EXHIBIT 10.2

 

Execution Version

 

(Bilateral Form)

(ISDA Agreements Subject to New York Law Only)

 

ISDA®

International Swaps and Derivatives Association, Inc.

 

CREDIT SUPPORT ANNEX

 

to the Schedule to the

 

ISDA MASTER AGREEMENT

(1992 – Multicurrency—Cross Border)

 

dated as of May 16, 2008

 

between

BNP PARIBAS,

a société anonyme organized under the laws of France

("Party A")

 

and

 

FORD CREDIT AUTO OWNER TRUST 2008-C,

a Delaware statutory trust

("Party B")

 

This Annex supplements, forms part of, and is subject to, the above-referenced
Agreement, is part of its Schedule and is a Credit Support Document under this
Agreement with respect to each party.

Accordingly, the parties agree as follows: –

 

Paragraph 1.

Interpretation

(a)        Definitions and Inconsistency. Capitalized terms not otherwise
defined herein or elsewhere in this Agreement have the meanings specified
pursuant to Paragraph 12, and all references in this Annex to Paragraphs are to
Paragraphs of this Annex.In the event of any inconsistency between this Annex
and the other provisions of this Schedule, this Annex will prevail, and in the
event of any inconsistency between Paragraph 13 and the other provisions of this
Annex, Paragraph 13 will prevail.

(b)        Secured Party and Pledgor. All references in this Annex to the
"Secured Party" will be to either party when acting in that capacity and all
corresponding references to the "Pledgor" will be to the other party when acting
in that capacity; provided, however, that if Other Posted Support is held by a
party to this Annex, all references herein to that party as the Secured Party
with respect to that Other Posted Support will be to that party as the
beneficiary thereof and will not subject that support or that party as the
beneficiary thereof to provisions of law generally relating to security
interests and secured parties.

 

Copyright ©1994 by International Swaps and Derivatives Association, Inc.

 

 

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Paragraph 2.

Security Interest

Each party, as the Pledgor, hereby pledges to the other party, as the Secured
Party, as security for its Obligations, and grants to the Secured Party a first
priority continuing security interest in, lien on and right of Set-off against
all Posted Collateral Transferred to or received by the Secured Party hereunder.
Upon the Transfer by the Secured Party to the Pledgor of Posted Collateral, the
security interest and lien granted hereunder on that Posted Collateral will be
released immediately and, to the extent possible, without any further action by
either party.

 

Paragraph 3.

Credit Support Obligations

(a)        Delivery Amount. Subject to Paragraphs 4 and 5, upon a demand made by
the Secured Party on or promptly following a Valuation Date, if the Delivery
Amount for that Valuation Date equals or exceeds the Pledgor's Minimum Transfer
Amount, then the Pledgor will Transfer to the Secured Party Eligible Credit
Support having a Value as of the date of Transfer at least equal to the
applicable Delivery Amount (rounded pursuant to Paragraph 13). Unless otherwise
specified in Paragraph 13, the "Delivery Amount" applicable to the Pledgor for
any Valuation Date will equal the amount by which:

 

 

(i)

the Credit Support Amount

exceeds

 

 

(ii)

the Value as of that Valuation Date of all Posted Credit Support held by the
Secured Party.

(b)        Return Amount. Subject to Paragraphs 4 and 5, upon a demand made by
the Pledgor on or promptly following a Valuation Date, if the Return Amount for
that Valuation Date equals or exceeds the Secured Party's Minimum Transfer
Amount, then the Secured Party will Transfer to the Pledgor Posted Credit
Support specified by the Pledgor in that demand having a Value as of the date of
Transfer as close as practicable to the applicable Return Amount (rounded
pursuant to Paragraph 13). Unless otherwise specified in Paragraph 13, the
"Return Amount" applicable to the Secured Party for any Valuation Date will
equal the amount by which:

 

 

(i)

the Value as of that Valuation Date of all Posted Credit Support held by the
Secured Party

exceeds

 

 

(ii)

the Credit Support Amount.

"Credit Support Amount" means, unless otherwise specified in Paragraph 13, for
any Valuation Date (i) the Secured Party's Exposure for that Valuation Date plus
(ii) the aggregate of all Independent Amounts applicable to the Pledgor, if any,
minus (iii) all Independent Amounts applicable to the Secured Party, if any,
minus (iv) the Pledgor's Threshold; provided, however, that the Credit Support
Amount will be deemed to be zero whenever the calculation of Credit Support
Amount yields a number less than zero.

 

Paragraph 4.

Conditions Precedent, Transfer Timing, Calculations and Substitutions

(a)        Conditions Precedent. Each Transfer obligation of the Pledgor under
Paragraphs 3 and 5 and of the Secured Party under Paragraphs 3, 4(d)(ii), 5 and
6(d) is subject to the conditions precedent that:

(i)  no Event of Default, Potential Event of Default or Specified Condition has
occurred and is continuing with respect to the other party; and

(ii)  no Early Termination Date for which any unsatisfied payment obligations
exist has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the other party.

(b)        Transfer Timing. Subject to Paragraphs 4(a) and 5 and unless
otherwise specified, if a demand for the Transfer of Eligible Credit Support or
Posted Credit Support is made by the Notification Time, then the relevant

 

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Transfer will be made not later than the close of business on the next Local
Business Day; if a demand is made after the Notification Time, then the relevant
Transfer will be made not later than the close of business on the second Local
Business Day thereafter.

(c)        Calculations. All calculations of Value and Exposure for purposes of
Paragraphs 3 and 6(d) will be made by the Valuation Agent as of the Valuation
Time. The Valuation Agent will notify each party (or the other party, if the
Valuation Agent is a party) of its calculations not later than the Notification
Time on the Local Business Day following the applicable Valuation Date (or in
the case of Paragraph 6(d), following the date of calculation).

 

(d)

Substitutions.

(i)  Unless otherwise specified in Paragraph 13, upon notice to the Secured
Party specifying the items of Posted Credit Support to be exchanged, the Pledgor
may, on any Local Business Day, Transfer to the Secured Party substitute
Eligible Credit Support (the "Substitute Credit Support"); and

(ii)  subject to Paragraph 4(a), the Secured Party will Transfer to the Pledgor
the items of Posted Credit Support specified by the Pledgor in its notice not
later than the Local Business Day following the date on which the Secured Party
receives the Substitute Credit Support, unless otherwise specified in Paragraph
13 (the "Substitution Date"); provided that the Secured Party will only be
obligated to Transfer Posted Credit Support with a Value as of the date of
Transfer of that Posted Credit Support equal to the Value as of that date of the
Substitute Credit Support.

 

Paragraph 5.

Dispute Resolution

If a party (a "Disputing Party") disputes (I) the Valuation Agent's calculation
of a Delivery Amount or a Return Amount or (II) the Value of any Transfer of
Eligible Credit Support or Posted Credit Support, then (1) the Disputing Party
will notify the other party and the Valuation Agent (if the Valuation Agent is
not the other party) not later than the close of business on the Local Business
Day following (X) the date that the demand is made under Paragraph 3 in the case
of (I) above or (Y) the date of Transfer in the case of (II) above, (2) subject
to Paragraph 4(a), the appropriate party will Transfer the undisputed amount to
the other party not later than the close of business on the Local Business Day
following (X) the date that the demand is made under Paragraph 3 in the case of
(I) above or (Y) the date of Transfer in the case of (II) above, (3) the parties
will consult with each other in an attempt to resolve the dispute and (4) if
they fail to resolve the dispute by the Resolution Time, then:

(i)  In the case of a dispute involving a Delivery Amount or Return Amount,
unless otherwise specified in Paragraph 13, the Valuation Agent will recalculate
the Exposure and the Value as of the Recalculation Date by:

(A) utilizing any calculations of Exposure for the Transactions (or Swap
Transactions) that the parties have agreed are not in dispute;

(B) calculating the Exposure for the Transactions (or Swap Transactions) in
dispute by seeking four actual quotations at mid-market from Reference
Market-makers for purposes of calculating Market Quotation, and taking the
arithmetic average of those obtained; provided that if four quotations are not
available for a particular Transaction (or Swap Transaction), then fewer than
four quotations may be used for that Transaction (or Swap Transaction); and if
no quotations are available for a particular Transaction (or Swap Transaction),
then the Valuation Agent's original calculations will be used for that
Transaction (or Swap Transaction); and

(C) utilizing the procedures specified in Paragraph 13 for calculating the
Value, if disputed, of Posted Credit Support.

(ii)  In the case of a dispute involving the Value of any Transfer of Eligible
Credit Support or Posted Credit Support, the Valuation Agent will recalculate
the Value as of the date of Transfer pursuant to Paragraph 13.

 

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Following a recalculation pursuant to this Paragraph, the Valuation Agent will
notify each party (or the other party, if the Valuation Agent is a party) not
later than the Notification Time on the Local Business Day following the
Resolution Time. The appropriate party will, upon demand following that notice
by the Valuation Agent or a resolution pursuant to (3) above and subject to
Paragraphs 4(a) and 4(b), make the appropriate Transfer.

 

Paragraph 6.

Holding and Using Posted Collateral

(a)        Care of Posted Collateral. Without limiting the Secured Party's
rights under Paragraph 6(c), the Secured Party will exercise reasonable care to
assure the safe custody of all Posted Collateral to the extent required by
applicable law, and in any event the Secured Party will be deemed to have
exercised reasonable care if it exercises at least the same degree of care as it
would exercise with respect to its own property. Except as specified in the
preceding sentence, the Secured Party will have no duty with respect to Posted
Collateral, including, without limitation, any duty to collect any
Distributions, or enforce or preserve any rights pertaining thereto.

 

(b)

Eligibility to Hold Posted Collateral; Custodians.

(i)  General. Subject to the satisfaction of any conditions specified in
Paragraph 13 for holding Posted Collateral, the Secured Party will be entitled
to hold Posted Collateral or to appoint an agent (a "Custodian") to hold Posted
Collateral for the Secured Party. Upon notice by the Secured Party to the
Pledgor of the appointment of a Custodian, the Pledgor's obligations to make any
Transfer will be discharged by making the Transfer to that Custodian. The
holding of Posted Collateral by a Custodian will be deemed to be the holding of
that Posted Collateral by the Secured Party for which the Custodian is acting.

(ii)  Failure to Satisfy Conditions. If the Secured Party or its Custodian fails
to satisfy any conditions for holding Posted Collateral, then upon a demand made
by the Pledgor, the Secured Party will, not later than five Local Business Days
after the demand, Transfer or cause its Custodian to Transfer all Posted
Collateral held by it to a Custodian that satisfies those conditions or to the
Secured Party if it satisfies those conditions.

(iii) Liability. The Secured Party will be liable for the acts or omissions of
its Custodian to the same extent that the Secured Party would be liable
hereunder for its own acts or omissions.

(c)        Use of Posted Collateral. Unless otherwise specified in Paragraph 13
and without limiting the rights and obligations of the parties under Paragraphs
3, 4(d)(ii), 5, 6(d) and 8, if the Secured Party is not a Defaulting Party or an
Affected Party with respect to a Specified Condition and no Early Termination
Date has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the Secured Party, then the Secured Party
will, notwithstanding Section 9-207 of the New York Uniform Commercial Code,
have the right to:

(i)  sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise
dispose of, or otherwise use in its business any Posted Collateral it holds,
free from any claim or right of any nature whatsoever of the Pledgor, including
any equity or right of redemption by the Pledgor; and

 

 

(ii)

register any Posted Collateral in the name of the Secured Party, its Custodian
or a nominee for either.

For purposes of the obligation to Transfer Eligible Credit Support or Posted
Credit Support pursuant to Paragraphs 3 and 5 and any rights or remedies
authorized under this Agreement, the Secured Party will be deemed to continue to
hold all Posted Collateral and to receive Distributions made thereon, regardless
of whether the Secured Party has exercised any rights with respect to any Posted
Collateral pursuant to (i) or (ii) above.

 

(d)

Distributions and Interest Amount

(i)  Distributions. Subject to Paragraph 4(a), if the Secured Party receives or
is deemed to receive Distributions on a Local Business Day, it will Transfer to
the Pledgor not later than the following Local Business Day any Distributions it
receives or is deemed to receive to the extent that a Delivery Amount

 

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would not be created or increased by that Transfer, as calculated by the
Valuation Agent (and the date of calculation will be deemed to be a Valuation
Date for this purpose).

(ii)  Interest Amount. Unless otherwise specified in Paragraph 13 and subject to
Paragraph 4(a), in lieu of any interest, dividends or other amounts paid or
deemed to have been paid with respect to Posted Collateral in the form of Cash
(all of which may be retained by the Secured Party), the Secured Party will
Transfer to the Pledgor at the times specified in Paragraph 13 the Interest
Amount to the extent that a Delivery Amount would not be created or increased by
that Transfer, as calculated by the Valuation Agent (and the date of calculation
will be deemed to be a Valuation Date for this purpose). The Interest Amount or
portion thereof not Transferred pursuant to this Paragraph will constitute
Posted Collateral in the form of Cash and will be subject to the security
interest granted under Paragraph 2.

 

Paragraph 7.

Events of Default

For purposes of Section 5(a)(iii)(1) of this Agreement, an Event of Default will
exist with respect to a party if:

(i)  that party fails (or fails to cause its Custodian) to make, when due, any
Transfer of Eligible Collateral, Posted Collateral or the Interest Amount, as
applicable, required to be made by it and that failure continues for two Local
Business Days after notice of that failure is given to that party;

(ii)  that party fails to comply with any restriction or prohibition specified
in this Annex with respect to any of the rights specified in Paragraph 6(c) and
that failure continues for five Local Business Days after notice of that failure
is given to that party; or

(iii) that party fails to comply with or perform any agreement or obligation
other than those specified in Paragraphs 7(i) and 7(ii) and that failure
continues for 30 days after notice of that failure is given to that party.

 

Paragraph 8.

Certain Rights and Remedies

(a)        Secured Party's Rights and Remedies. If at any time (1) an Event of
Default or Specified Condition with respect to the Pledgor has occurred and is
continuing or (2) an Early Termination Date has occurred or been designated as
the result of an Event of Default or Specified Condition with respect to the
Pledgor, then, unless the Pledgor has paid in full all of its Obligations that
are then due, the Secured Party may exercise one or more of the following rights
and remedies:

(i)  all rights and remedies available to a secured party under applicable law
with respect to Posted Collateral held by the Secured Party;

(ii)  any other rights and remedies available to the Secured Party under the
terms of Other Posted Support, if any;

(iii) the right to Set-off any amounts payable by the Pledgor with respect to
any Obligations against any Posted Collateral or the Cash equivalent of any
Posted Collateral held by the Secured Party (or any obligation of the Secured
Party to Transfer that Posted Collateral); and

(iv) the right to liquidate any Posted Collateral held by the Secured Party
through one or more public or private sales or other dispositions with such
notice, if any, as may be required under applicable law, free from any claim or
right of any nature whatsoever of the Pledgor, including any equity or right of
redemption by the Pledgor (with the Secured Party having the right to purchase
any or all of the Posted Collateral to be sold) and to apply the proceeds (or
the Cash equivalent thereof) from the liquidation of the Posted Collateral to
any amounts payable by the Pledgor with respect to any Obligations in that order
as the Secured Party may elect.

 

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Each party acknowledges and agrees that Posted Collateral in the form of
securities may decline speedily in value and is of a type customarily sold on a
recognized market, and, accordingly, the Pledgor is not entitled to prior notice
of any sale of that Posted Collateral by the Secured Party, except any notice
that is required under applicable law and cannot be waived.

(b)        Pledgor's Rights and Remedies. If at any time an Early Termination
Date has occurred or been designated as the result of an Event of Default or
Specified Condition with respect to the Secured Party, then (except in the case
of an Early Termination Date relating to less than all Transactions (or Swap
Transactions) where the Secured Party has paid in full all of its obligations
that are then due under Section 6(e) of this Agreement):

(i)  the Pledgor may exercise all rights and remedies available to a pledgor
under applicable law with respect to Posted Collateral held by the Secured
Party;

(ii)  the Pledgor may exercise any other rights and remedies available to the
Pledgor under the terms of Other Posted Support, if any;

(iii) the Secured Party will be obligated immediately to Transfer all Posted
Collateral and the Interest Amount to the Pledgor; and

(iv) to the extent that Posted Collateral or the Interest Amount is not so
Transferred pursuant to (iii) above, the Pledgor may:

(A) Set-off any amounts payable by the Pledgor with respect to any Obligations
against any Posted Collateral or the Cash equivalent of any Posted Collateral
held by the Secured Party (or any obligation of the Secured Party to Transfer
that Posted Collateral); and

(B) to the extent that the Pledgor does not Set-off under (iv)(A) above,
withhold payment of any remaining amounts payable by the Pledgor with respect to
any Obligations, up to the Value of any remaining Posted Collateral held by the
Secured Party, until that Posted Collateral is Transferred to the Pledgor.

(c)        Deficiencies and Excess Proceeds. The Secured Party will Transfer to
the Pledgor any proceeds and Posted Credit Support remaining after liquidation,
Set-off and/or application under Paragraphs 8(a) and 8(b) after satisfaction in
full of all amounts payable by the Pledgor with respect to any Obligations; the
Pledgor in all events will remain liable for any amounts remaining unpaid after
any liquidation, Set-off and/or application under Paragraphs 8(a) and 8(b).

(d)        Final Returns. When no amounts are or thereafter may become payable
by the Pledgor with respect to any Obligations (except for any potential
liability under Section 2(d) of this Agreement), the Secured Party will Transfer
to the Pledgor all Posted Credit Support and the Interest Amount, if any.

 

Paragraph 9.

Representations

Each party represents to the other party (which representations will be deemed
to be repeated as of each date on which it, as the Pledgor, Transfers Eligible
Collateral) that:

(i)  it has the power to grant a security interest in and lien on any Eligible
Collateral it Transfers as the Pledgor and has taken all necessary actions to
authorize the granting of that security interest and lien;

(ii)  it is the sole owner of or otherwise has the right to Transfer all
Eligible Collateral it Transfers to the Secured Party hereunder, free and clear
of any security interest, lien, encumbrance or other restrictions other than the
security interest and lien granted under Paragraph 2;

(iii) upon the Transfer of any Eligible Collateral to the Secured Party under
the terms of this Annex, the Secured Party will have a valid and perfected first
priority security interest therein (assuming that any

 

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central clearing corporation or any third-party financial intermediary or other
entity not within the control of the Pledgor involved in the Transfer of that
Eligible Collateral gives the notices and takes the action required of it under
applicable law for perfection of that interest); and

(iv) the performance by it of its obligations under this Annex will not result
in the creation of any security interest, lien or other encumbrance on any
Posted Collateral other than the security interest and lien granted under
Paragraph 2.

 

Paragraph 10.

Expenses

(a)        General. Except as otherwise provided in Paragraphs 10(b) and 10(c),
each party will pay its own costs and expenses in connection with performing its
obligations under this Annex and neither party will be liable for any costs and
expenses incurred by the other party in connection herewith.

(b)        Posted Credit Support.The Pledgor will promptly pay when due all
taxes, assessments or charges of any nature that are imposed with respect to
Posted Credit Support held by the Secured Party upon becoming aware of the same,
regardless of whether any portion of that Posted Credit Support is subsequently
disposed of under Paragraph 6(c), except for those taxes, assessments and
charges that result from the exercise of the Secured Party's rights under
Paragraph 6(c).

(c)        Liquidation/Application of Posted Credit Support.All reasonable costs
and expenses incurred by or on behalf of the Secured Party or the Pledgor in
connection with the liquidation and/or application of any Posted Credit Support
under Paragraph 8 will be payable, on demand and pursuant to the Expenses
Section of this Agreement, by the Defaulting Party or, if there is no Defaulting
Party, equally by the parties.

 

Paragraph 11.

Miscellaneous

(a)        Default Interest.A Secured Party that fails to make, when due, any
Transfer of Posted Collateral or the Interest Amount will be obligated to pay
the Pledgor (to the extent permitted under applicable law) an amount equal to
interest at the Default Rate multiplied by the Value of the items of property
that were required to be Transferred, from (and including) the date that Posted
Collateral or Interest Amount was required to be Transferred to (but excluding)
the date of Transfer of that Posted Collateral or Interest Amount. This interest
will be calculated on the basis of daily compounding and the actual number of
days elapsed.

(b)        Further Assurances. Promptly following a demand made by a party, the
other party will execute, deliver, file and record any financing statement,
specific assignment or other document and take any other action that may be
necessary or desirable and reasonably requested by that party to create,
preserve, perfect or validate any security interest or lien granted under
Paragraph 2, to enable that party to exercise or enforce its rights under this
Annex with respect to Posted Credit Support or an Interest Amount or to effect
or document a release of a security interest on Posted Collateral or an Interest
Amount.

(c)        Further Protection. The Pledgor will promptly give notice to the
Secured Party of, and defend against, any suit, action, proceeding or lien that
involves Posted Credit Support Transferred by the Pledgor or that could
adversely affect the security interest and lien granted by it under Paragraph 2,
unless that suit, action, proceeding or lien results from the exercise of the
Secured Party's rights under Paragraph 6(c).

(d)        Good Faith and Commercially Reasonable Manner. Performance of all
obligations under this Annex, including, but not limited to, all calculations,
valuations and determinations made by either party, will be made in good faith
and in a commercially reasonable manner.

(e)        Demands and Notices. All demands and notices made by a party under
this Annex will be made as specified in the Notices Section of this Agreement,
except as otherwise provided in Paragraph 13.

 

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(f)        Specifications of Certain Matters. Anything referred to in this Annex
as being specified in Paragraph 13 also may be specified in one or more
Confirmations or other documents and this Annex will be construed accordingly.

 

Paragraph 12.

Definitions

As used in this Annex:—

"Cash"means the lawful currency of the United States of America.

"Credit Support Amount"has the meaning specified in Paragraph 3.

"Custodian"has the meaning specified in Paragraphs 6(b)(i) and 13.

"Delivery Amount" has the meaning specified in Paragraph 3(a).

"Disputing Party" has the meaning specified in Paragraph 5.

"Distributions" means with respect to Posted Collateral other than Cash, all
principal, interest and other payments and distributions of cash or other
property with respect thereto, regardless of whether the Secured Party has
disposed of that Posted Collateral under Paragraph 6(c). Distributions will not
include any item of property acquired by the Secured Party upon any disposition
or liquidation of Posted Collateral or, with respect to any Posted Collateral in
the form of Cash, any distributions on that collateral, unless otherwise
specified herein.

"Eligible Collateral" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.

"Eligible Credit Support" means Eligible Collateral and Other Eligible Support.

"Exposure" means for any Valuation Date or other date for which Exposure is
calculated and subject to Paragraph 5 in the case of a dispute, the amount, if
any, that would be payable to a party that is the Secured Party by the other
party (expressed as a positive number) or by a party that is the Secured Party
to the other party (expressed as a negative number) pursuant to Section
6(e)(ii)(2)(A) of this Agreement as if all Transactions (or Swap Transactions)
were being terminated as of the relevant Valuation Time; provided that Market
Quotation will be determined by the Valuation Agent using its estimates at
mid-market of the amounts that would be paid for Replacement Transactions (as
that term is defined in the definition of "Market Quotation").

"Independent Amount" means, with respect to a party, the amount specified as
such for that party in Paragraph 13; if no amount is specified, zero.

"Interest Amount" means, with respect to an Interest Period, the aggregate sum
of the amounts of interest calculated for each day in that Interest Period on
the principal amount of Posted Collateral in the form of Cash held by the
Secured Party on that day, determined by the Secured Party for each such day as
follows:

(x) the amount of that Cash on that day; multiplied by

(y) the Interest Rate in effect for that day; divided by

(z) 360.

"Interest Period" means the period from (and including) the last Local Business
Day on which an Interest Amount was Transferred (or, if no Interest Amount has
yet been Transferred, the Local Business Day on which Posted Collateral in the
form of Cash was Transferred to or received by the Secured Party) to (but
excluding) the Local Business Day on which the current Interest Amount is to be
Transferred.

 

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"Interest Rate" means the rate specified in Paragraph 13.

"Local Business Day," unless otherwise specified in Paragraph 13, has the
meaning specified in the Definitions Section of this Agreement, except that
references to a payment in clause (b) thereof will be deemed to include a
Transfer under this Annex.

"Minimum Transfer Amount" means, with respect to a party, the amount specified
as such for that party in Paragraph 13; if no amount is specified, zero.

"Notification Time" has the meaning specified in Paragraph 13.

"Obligations" means, with respect to a party, all present and future obligations
of that party under this Agreement and any additional obligations specified for
that party in Paragraph 13.

"Other Eligible Support" means, with respect to a party, the items, if any,
specified as such for that party in Paragraph 13.

"Other Posted Support" means all Other Eligible Support Transferred to the
Secured Party that remains in effect for the benefit of that Secured Party.

"Pledgor" means either party, when that party (i) receives a demand for or is
required to Transfer Eligible Credit Support under Paragraph 3(a) or (ii) has
Transferred Eligible Credit Support under Paragraph 3(a).

"Posted Collateral" means all Eligible Collateral, other property,
Distributions, and all proceeds thereof that have been Transferred to or
received by the Secured Party under this Annex and not Transferred to the
Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or 6(d)(i) or released by the
Secured Party under Paragraph 8. Any Interest Amount or portion thereof not
Transferred pursuant to Paragraph 6(d)(ii) will constitute Posted Collateral in
the form of Cash.

"Posted Credit Support" means Posted Collateral and Other Posted Support.

"Recalculation Date" means the Valuation Date that gives rise to the dispute
under Paragraph 5; provided, however, that if a subsequent Valuation Date occurs
under Paragraph 3 prior to the resolution of the dispute, then the
"Recalculation Date" means the most recent Valuation Date under Paragraph 3.

"Resolution Time" has the meaning specified in Paragraph 13.

"Return Amount" has the meaning specified in Paragraph 3(b).

"Secured Party" means either party, when that party (i) makes a demand for or is
entitled to receive Eligible Credit Support under Paragraph 3(a) or (ii) holds
or is deemed to hold Posted Credit Support.

"Specified Condition" means, with respect to a party, any event specified as
such for that party in Paragraph 13.

"Substitute Credit Support" has the meaning specified in Paragraph 4(d)(i).

"Substitution Date" has the meaning specified in Paragraph 4(d)(ii).

"Threshold" means, with respect to a party, the amount specified as such for
that party in Paragraph 13; if no amount is specified, zero.

"Transfer" means, with respect to any Eligible Credit Support, Posted Credit
Support or Interest Amount, and in accordance with the instructions of the
Secured Party, Pledgor or Custodian, as applicable:

(i)  in the case of Cash, payment or delivery by wire transfer into one or more
bank accounts specified by the recipient;

 

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(ii)  in the case of certificated securities that cannot be paid or delivered by
book-entry, payment or delivery in appropriate physical form to the recipient or
its account accompanied by any duly executed instruments of transfer,
assignments in blank, transfer tax stamps and any other documents necessary to
constitute a legally valid transfer to the recipient;

(iii) in the case of securities that can be paid or delivered by book-entry, the
giving of written instructions to the relevant depository institution or other
entity specified by the recipient, together with a written copy thereof to the
recipient, sufficient if complied with to result in a legally effective transfer
of the relevant interest to the recipient; and

 

 

(iv)

in the case of Other Eligible Support or Other Posted Support, as specified in
Paragraph 13.

"Valuation Agent" has the meaning specified in Paragraph 13.

"Valuation Date" means each date specified in or otherwise determined pursuant
to Paragraph 13.

"Valuation Percentage" means, for any item of Eligible Collateral, the
percentage specified in Paragraph 13.

"Valuation Time" has the meaning specified in Paragraph 13.

"Value" means for any Valuation Date or other date for which Value is calculated
and subject to Paragraph 5 in the case of a dispute, with respect to:

 

 

(i)

Eligible Collateral or Posted Collateral that is:

 

 

(A)

Cash, the amount thereof; and

(B) a security, the bid price obtained by the Valuation Agent multiplied by the
applicable Valuation Percentage, if any;

 

 

(ii)

Posted Collateral that consists of items that are not specified as Eligible
Collateral, zero; and

Other Eligible Support and Other Posted Support, as specified in Paragraph 13.

 

Paragraph 13.

 

 

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Elections and Variables

(a)        Security Interest for "Obligations." The term "Obligations" as used
in this Annex includes the following additional obligations:

 

 

With respect to Party A: None.

 

With respect to Party B: None.

 

 

(b)

Credit Support Obligations.

 

 

(i)

Delivery Amount, Return Amount and Credit Support Amount.

(A) "Delivery Amount" has the meaning specified in Paragraph 3(a), except that
the words "upon a demand made by the Secured Party on or promptly following a
Valuation Date" shall be deleted and replaced by the words "on each Valuation
Date".

 

 

(B)

"Return Amount" has the meaning specified in Paragraph 3(b).

(C) "Credit Support Amount" means the amount specified in (1), (2), (3), (4) or
(5) below, except that if two or more amounts below apply, the highest amount:

(1) if the Moody's First Rating Trigger Requirements apply to Party A and Party
A chooses to post collateral, the following amount as determined by the
Valuation Agent:

The greater of (i) Secured Party's Exposure + (Notional Amount on such Valuation
Date * the respective potential increase below) and (ii) 0.

Potential Increase of Mid-Market Valuation

Weighted Average Life of Hedge in Years

Posting Frequency (Daily)

1

0.15%

2

0.30%

3

0.40%

 

(2) if the Moody's Second Rating Trigger Requirements apply to Party A, the
following amount as determined by the Valuation Agent:

The greatest of (i) Floating Amount on next Payment Date, (ii) Secured Party's
Exposure + (Notional Amount on such Valuation Date * the respective potential
increase below) and (iii) 0.

Potential Increase of Mid-Market Valuation

Weighted Average Life of Hedge in Years

Posting Frequency (Daily)

1

0.50%

2

1.00%

3

1.50%

 

 

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(3) if the S&P First Rating Trigger occurs and the S&P Second Rating Trigger has
not occurred, within 10 Local Business Days of such occurrence (or on the date
of this Annex, if no Relevant Entity has the S&P First Rating Thresholds as of
the date of this Annex), Party A will post collateral in the following amount as
determined by the Valuation Agent:

 

 

The greater of (i) Secured Party's Exposure * 100%, and (ii) 0.

(4) if the S&P Second Rating Trigger occurs, within 10 Local Business Days of
such occurrence, Party A will post collateral in the following amount as
determined by the Valuation Agent:

 

 

The greater of (i) Secured Party's Exposure * 125%, and (ii) 0.

(5) if the Fitch First Rating Trigger occurs and Party A chooses to post
collateral or if a Fitch Second Rating Trigger occurs, the following amount as
determined by the Valuation Agent:

The greater of (i) Secured Party's Exposure + (Volatility Buffer * Notional
Amount), and (ii) 0

"Volatility Buffer" means the percentage set forth in the following table with
respect to any Transaction:

 

Weighted Average Life of Hedge in Years

Notes' Rating

1

2

3

4

5

6

7

8

9

10

USD Interest Rate Swaps

AA- or Better

0.6

1.6

2.6

3.4

4.2

4.8

5.5

5.9

6.4

7.0

A+/A

0.3

0.8

1.3

1.7

2.1

2.4

2.8

3.0

3.3

3.6

A-/BBB+

0.2

0.6

1.0

1.3

1.6

1.9

2.1

2.3

2.5

2.7

 

(ii)  Eligible Collateral. The following items will qualify as "Eligible
Collateral" (unless noted below) for Party A:

 

The following Valuation Percentages(1) will apply to Eligible Collateral with
respect to Party A upon the occurrence of the respective rating trigger event
below:

 

 

Moody's First Rating Trigger Requirements

Moody's Second Rating Trigger Requirements

S&P First Rating Trigger

S&P Second Rating Trigger

Fitch First and Second Rating Triggers

(A) Cash in U.S. Dollars

100%

100%

100%

80%

100%

(B)  Fixed rate negotiable debt obligations issued by the U.S. Treasury
Department having a remaining maturity of not more than one year

100%

100%

98%

78.4%

97.5%

(C)  Fixed rate negotiable debt obligations issued by the U.S. Treasury
Department having a remaining maturity of more than one year but not more than 2
years

100%

99%

 

98%

78.4%

91.5%

 

 

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(D) Fixed rate negotiable debt obligations issued by the U.S. Treasury
Department having a remaining maturity of more than 2 years but not more than 3
years

100%

98%

98%

78.4%

91.5%

(E)  Fixed rate negotiable debt obligations issued by the U.S. Treasury
Department having a remaining maturity of more than 3 years but not more than 5
years

100%

97%

98%

78.4%

91.5%

(F)  Fixed rate negotiable debt obligations issued by the U.S. Treasury
Department having a remaining maturity of more than 5 years but not more than 7
years

100%

96%

92.6%

74.1%

86.3%

(G) Fixed rate negotiable debt obligations issued by the U.S. Treasury
Department having a remaining maturity of more than 7 years but not more than 10
years

100%

94%

92.6%

74.1%

86.3%

(H) Fixed rate negotiable debt obligations issued by the U.S. Treasury
Department having a remaining maturity of more than 10 years but not more than
20 years

100%

90%

87.9%

70.3%

79%

(I)   Fixed rate negotiable debt obligations issued by the U.S. Treasury
Department having a remaining maturity of more than 20 years

100%

88%

84.6%

67.7%

79%

(J)   Floating rate negotiable debt obligations issued by the U.S. Treasury
Department

100%

99%

Not Eligible Collateral

Not Eligible Collateral

(2)

(K) Fixed rate U.S. Agency Debentures having a remaining maturity of not more
than one year

100%

99%

98%

78.4%

(2)

(L)  Fixed rate U.S. Agency Debentures having a remaining maturity of more than
one year but not more than 2 years

100%

98%

98%

78.4%

(2)

(M) Fixed rate U.S. Agency Debentures having a remaining maturity of more than 2
years but not more than 3 years

100%

97%

98%

78.4%

(2)

(N) Fixed rate U.S. Agency Debentures having a remaining maturity of more than 3
years but not more than 5 years

100%

96%

98%

78.4%

(2)

(O) Fixed rate U.S. Agency Debentures having a remaining maturity of more than 5
years but not more than 7 years

100%

94%

92.6%

74.1%

(2)

(P)  Fixed rate U.S. Agency Debentures having a remaining maturity of more than
7 years but not more than 10 years

100%

93%

92.6%

74.1%

(2)

 

 

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(Q) Fixed rate U.S. Agency Debentures having a remaining maturity of more than
10 years but not more than 20 years

100%

88%

82.6%

66.1%

(2)

(R)  Fixed rate U.S. Agency Debentures having a remaining maturity of more than
20 years

100%

86%

77.9%

62.3%

(2)

(S)  Floating rate U.S. Agency Debentures

100%

98%

Not Eligible Collateral

Not Eligible Collateral

(2)

___________________

(1) With respect to collateral types not listed below, such assets will be
subject to review by S&P, Fitch or Moody's, as applicable.

(2) Subject to review by Fitch.

 

 

(iii)

Thresholds.

 

 

(A)

"Independent Amount" means with respect to Party A: zero.

 

 

"Independent Amount" means with respect to Party B: zero.

 

 

(B)

"Threshold" means with respect to Party A: infinity; provided that the Threshold
with respect to Party A shall be zero for so long as, no Relevant Entity has the
Moody's First Trigger Required Ratings, the Fitch First Trigger Required Ratings
or the S&P First Trigger Required Ratings and (i) no Relevant Entity has had the
Moody's First Trigger Required Ratings since this Annex was executed, or (ii) at
least 30 Local Business days have elapsed since the last time a Relevant Entity
had the Moody's First Trigger Required Ratings, or (iii) no Relevant Entity has
had the Fitch's First Trigger Required Ratings since this Annex was executed, or
(iv) at least 30 calendar days have elapsed since the last time a Relevant
Entity had the Fitch's First Trigger Required Ratings, or (v) no Relevant Entity
has had the S&P First Trigger Required Ratings since this Annex was executed or
(vi) at least 10 Local Business days have elapsed since the last time a Relevant
Entity had the S&P First Trigger Required Ratings.

 

 

"Threshold" means with respect to Party B: infinity.

 

 

(C)

"Minimum Transfer Amount" means with respect to Party A: U.S.$100,000; provided,
however, that if the aggregate outstanding principal balance of the Notes rated
by S&P is at the time of any transfer less than U.S.$50,000,000, the "Minimum
Transfer Amount" shall mean U.S.$50,000.

"Minimum Transfer Amount" means with respect to Party B: U.S.$100,000.

 

 

(D)

Rounding. The Delivery Amount will be rounded up to the nearest integral
multiple of U.S.$10,000. The Return Amount will be rounded down to the nearest
integral multiple of U.S.$10,000.

 

(c)

Valuation and Timing.

 

 

(i)

"Valuation Agent" means Party A in all circumstances.

 

 

(ii)

"Valuation Date" means the first Local Business Day in each week.

 

 

(iii)

"Valuation Time" means the close of business in the city of the Valuation Agent
on the Local Business Day immediately preceding the Valuation Date or date of
calculation, as applicable; provided

 

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ISDA® 1994

 

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that the calculations of Value and Credit Support Amount will, as far as
practicable, be made as of approximately the same time on the same date.

 

 

(iv)

"Value" has the meaning specified in Paragraph 12, except that clause (i)
thereof will be replaced in its entirety with the following:

"(i) Eligible Collateral or Posted Collateral that is:

(A)    Cash, the amount thereof multiplied by the applicable Valuation
Percentage but if more than one Valuation Percentage is applicable, the
Valuation Percentage with the lowest percentage; and

(B)    a security, the bid price obtained by the Valuation Agent multiplied by
the applicable Valuation Percentage but if more than one Valuation Percentage is
applicable, the Valuation Percentage with the lowest percentage;"

 

 

(v)

"Notification Time" means 11:00 a.m., New York time, on a Local Business Day.

(d)        Conditions Precedent and Secured Party's Rights and Remedies. The
following Termination Event(s) will be a "Specified Condition" for the party
specified (that party being the Affected Party if the Termination Event occurs
with respect to that party): None.

 

(e)

Substitution.

 

 

(i)

"Substitution Date" has the meaning specified in Paragraph 4(d)(ii).

 

(ii)

Consent. Not applicable.

 

 

(f)

Dispute Resolution.

 

 

(i)

"Resolution Time" means 1:00 p.m., New York time, on the Local Business Day
following the date on which the notice is given that gives rise to a dispute
under Paragraph 5.

 

(ii)

Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), on any date, the Value
of the outstanding Posted Credit Support or of any transfer of Eligible Credit
Support or Posted Credit Support, as the case may be, will be calculated as
follows:

 

 

(A)

with respect to any Eligible Credit Support or Posted Credit Support comprising
securities ("Securities") the sum of (a)(x) the last bid price on such date for
such Securities on the principal national securities exchange on which such
Securities are listed, multiplied by the applicable Valuation Percentage; or (y)
where any Securities are not listed on a national securities exchange, the bid
price for such Securities quoted as at the close of business on such date by any
principal market maker (which shall not be and shall be independent from the
Valuation Agent) for such Securities chosen by the Valuation Agent, multiplied
by the applicable Valuation Percentage; or (z) if no such bid price is listed or
quoted for such date, the last bid price listed or quoted (as the case may be),
as of the day next preceding such date on which such prices were available,
multiplied by the applicable Valuation Percentage; plus (b) the accrued interest
where applicable on such Securities (except to the extent that such interest
shall have been paid to the Pledgor pursuant to Paragraph 6(d)(ii) or included
in the applicable price referred to in subparagraph (a) above) as of such date;
and

 

(B)

with respect to any Cash, the amount thereof in U.S. dollars.

 

 

(iii)

Alternative. The provisions of Paragraph 5 will apply.

 

 

(g)

Holding and Using Posted Collateral.

 

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ISDA® 1994

 

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(i)

Eligibility to Hold Posted Collateral; Custodians.A Custodian of Party B will be
entitled to hold Posted Collateral on behalf of Party B pursuant to Paragraph 6;
provided that such Custodian has a short term rating of at least "A-1" by S&P.
Party B's Custodian is the Indenture Trustee for Party B. Initially, the
Custodian for Party B is the Bank of New York. If at any time the Custodian's
short term rating by S&P falls below "A-1", Party B will within 60 days replace
such Custodian with a new Custodian having a short term rating of "A-1" or
better by S&P.

 

(ii)

Swap Counterparty Collateral Account. The Posted Collateral will be held in the
Swap Counterparty Collateral Account, which initially will be account number
879558, in the name "The Bank of New York as Indenture Trustee, as secured party
for Ford Credit Auto Owner Trust 2008-C," at the corporate trust department of
The Bank of New York. The security interest of the Indenture Trustee in such
account or any other account in which Posted Collateral will be maintained will
be perfected by the Indenture Trustee by control pursuant to §8-106 of the
Uniform Commercial Code. Party A consents to The Bank of New York as securities
intermediary entering into an agreement establishing such control under
§8-106(d)(2) of the UCC.

(iii)     Use of Posted Collateral. Paragraph 6(c)(i) will not apply to Party B
but Paragraph 6(c)(ii) will apply to Party B.

(h)

Distributions and Interest Amount.

(i)  Interest Rate. The "Interest Rate" will be the weighted average rate of
interest earned by the Secured Party in respect of the portion of the Posted
Credit Support comprised of cash.

(ii)  Transfer of Interest Amount. The transfer of the Interest Amount will be
made on the second Local Business Day following the end of each calendar month
and on any other Local Business Day on which Posted Credit Support in the form
of cash is transferred to the Secured Party pursuant to Paragraph3(b), in each
case to the extent that a Delivery Amount would not be created or increased by
that transfer; provided that Party B shall not be obliged to so transfer any
Interest Amount unless and until it has earned and received such interest.

 

 

(iii)

Alternative to Interest Amount. The provisions of Paragraph 6(d)(ii) will apply.

(iv) "Distributions" means, with respect to any Eligible Credit Support
comprised in the Posted Credit Support consisting of securities, all principal,
interest and other payments and distributions of cash or other property to which
a holder of securities of the same type, nominal value, description and amount
as such Eligible Credit Support would have received from time to time.

(v)  "Distribution Date" means, with respect to any Eligible Credit Support
comprised in the Posted Credit Support other than cash, each date on which a
holder of such Eligible Credit Support would have received Distributions or, if
that date is not a Local Business Day, the next following Local Business Day.

 

(i)

Additional Representation(s).

There are no additional representations by either party.

 

(j)

Other Eligible Support and Other Posted Support.

(i)  "Value" with respect to Other Eligible Support and Other Posted Support
shall have such meaning as the parties shall agree in writing from time to time.

(ii)  "Transfer" with respect to Other Eligible Support and Other Posted Support
shall have such meaning as the parties shall agree in writing from time to time.

 

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ISDA® 1994

 

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(k)        Demands and Notices. All demands, specifications and notices under
this Annex will be made pursuant to the Notices Section of this Agreement,
unless otherwise specified here:

 

 

(A)

shall be given to or made at the following addresses:

If to Party A:

BNP Paribas

787 Seventh Avenue

New York, New York 10019

Attention: Legal and Transaction Management Group - ISDA

Telephone No.: (212) 841-3000

Facsimile No.: (212) 841-3561

 

With a copy to:

 

BNP Paribas

1 Rue Taitbout

75009 Paris

Attn: Legal and Transaction Management Group - ISDA

Telephone No: (33) (0) 1 4014 0199

Facsimile No: (33) (0) 1 4014 5577 / 7511

 

 

If to Party B:

The addresses set forth in the Schedule.

or at such other address as the relevant party may from time to time designate
by giving notice (in accordance with the terms of this subparagraph) to the
other party; and

 

 

(B)

shall be deemed to be effective at the time such notice is actually received
unless such notice is received on a day which is not a Local Business Day or
after the Notification Time on any Local Business Day in which event such notice
shall be deemed to be effective on the next succeeding Local Business Day.

 

(l)

Addresses for Transfers.

Party A: To be notified to Party B by Party A at the time of the request for the
transfer.

Party B: To be notified to Party A by Party B upon request by Party A.

 

(m)

Other Provisions.

 

 

(i)

Early Termination

The heading for Paragraph 7 shall be deleted and replaced with "Early
Termination" and the following shall be added after the word "Default" in the
first line of Paragraph 7, "in relation to all Transactions or a Termination
Event in relation to all Transactions". Paragraph 7(iii) is hereby deleted.

 

 

(ii)

Costs of Transfer on Exchange

 

Notwithstanding Paragraph 10, the Pledgor will be responsible for, and will
reimburse the Secured Party for, all transfer and other taxes and other costs
involved in the transfer of Eligible Credit Support either from the Pledgor to
the Secured Party or from the Secured Party to the Pledgor.

 

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(iii)

Cumulative Rights

 

The rights, powers and remedies of the Secured Party under this Annex shall be
in addition to all rights, powers and remedies given to the Secured Party by the
Agreement or by virtue of any statute or rule of law, all of which rights,
powers and remedies shall be cumulative and may be exercised successively or
concurrently without impairing the rights of the Secured Party in the Posted
Credit Support created pursuant to this Annex.

 

 

(iv)

Single Pledgor and Single Secured Party

 

For the avoidance of doubt Party A shall always be the Pledgor and Party B shall
always be the Secured Party.

 

 

(v)

"Exposure" has the meaning specified in Paragraph 12, except that after the word
"Agreement" the words "(assuming, for this purpose only, that Part 1(k) of the
Schedule is deleted)" shall be inserted.

 

 

(vi)

Additional Defined Terms. Capitalized terms used but not defined in this Annex
have the meanings assigned to them in the Agreement and the Schedule thereto. In
the event of any inconsistency between the provisions of this Annex and the
provisions in the Agreement or the Schedule thereto, this Annex will prevail.

 

 

(vii)

Transfer Timing. Paragraph 4(b) is amended by inserting at the end of Paragraph
4(b): "; provided that any transfer of Eligible Credit Support by the Pledgor
pursuant to paragraph 3(a) shall be made not later than the close of business on
the relevant Valuation Date, regardless of whether any demand for transfer is
received."

 

[SIGNATURE PAGE FOLLOWS]

 

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ISDA® 1994

 

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Execution Version

 

IN WITNESS WHEREOF, the parties have executed this Annex by their duly
authorized representatives as of the date of the Agreement.

 

BNP PARIBAS

 

 

By: /s/ Jane Shahmanesh  

Name:  Jane Shahmanesh

Title:   Authorized Signatory

By: /s/ Mindy Sperling  

Name:  Mindy Sperling

Title:    Authorized Signatory

 

 

 

FORD CREDIT AUTO OWNER TRUST 2008-C

 

By:     U.S. Bank Trust NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Owner Trustee

 

 

By: /s/ Mildred F. Smith  

Name:  Mildred F. Smith

Title:    Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Credit Support Annex]

 

Copyright ©1994 by International Swaps and Derivatives Association, Inc.