in income. Capital gain or loss will be long-term if the note was held by the holder for more than one year and otherwise will be short-term.
Information Reporting and Back-up Withholding. The indenture trustee will be required to report annually to the IRS, and to each noteholder of record, the amount of interest paid on the notes, and any amount of interest withheld for federal income taxes, except as to exempt holders (generally, corporations, tax-exempt organizations, qualified pension and profit-sharing trusts, individual retirement accounts, or nonresident aliens who provide certification as to their status). Each holder who is not an exempt holder will be required to provide to the indenture trustee, under penalties of perjury, a certificate containing the holder's name, address, correct federal taxpayer identification number and a statement that the holder is not subject to back-up withholding. Should such a holder fail to provide the required certification, the indenture trustee will be required to withhold the tax from interest otherwise payable to the holder and pay the withheld amount to the IRS.
Tax Consequences to Non-U.S. Noteholders. A non-U.S. noteholder who is an individual or corporation (or a person treated as a corporation for U.S. federal income tax purposes) holding the notes on its own behalf will not be subject to U.S. federal income taxes on payments of principal, premium, interest or OID on a note, unless such non-U.S. noteholder is a direct or indirect 10% or greater shareholder of the trust or a controlled foreign corporation related to the trust. To qualify for the exemption from taxation, the withholding agent must have received a statement from the individual or corporation that:
| · | is signed under penalties of perjury by the beneficial owner of the note, |
| · | certifies that such owner is not a U.S. noteholder, and |
| · | provides the beneficial owner's name and address. |
A "withholding agent" is the last U.S. payor (or a non-U.S. payor who is a qualified intermediary, U.S. branch of a foreign person, or withholding foreign partnership) in the chain of payment prior to payment to a non-U.S. noteholder (which itself is not a withholding agent). Generally, this statement is made on an IRS Form W-8BEN, which is effective for the remainder of the year of signature plus three full calendar years unless a change in circumstances makes any information on the form incorrect. Notwithstanding the preceding sentence, a W-8BEN with a U.S. taxpayer identification number will remain effective until a change in circumstances makes any information on the form incorrect, provided that the withholding agent reports at least annually to the beneficial owner on IRS Form 1042-S. The beneficial owner must inform the withholding agent within 30 days of such change and furnish a new W-8BEN.
A non-U.S. noteholder who is not an individual or corporation (or a person treated as a corporation for U.S. federal income tax purposes) holding the notes on its own behalf may have substantially increased reporting requirements and is encouraged to consult its tax advisor.
A non-U.S. noteholder whose income with respect to its investment in a note is effectively connected with the conduct of a U.S. trade or business would generally be taxed as if the holder was a U.S. noteholder provided the holder files IRS Form W-8ECI.
Certain securities clearing organizations, and other entities who are not beneficial owners, may be able to provide a signed statement to the withholding agent. However, in such case, the signed statement may require a copy of the beneficial owner's W-8BEN (or the substitute form).
Any capital gain realized on the sale, redemption, retirement or other taxable disposition of a note by a non-U.S. noteholder will be exempt from U.S. federal income and withholding tax so long as:
| �� | · | the gain is not effectively connected with the conduct of a trade or business in the United States by the non-U.S. noteholder, and |
| · | in the case of a foreign individual, the non-U.S. noteholder is not present in the United States for 183 days or more in the taxable year. |
If the interest, gain or income on a note held by a non-U.S. noteholder is effectively connected with the conduct of a trade or business in the United States by the non-U.S. noteholder, such holder, although exempt from the withholding tax previously discussed if an appropriate statement is furnished, will generally be subject to U.S. federal income tax on the interest, gain or income at regular federal income tax rates. In addition, if the non-U.S. noteholder is a foreign corporation, it may be subject to a branch profits tax equal to 30 percent of its "effectively connected earnings and profits" within the meaning of the Internal Revenue Code for the taxable year, unless it qualifies for a lower rate under an applicable tax treaty.
Because of the variation in the tax laws of each state and locality, it is impossible to predict the tax classification of the trust or the tax consequences to the trust or to holders of notes in all of the state and local taxing jurisdictions in which they may be subject to tax. Prospective purchasers are encouraged to consult their tax advisors with respect to the state and local taxation of the trust and state and local tax consequences of the purchase, ownership and disposition of notes.
The Employee Retirement Income Security Act of 1974, or "ERISA," and the Internal Revenue Code impose certain duties and requirements on employee benefit plans and other retirement plans and arrangements (such as individual retirement accounts and Keogh plans) that are subject to Title I of ERISA and/or Section 4975 of the Internal Revenue Code, referred to as "plans," and certain entities (including insurance company general accounts) whose assets are deemed to include assets of plans, and on persons who are fiduciaries of plans. Any person who exercises any authority or control over the management or disposition of a plan's assets is considered to be a fiduciary of that plan. In accordance with ERISA's general fiduciary standards, before investing in the notes, a plan fiduciary should determine, among other factors:
| · | whether the investment is permitted under the plan's governing documents, |
| · | whether the fiduciary has the authority to make the investment, |
| · | whether the investment is consistent with the plan's funding objectives, |
| · | the tax effects of the investment, |
| · | whether under the general fiduciary standards of investment prudence and diversification an investment in any notes of a trust is appropriate for the plan, taking into account the overall investment policy of the plan and the composition of the plan's investment portfolio, and |
| · | whether the investment is prudent considering the factors discussed in this prospectus and the prospectus supplement. |
In addition, ERISA and Section 4975 of the Internal Revenue Code prohibit a broad range of transactions involving assets of a plan and persons who are "parties in interest" under ERISA or "disqualified persons" under Section 4975 of the Internal Revenue Code. A violation of these rules may result in the imposition of significant excise taxes and other liabilities.
A fiduciary of any plan should carefully review with its legal and other advisors whether the purchase or holding of any notes could give rise to a transaction prohibited or otherwise impermissible under ERISA or Section 4975 of the Internal Revenue Code, and should read "ERISA Considerations" in both this prospectus and the prospectus supplement regarding any restrictions on the purchase and/or holding of the notes offered by this prospectus and the prospectus supplement.
Whether or not an investment in the notes will give rise to a transaction prohibited or otherwise impermissible under ERISA or Section 4975 of the Internal Revenue Code will depend on the structure of the trust and whether the assets of the trust will be deemed to be "plan assets" of a plan investing in notes issued by the trust. Pursuant to a regulation issued by the U.S. Department of Labor, or the "plan
assets regulation", a plan's assets may be deemed to include an interest in the underlying assets of the trust if the plan acquires an "equity interest" in the trust and none of the exceptions contained in the plan assets regulation are applicable. In general, an "equity interest" is defined under the plan asset regulations as any interest in an entity other than an instrument which is treated as indebtedness under applicable local law and which has no substantial equity features.
The depositor believes that the notes will be treated as indebtedness without substantial equity features for purposes of the plan assets regulation. However, without regard to whether the notes are treated as debt for ERISA purposes, the purchase and holding of the notes by or on behalf of a plan could be considered to give rise to a direct or indirect prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code if the trust, the owner trustee, the Delaware trustee, the indenture trustee, any noteholder or any of their respective affiliates, including Ford Credit, is or becomes a "party in interest" under ERISA or a "disqualified person" under Section 4975 of the Internal Revenue Code with respect to the plan. In such case, exemptions from the prohibited transaction rules could be applicable to the purchase and holding of notes by a plan depending on the type and circumstances of the plan fiduciary making the decision to purchase a note. Included among these exceptions are:
| · | prohibited transaction class exemption, or "PTCE", 84-14, regarding transactions effected by qualified professional asset managers, |
| · | PTCE 90-1, regarding transactions entered into by insurance company pooled separate accounts, |
| · | PTCE 91-38, regarding transactions entered into by bank collective investment funds, |
| · | PTCE 95-60, regarding transactions entered into by insurance company general accounts, and |
| · | PCTE 96-23, regarding transactions effected by in-house asset managers. |
In addition, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Internal Revenue Code provide an exemption for certain transactions between a plan and a person that is a party in interest or disqualified person with respect to a plan solely by reason of providing services to the plan or a relationship with such a service provider (other than a party in interest or a disqualified person that is, or is an affiliate of, a fiduciary with respect to the assets of the plan involved in the transaction), provided the plan pays no more than, and receives no less than, adequate consideration in connection with the transaction. However, even if the conditions specified in one or more of the foregoing exemptions are met, the scope of relief provided by these exemptions may not necessarily cover all acts that might be construed as prohibited transactions.
Any plan that purchases and holds notes of any class will be deemed to have represented that its purchase and holding of the notes does not and will not constitute a non-exempt prohibited transaction under ERISA or Section 4975 of the Internal Revenue Code due to the applicability of a statutory or administrative exemption from the prohibited transaction rules.
Certain employee benefit plans, such as governmental plans, foreign plans and certain church plans (each as defined or described in ERISA) are not subject to the prohibited transaction provisions of ERISA and Section 4975 of the Internal Revenue Code. However, such plans may be subject to provisions of other federal, state, local or non-U.S. laws or regulations that are substantially similar to Title I of ERISA or Section 4975 of the Internal Revenue Code. In addition, any such plan that is qualified and exempt from taxation under Sections 401(a) and 501(a) of the Internal Revenue Code is subject to the prohibited transaction rules set forth in Section 503 of the Internal Revenue Code. Each plan that is subject to any laws or regulations substantially similar to Title I of ERISA or Section 4975 of the Internal Revenue Code
that purchases and holds notes will be deemed to have represented that its purchase and holding of the notes does not constitute and will not result in a violation of such similar laws or regulations.
The trust will issue each series of notes to the depositor and the depositor will sell the notes to the underwriters named in the prospectus supplement. In the underwriting agreement the depositor will agree to sell, and each of the underwriters will agree to purchase, a specified principal amount of one or more classes of notes, as set forth in the prospectus supplement.
The prospectus supplement (or supplemental prospectus supplement, as described below), will specify the price at which the related series or classes of notes will be offered to the public and any concessions that may be offered to certain dealers participating in the offering of the notes or specify that the notes are to be resold by the underwriters in negotiated transactions at varying prices to be determined at the time of such sale.
After the initial public offering of the notes, the public offering prices and the concessions may be changed.
The prospectus supplement, together with a supplemental prospectus supplement, also may be used by Ford Credit or its affiliates for the sale of a class of notes originally purchased from the depositor by Ford Credit or its affiliates on or after the closing date.
The depositor and Ford Credit will indemnify the underwriters against certain civil liabilities, including liabilities under the federal securities laws, or contribute to payments the underwriters may be required to make for those liabilities.
The trust may invest the funds in its trust bank accounts in obligations issued by the underwriters or their affiliates.
In connection with the sale of the notes, the underwriters may, to the extent permitted by Regulation M under the Securities Exchange Act of 1934, engage in:
| · | over-allotments, in which members of the selling syndicate sell more notes than the seller actually sold to the syndicate, creating a syndicate short position, |
| · | stabilizing transactions, in which purchases and sales of the notes may be made by the members of the selling syndicate at prices that do not exceed a specified maximum, |
| · | syndicate covering transactions, in which members of the selling syndicate purchase the notes in the open market after the distribution is completed in order to cover syndicate short positions, and |
| · | penalty bids, by which underwriters reclaim a selling concession from a syndicate member when any of the notes originally sold by that syndicate member are purchased in a syndicate covering transaction to cover syndicate short positions. |
These stabilizing transactions, syndicate covering transactions and penalty bids may cause the prices of the notes to be higher than they would otherwise be. These transactions, if commenced, may be discontinued at any time.
Counsel identified in the prospectus supplement will review or provide legal opinions on certain legal matters relating to the notes of the trust for the trust, the depositor and the servicer including an opinion that the notes will be legally issued, fully paid and non-assessable and will be binding obligations of the trust, subject to customary exceptions as to enforceability. Counsel identified in the prospectus supplement will review or provide legal opinions on certain legal matters for the underwriters.
Ford Credit Floorplan Corporation and Ford Credit Floorplan LLC, as depositors of the trusts, have filed with the SEC a registration statement, Registration Nos. 333-148505 and 333-148505-01 under the Securities Act of 1933, for the notes offered by this prospectus. You may read and copy the registration statement and any notices, reports, statements or other materials filed by the trust, Ford Credit or the depositor at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C., 20549.
You may obtain more information about the operation of the Public Reference Room and copying costs by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at http://www.sec.gov where you can find reports, information statements and other information for registrants that file electronically with the SEC. You may obtain more information about Ford and Ford Credit at www.ford.com and www.fordcredit.com.
For the time period that each trust is required to report under the Securities Exchange Act of 1934, the servicer will file for each trust annual reports on Form 10-K and distribution reports on Form 10-D, any current reports on Form 8-K, and amendments to those reports with the SEC. A copy of any reports may be obtained by any noteholder by request to the indenture trustee or the depositor.
Each trust "incorporates by reference" certain information it files with the SEC, which means that the trust can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus. Information that the trust files later with the SEC will automatically update the information in this prospectus. In all cases, you should rely on the later information over different information included in this prospectus or the accompanying prospectus supplement. Each trust incorporates by reference any monthly reports on Form 10-D and current reports on Form 8-K subsequently filed by or on behalf of the trust prior to the termination of the offering of the notes (including any market-making transactions with respect to such notes unless exempt from the registration statements of the Securities Act).
The depositor will provide without charge to each person, including any beneficial owner of the notes, to whom a copy of this prospectus is delivered, on request of any such person, a copy of any of the documents incorporated in this prospectus or in any prospectus supplement by reference. Requests for such copies should be directed to:
Ford Credit Floorplan Corporation
or Ford Credit Floorplan LLC
c/o Ford Motor Credit Company LLC
Suite 2407, 212-045
One American Road
Dearborn, Michigan 48126
Attention: Ford Credit SPE Management Office
Telephone number: (313) 594-3495
Fax number: (313) 248-7613
| addition date | 55 |
| additional cut-off date | 51 |
| adjusted invested amount | 42 |
| adjusted pool balance | 62 |
| adjustment fee | 19 |
| adjustment payments | 33 |
| amortization event | 37 |
| available subordinated amount | 38 |
| clean up call | 8, 40 |
| collection account | 42 |
| collection period | 43 |
| controlled accumulation period | 36 |
| controlled amortization period | 36 |
| co-trustees | 4, 26 |
| credit enhancement percentage | 42 |
| defaulted amount | 62 |
| defaulted receivable | 63 |
| deposit date | 43 |
| determination date | 59 |
| development dealers | 23 |
| disqualified persons | 71 |
| DTC | 46 |
| early accumulation period | 36 |
| early amortization period | 37 |
| eligible account | 54 |
| eligible receivable | 54 |
| ERISA | 71 |
| event of default | 47 |
| excess funding account | 42 |
| excess interest collections | 41 |
| excess interest sharing group | 41 |
| excess spread | 38 |
| expected final payment date | 36 |
| FCF Corp | 24 |
| FCF LLC | 24 |
| final maturity date | 40 |
| Ford | 4 |
| Ford Credit | 4 |
| interest collections | 44 |
| interest reallocation group | 41 |
| interest receivables | 45 |
| interests in other floorplan assets | 31 |
| in-transit period | 12, 19 |
| in-transit receivables | 7 |
| invested amount | 42 |
| investor charge-off | 45 |
| investor default amount | 45 |
| investor percentage | 42 |
| IRS | 67 |
| LIBOR | 35 |
| net adjusted pool balance | 62 |
| new vehicles | 18 |
| non-U.S. noteholder | 68 |
| OID | 69 |
| other floorplan assets | 31 |
| owner trustee | 4 |
| partial amortization period | 37 |
| parties in interest | 71 |
| plan assets regulation | 72 |
| plans | 71 |
| pool balance | 62 |
| pooled participation receivables | 31 |
| principal collections | 44 |
| principal receivables | 45 |
| principal sharing group | 41 |
| program vehicles | 18 |
| PTCE | 72 |
| purchased participation receivables | 31 |
| rating agency condition | 26 |
| required federal income tax opinion | 26 |
| required pool balance | 45 |
| required transferor amount | 34 |
| revolving period | 35 |
| SEC | 4 |
| series amortization events | 37 |
| series cut-off date | 51 |
| series enhancement | 38 |
| series enhancer | 38 |
| servicer | 8 |
| servicer default | 61 |
| significant adverse effect | 34 |
| status | 24 |
| supplemental interest | 60 |
| syndicated receivables | 31 |
| third-party financed in-transit receivables | 31 |
| third-party purchased receivables | 32 |
| transferor | 4 |
| transferor amount | 33 |
| transferor interest | 33 |
| transferor percentage | 42 |
| transition costs | 62 |
| trust | 4 |
| trust amortization events | 37 |
| trust available subordinated amount | 39 |
| trust portfolio | 30 |
| trust termination date | 40 |
| U.S. noteholder | 68 |
| UCC | 55 |
| uncovered reallocated principal collection | 45 |
| used vehicles | 18 |
You should rely only on the information contained in or incorporated by reference into this prospectus supplement or the prospectus. Ford Credit has not authorized anyone to give you different information. You should not rely on the accuracy of the information in this prospectus supplement or the prospectus for any date other than on this date. Ford Credit is not offering the notes in any states where it is not permitted.
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Ford Credit Floorplan Corporation
Ford Credit Floorplan LLC
Depositors
Ford Motor Credit Company LLC
Sponsor and Servicer
_______________
Dealer Prospectus Delivery Obligation. Until 90 days after the date of this prospectus supplement all dealers that effect transactions in these securities, whether or not participating in the offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
Ford Credit Floorplan
Master Owner Trust A
Issuing Entity or Trust
$1,500,000,000
Series 2009-2 Floating Rate
Asset Backed Notes
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PROSPECTUS SUPPLEMENT
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