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EXHIBIT 10.2.1
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SALE AND SERVICING AGREEMENT
among
WFS FINANCIAL 20__-_ OWNER TRUST,
as Issuer,
WFS FINANCIAL AUTO LOANS, INC.,
as Seller,
and
WFS FINANCIAL INC,
as Master Servicer
Dated as of __________ 1, 20__
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TABLE OF CONTENTS
Page
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ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions................................................................ 1
Section 1.02. Usage of Terms............................................................. 24
Section 1.03. Section References......................................................... 24
Section 1.04. Calculations............................................................... 24
Section 1.05. Accounting Terms........................................................... 25
ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts.................................................... 26
ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller............................... 28
Section 3.02. Purchase of Certain Contracts.............................................. 33
Section 3.03. Custody of Contract Files.................................................. 33
Section 3.04. Duties of Master Servicer as Custodian..................................... 34
Section 3.05. Instructions; Authority to Act............................................. 35
Section 3.06. Indemnification............................................................ 35
Section 3.07. Effective Period and Termination........................................... 36
Section 3.08. Nonpetition Covenant....................................................... 36
Section 3.09. Collecting Title Documents Not Delivered at the Closing Date............... 37
ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer.................................................. 38
Section 4.02. Collection of Contract Payments............................................ 42
Section 4.03. Realization upon Defaulted Contracts and Liquidated Contracts.............. 42
Section 4.04. Insurance.................................................................. 43
Section 4.05. Maintenance of Security Interests in Financed Vehicles..................... 43
Section 4.06. Covenants, Representations and Warranties of Master Servicer............... 43
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Section 4.07. Repurchase of Contracts upon Breach of Covenant............................ 45
Section 4.08. Servicing Compensation..................................................... 45
Section 4.09. Reporting by the Master Servicer........................................... 45
Section 4.10. Annual Statement as to Compliance.......................................... 48
Section 4.11. Annual Independent Certified Public Accountants' Report.................... 49
Section 4.12. Access to Certain Documentation and Information Regarding Contracts........ 49
Section 4.13. Fidelity Bond.............................................................. 49
Section 4.14. Indemnification; Third Party Claims........................................ 49
ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts............................................ 51
Section 5.02. Collections; Realization Upon Note Policy; Net Deposits.................... 53
Section 5.03. Application of Collections................................................. 55
Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts................... 55
Section 5.05. Distributions.............................................................. 56
Section 5.06. Spread Account............................................................. 57
Section 5.07. Statements to Securityholders.............................................. 58
ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence........................................................ 60
Section 6.02. Liability of Seller; Indemnities........................................... 60
Section 6.03. Merger or Consolidation of, or Assumption of the Obligations of,
Seller; Certain Limitations............................................. 61
Section 6.04. Limitation on Liability of Seller and Others............................... 62
Section 6.05. Seller Not to Resign....................................................... 63
Section 6.06. Seller May Own Securities.................................................. 63
ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities.................................. 64
Section 7.02. Corporate Existence; Status as Master Servicer; Merger..................... 65
Section 7.03. Performance of Obligations................................................. 65
Section 7.04. Master Servicer Not to Resign; Assignment.................................. 65
Section 7.05. Limitation on Liability of Master Servicer and Others...................... 66
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ARTICLE EIGHT
DEFAULT
Section 8.01. Servicer Default........................................................... 68
Section 8.02. Indenture Trustee to Act; Appointment of Successor......................... 69
Section 8.03. Repayment of Advances...................................................... 70
Section 8.04. Notification to Noteholders and Certificateholders......................... 70
Section 8.05. Waiver of Past Defaults.................................................... 70
Section 8.06. Insurer Direction of Insolvency Proceedings................................ 70
ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts......................................... 72
Section 9.02. Transfer to the Insurer.................................................... 73
ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment................................................................. 74
Section 10.02. Protection of Title to Trust.............................................. 75
Section 10.03. Governing Law............................................................. 77
Section 10.04. Notices................................................................... 77
Section 10.05. Severability of Provisions................................................ 77
Section 10.06. Assignment................................................................ 77
Section 10.07. Third Party Beneficiaries................................................. 77
Section 10.08. Insurer Default or Insolvency............................................. 78
Section 10.09. Counterparts.............................................................. 78
Section 10.10. Headings.................................................................. 78
Section 10.11. Assignment by Issuer...................................................... 78
Section 10.12. Limitation of Liability of Owner Trustee.................................. 78
SCHEDULES
Schedule A Schedule of Contracts................................................... SA-1
Schedule B Location of Contract Files.............................................. SB-1
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EXHIBITS
Exhibit A Form of Insurance Agreement............................................. A-1
Exhibit B Form of Note Policy..................................................... B-1
Exhibit C Form of RIC............................................................. C-1
Exhibit D Form of Subservicing Agreement.......................................... D-1
Exhibit E Form of Distribution Date Statement..................................... E-1
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This SALE AND SERVICING AGREEMENT, dated as of __________ 1, 20__, is
among WFS Financial 20__-_ Owner Trust (the "Issuer"), WFS Financial Auto Loans,
Inc. (the "Seller") and WFS Financial Inc ("WFS" or, in its capacity as Master
Servicer, the "Master Servicer").
WHEREAS, the Issuer desires to purchase from the Seller a portfolio of
receivables arising in connection with automobile retail installment sales
contracts and installment loans (collectively, the "Contracts") primarily
originated by motor vehicle dealers and purchased by WFS, which Contracts were
subsequently sold by WFS to the Seller;
WHEREAS, the Seller is willing to sell the Contracts to the Issuer
pursuant to the terms hereof; and
WHEREAS, the Master Servicer is willing to service the Contracts
pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accelerated Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the lesser of (i) the sum of one-twelfth
of 0% of the Aggregate Scheduled Balance as of the first day of each month of
the Due Period relating to such Distribution Date and (ii) amounts remaining on
deposit in the Collection Account for such Distribution Date after giving effect
to the distributions pursuant to Section 5.05(a) without regard to the inclusion
of such amount as part of the Note Principal Distributable Amount. The
Accelerated Principal Distributable Amount shall be allocated and distributed on
each Distribution Date to the Note Distribution Account.
"Advance" means the aggregate amount, as of a Master Servicer Report
Date, that the Master Servicer is required to advance in respect of the
Contracts pursuant to Section 5.04(a).
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Net Liquidation Losses" means, with respect to any Due
Period, the aggregate of the amounts by which (i) the principal amount of each
Contract that became a Liquidated
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Contract pursuant to clause (ii) or (iv) of the definition of the term
"Liquidated Contract" during such Due Period plus accrued and unpaid interest
thereon (adjusted to the Net Contract Rate) to the last Due Date in such Due
Period exceeds (ii) the Net Liquidation Proceeds for such Contract.
"Aggregate Scheduled Balance" means, with respect to any Distribution
Date and the Outstanding Contracts, the aggregate of the Scheduled Balances of
such Contracts as of the end of the Due Period immediately preceding such
Distribution Date.
"Aggregate Scheduled Balance Decline" means, with respect to any
Distribution Date, the amount by which the Aggregate Scheduled Balance as of the
beginning of the related Due Period (or the Cut-Off Date Aggregate Scheduled
Balance in the case of the first Distribution Date) exceeds the Aggregate
Scheduled Balance at the end of such Due Period.
"Amount Financed" means, with respect to a Contract, the amount advanced
under the Contract toward the purchase price of the related Financed Vehicle and
any related costs, exclusive of any amount allocable to the premium of
force-placed physical damage insurance covering such Financed Vehicle.
"APR" of a Contract means annual percentage rate and is the annual rate
of finance charges specified in such Contract.
"Assignments" means, collectively, (i) the original instrument of
assignment of a Contract and all other documents securing such Contract made by
the Seller to the Owner Trustee (or in the case of any Contract acquired by the
Seller from another Person, from such other Person to the Seller and from the
Seller to the Owner Trustee), and (ii) the original instrument granting a
security interest in such Contract and other documents made by the Owner Trustee
to the Insurer, which, in the case of clause (i) above, is in a form sufficient
under the laws of the jurisdiction under which the security interest in the
related Financed Vehicle arises to permit the assignee to exercise all rights
granted by the Obligor under such Contract and such other documents and all
rights available under applicable law to the Obligee under such Contract and
such other documents and, in the case of clause (ii) above, is in a form
sufficient under the laws of the jurisdiction under which the security interest
in the related Financed Vehicle arises to permit the Insurer, as a secured
party, to exercise, upon default, all rights granted by the Obligor under such
Contract and such other documents and all rights available under applicable law
to the Obligee under such Contract and which, in the case of either clause (i)
or (ii) above, may, to the extent permitted by the laws of such jurisdiction, be
a blanket instrument of assignment covering other Contracts as well and which
may also, to the extent permitted by the laws of the jurisdiction governing such
Contract, be an instrument of assignment running directly from the Seller to the
Owner Trustee and the Insurer.
"Bank" means Western Financial Bank, and its successors.
"Basic Documents" shall have the meaning specified in the Indenture.
"Business Day" means any day that is not a Saturday, Sunday or other day
on which banking institutions in Los Angeles, California, Wilmington, Delaware
or New York, New York are authorized or obligated by law, executive order or
government decree to remain closed.
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"Calculation Day" means the last day of each calendar month.
"Certificate Distributable Amount" means, the aggregate amount of the
Excess Spread Amount distributed to the Certificateholders pursuant to Section
5.05(b).
"Certificate Distribution Account" shall have the meaning specified in
the Trust Agreement.
"Certificate Percentage Interest" means, with respect to a Certificate,
the percentage specified on such Certificate as the Certificate Percentage
Interest, which percentage represents the beneficial interest of such
Certificate in the Trust.
"Certificate Register" shall have the meaning specified in the Trust
Agreement.
"Certificateholders" shall have the meaning specified in the Trust
Agreement.
"Certificates" means the Trust Certificates (as such term is defined in
the Trust Agreement).
"Charge-Off Percentage" means, with respect to any three calendar month
period, the annualized percentage equivalent of the average of the percentages
of charged-off Contracts for each month in such period. For each month, the
percentage of charged-off Contracts shall be the percentage equivalent of a
fraction, the numerator of which is the aggregate Scheduled Balance for such
month of all Contracts that became Liquidated Contracts pursuant to clauses (ii)
or (iv) of the definition of the term "Liquidated Contract" during such month,
less any Net Liquidation Proceeds received during such month (and not reflected
in prior periods) with respect to such Contracts or from any Contracts
charged-off in prior periods, and the denominator of which is the aggregate
Scheduled Balances of all Outstanding Contracts as of the end of the immediately
preceding month.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A-1 Final Distribution Date" means the July, 2002 Distribution
Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register, as such term is defined in the Indenture.
"Class A-1 Rate" means ______% per annum.
"Class A-2 Final Distribution Date" means the __________, 20__
Distribution Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
"Class A-2 Rate" means ______% per annum.
"Class A-3 Final Distribution Date" means the __________, 20__
Distribution Date.
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"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"Class A-3 Rate" means ______% per annum.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means __________ 3, 20__.
"Collateral Agent" means Bankers Trust Company, in its capacity as
collateral agent for the Insurer under the Insurance Agreement, and each
successor thereto.
"Collection Account" means the account established and maintained as
such pursuant to Section 5.01.
"Company" means WFS Investments, Inc., and its successors.
"Contract" means each retail installment sales contract and security
agreement or installment loan agreement and security agreement which has been
executed by an Obligor and pursuant to which such Obligor purchased, financed or
pledged the Financed Vehicle described therein, agreed to pay the deferred
purchase price (i.e., the purchase price net of any down payment) or amount
borrowed, together with interest, as therein provided in connection with such
purchase or loan, granted a security interest in such Financed Vehicle, and
undertook to perform certain other obligations as specified in such Contract and
which has been conveyed to the Trust pursuant to this Agreement.
"Contract Documents" means, with respect to each Contract, (i) the
Contract; (ii) either the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof, together with evidence of perfection
of the security interest in the related Financed Vehicle granted by such
Contract, as determined by the Master Servicer to be permitted or required to
perfect such security interest under the laws of the applicable jurisdiction
(or, in the case of a Contract listed on the Schedule of Contracts, written
evidence from the Dealer selling such Financed Vehicle that the Title Document
for such Financed Vehicle showing the Seller as first lienholder has been
applied for); (iii) the related Assignments; (iv) any agreement(s) modifying the
Contract (including, without limitation, any extension agreement(s)); and (v)
documents evidencing the existence of physical damage insurance covering such
Financed Vehicle.
"Contract Files" means the Contract Documents and all other papers and
computerized records customarily kept by the Master Servicer and all
Subservicers, as the case may be, in servicing contracts and loans comparable to
the Contracts.
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"Contract Number" means, with respect to any Contract included in the
Trust, the number assigned to such Contract by the Master Servicer, which number
is set forth in the related Schedule of Contracts.
"Contract Rate" means, with respect to a Contract that is a (i) Simple
Interest Contract, the interest rate borne by such Contract as determined by the
terms thereof, and (ii) Rule of 78's Contract, the discount rate used in
accordance with the definition of the term "Scheduled Balance" to derive the
Scheduled Balance of such Contract.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at Four Albany Street - 10th Floor, New York, New York 10006, Attention:
Corporate Trust Department - Asset Backed Group; or at such other address as the
Indenture Trustee may designate from time to time by notice to the
Certificateholders, the Insurer, the Master Servicer and the Seller.
"Cut-Off Date" means __________ 1, 20__.
"Cut-Off Date Aggregate Scheduled Balance" means $______, the aggregate
of the Scheduled Balances of the Contracts as of the Cut-Off Date.
"Dealer" means the seller of a Financed Vehicle, which seller originated
and assigned the related Contract, including the Bank.
"Defaulted Contract" means, with respect to any Due Period, a Contract
(i) which is, at the end of such Due Period, delinquent in the amount of at
least two monthly payments or (ii) with respect to which the related Financed
Vehicle has been repossessed or repossession efforts have been commenced.
"Deficiency Claim Date" means, with respect to any Distribution Date,
the fourth Business Day immediately preceding such Distribution Date.
"Deficiency Notice" means, with respect to any Distribution Date, the
notice delivered pursuant to Section 5.02(c) by the Master Servicer to the
Indenture Trustee, with a copy to the Insurer and the Owner Trustee.
"Delinquency Percentage" means, with respect to any three calendar month
period, the average of the percentages of delinquent Contracts for each month in
such period. For each month the percentage of delinquent Contracts shall be the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate Scheduled Balance of all Outstanding Contracts 61 days or more
delinquent (after taking into account permitted extensions), plus (ii) the
aggregate Scheduled Balance of all Contracts in respect of which the related
Financed Vehicles have been repossessed but have not been liquidated (to the
extent the related Contract is not otherwise reflected in clause (i) above), and
the denominator of which is the aggregate Scheduled Balance of all outstanding
Contracts, in each case, on the last day of such calendar month.
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"Delivery" means, when used with respect to Trust Account Property:
(i) with respect to certificated securities, bankers'
acceptances, commercial paper, negotiable certificates of deposit and
any other obligations which evidence a right to the payment of money and
is not itself a security agreement or lease and is of a type which is in
ordinary course of business transferred by delivery with necessary
endorsement or assignment (collectively, "Physical Property"): (A) the
Indenture Trustee or the Owner Trustee, as the case may be, or its
Financial Intermediary acquires possession of the Physical Property, and
evidence that any such Physical Property that is in registerable form
has been registered in the name of the Trustee, its Financial
Intermediary, its custodian or its nominee; (B) the Financial
Intermediary, not a clearing corporation, sends the Indenture Trustee or
the Owner Trustee, as the case may be, confirmation of the transfer and
also by book entry or otherwise identifies as belonging to the Indenture
Trustee or the Owner Trustee, as the case may be, the Physical Property
in the Financial Intermediary's possession; or (C) with respect to a
clearing corporation, appropriate entries to the account of the
Indenture Trustee or the Owner Trustee, as the case may be, or a Person
designated by him or her and, if certificated, it is both, in the
custody of the clearing corporation or another clearing corporation, a
custodian bank or a nominee of any of them and, in bearer form or
endorsed in blank by the appropriate person or registered in the name of
the clearing corporation, custodian bank, or a nominee of any of them;
(ii) with respect to any Trust Account Property that is a
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations, the following procedures, all in
accordance with applicable law, including applicable Federal regulations
and Articles 8 and 9 of the UCC: (A) book-entry registration of such
property to an appropriate book-entry account maintained with a Federal
Reserve Bank by the Indenture Trustee or the Owner Trustee, as the case
may be, of a deposit advice or other written confirmation of such
book-entry registration, (B) the making by any such custodian of entries
in its books and records identifying such book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations as belonging to the Indenture Trustee or the Owner Trustee,
as the case may be, and indicating that such custodian holds such Trust
Account Property solely as agent for the Indenture Trustee or the Owner
Trustee, as the case may be, and the making by the Indenture Trustee or
the Owner Trustee, as the case may be, of entries in its books and
records establishing that it holds such Trust Account Property solely as
trustee pursuant to Section 5.01, and (C) such additional or alternative
procedures as may hereafter become necessary to effect complete transfer
of ownership of any such Trust Account Property to the Indenture Trustee
or the Owner Trustee, as the case may be, consistent with changes in
applicable law or regulations or the interpretation thereof; and
(iii) with respect to any Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (ii) above, registration of the transfer to, and
ownership of such Trust Account Property by, the Indenture Trustee or
the Owner Trustee, as the case may be, its custodian or its nominee by
the issuer of such Trust Account Property.
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"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement, and its successors.
"Distribution Date" means each January 20, April 20, July 20 and October
20, or, if any such date shall not be a Business Day, the next succeeding
Business Day, commencing January 20, 2000.
"Distribution Date Outstanding Principal Balance" means, with respect to
any Contract which has been the subject of a Partial Prepayment and under which
payments are applied on the basis of the Rule of 78's, the amount equal to the
total of all Monthly P&I due after the Distribution Date next succeeding the Due
Period during which such Partial Prepayment was received, less any unearned
finance charge as of the Due Date next preceding such Distribution Date computed
in accordance with the Rule of 78's.
"Distribution Date Statement" shall have the meaning specified in
Section 4.09(a).
"DTC" means The Depository Trust Company, and its successors.
"Due Date" means, as to any Contract, the date upon which an installment
of Monthly P&I is due.
"Due Period" means, with respect to any Distribution Date, the three
month period commencing on the first day of the third month preceding the month
in which such Distribution Date occurs (or from October 1, 20__ in the case of
the first Distribution Date) to the last day of the month immediately preceding
the month in which such Distribution Date occurs.
"Eligible Account" means (i) a segregated trust account in the corporate
trust department that is maintained with a depository institution or trust
company the commercial paper or other short-term debt obligations of which have
credit ratings from Standard & Poor's at least equal to "A-1" and from Moody's
equal to "P-1", which account is fully insured up to applicable limits by the
FDIC or (ii) a general ledger account or deposit account that is (a) guaranteed
by an entity the long-term unsecured debt obligations of which are rated "Aa2"
by Moody's and "AAA" by Standard & Poor's or the commercial paper or other
short-term debt obligations of which have credit ratings from Standard & Poor's
at least equal to "A-1+" and from Moody's equal to "P-1" or (b) that otherwise
will not result in the qualification, reduction or withdrawal by any Rating
Agency of its then-applicable rating on any Class of Notes (without giving
effect to the guaranty under the Note Policy of payments owing to Noteholders).
If any Eligible Account falls below the ratings specified in (i) or (ii) above,
all monies in such Eligible Account will be moved within 15 days to an account
meeting the requirements of an Eligible Account.
"Eligible Investments" means any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality of the United States the obligations of which
are backed by the full faith and credit of the United States;
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(ii) general obligations of or obligations guaranteed as to
timely payment of principal and interest by FNMA, FHLMC or any state of
the United States, the District of Columbia or the Commonwealth of
Puerto Rico then rated the highest available credit rating of each
Rating Agency for such obligations;
(iii) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or the
Owner Trustee) incorporated under the laws of the United States or any
state and subject to supervision and examination by federal and/or state
banking authorities, so long as at the time of such investment or
contractual commitment providing for such investment either (a) the
long-term, unsecured debt obligations of such depository institution or
trust company have credit ratings from Moody's at least equal to "Aa2"
and shall have commercial paper or other short-term debt obligations
rated at least "A-1+" by Standard & Poor's and "P-1" by Moody's or (b)
the investment is guaranteed by an entity the long-term, unsecured debt
obligations of which have been rated "AAA" by Standard & Poor's and at
least "Aa2" by Moody's or otherwise will not result in the
qualification, reduction or withdrawal by Moody's or Standard & Poor's
of its then-applicable rating on any Class of Notes (without giving
effect to the guaranty under the Note Policy of payments owing to
Noteholders); if the investments in this paragraph (iii) fall below the
specified ratings, the invested monies shall be moved to Eligible
Investments as soon as the investment matures; however, no new monies
may be invested in any instrument that is not currently an Eligible
Investment;
(iv) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed as to timely payment of principal and interest by an agency
or instrumentality of the United States, in either case entered into
with a depository institution or trust company (including the Indenture
Trustee or the Owner Trustee), acting as principal and the counterparty,
the long-term unsecured debt obligations of which are rated "AAA" by
Standard & Poor's and at least "Aa2" by Moody's and commercial paper or
other short-term debt obligations are rated at least "A-1+" by Standard
& Poor's and "P-1" by Moody's;
(v) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States or any
state thereof which at the time of such investment or contractual
commitment providing for such investment have long-term, unsecured debt
obligations rated "AAA" by Standard & Poor's and at least "Aa2" by
Moody's or better and shall have commercial paper or other short-term
debt obligations rated at least "A-1+" by Standard & Poor's and "P-1" by
Moody's; provided, however, that securities issued by any corporation
will not be Eligible Investments to the extent that investment therein
will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the Trust to exceed 10% of the sum
of the aggregate Outstanding Principal Balances of the Contracts and all
Eligible Investments held as part of the Trust;
(vi) commercial paper given the highest rating by each Rating
Agency at the time of such investment; provided that the issuer of such
commercial paper must have a
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long-term unsecured debt rating of at least A1 from Moody's and AAA from
Standard & Poor's;
(vii) the RIC, if investment in such RIC will not result in a
qualification, reduction or withdrawal by Moody's or Standard & Poor's
of its then-applicable rating on any Class of Notes (without giving
effect to the guaranty under the Note Policy of payments owing to the
Noteholders); if the investments in this paragraph (vii) fall below the
specified ratings, the invested monies shall be moved to Eligible
Investments on the fifth Business Day preceding the next succeeding
Distribution Date; however, no new monies may be invested in the RIC
until the RIC once again becomes an Eligible Investment; and
(viii) any other investments which meet the criteria of each
Rating Agency as being consistent with their then-current rating of each
Class of Notes.
"Excess Amounts" shall have the meaning specified in Section 5.05(b).
"Excess Spread Amount" means, with respect to a Distribution Date or
Calculation Day, the excess of the Spread Account Balance over the Specified
Spread Account Balance (after giving effect to all deposits to, and withdrawals
(other than withdrawals pursuant to Section 5.06(b)) from, the Spread Account on
such Distribution Date or Calculation Day).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation, and its
successors.
"FHLMC" means the Federal Home Loan Mortgage Corporation, and its
successors.
"FNMA" means the Federal National Mortgage Association, and its
successors.
"Final Distribution Date" means the Class A-1 Final Distribution Date,
the Class A-2 Final Distribution Date or the Class A-3 Final Distribution Date
Date, as the case may be.
"Financed Vehicle" means, as to any Contract, an automobile or
light-duty truck, together with all accessions thereto, securing the related
Obligor's indebtedness under such Contract.
"Financial Intermediary" means a bank, broker, clearing corporation or
the Person (or the nominee of any of them) that in the ordinary course of its
business maintains security accounts for its customers and is acting in that
capacity.
"Fiscal Agent" shall have the meaning set forth in the Note Policy.
"Full Prepayment" means any of the following: (i) payment to the Master
Servicer of 100% of the outstanding principal balance of a Contract, exclusive
of any Contract referred to in clause (ii), (iii) or (iv) of the definition of
the term "Liquidated Contract," together with all accrued and unpaid interest
thereon to the date of such payment, or (ii) payment by the Seller or the Master
Servicer, as the case may be, of the purchase price of a Contract in connection
with the purchase of a Contract pursuant to Section 3.02 or 4.07 or payment by
the Seller of the
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purchase price of a Contract in connection with the purchase of all Contracts
pursuant to Section 9.01.
"Holder" means, with respect to a (i) Certificate, the Person in whose
name such Certificate is registered in the Certificate Register and (ii) Note,
the Person in whose name such Note is registered in the Note Register.
"Holding Account" means the account established and maintained as such
pursuant to Section 5.01.
"Indenture" means the Indenture, dated as of the date hereof, among the
Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Independent", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Issuer, the Seller or WFS,
(ii) is not a director, officer or employee of any Affiliate of the Issuer, the
Seller or WFS, (iii) is not a person related to any officer or director of the
Issuer, the Seller, WFS or any of their respective Affiliates, (iv) is not a
holder (directly or indirectly) of more than 10% of any voting securities of
Issuer, the Seller, WFS or any of their respective Affiliates, and (v) is not
connected with the Issuer, the Seller or WFS as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Insolvency Event" means, with respect to a specified Person, (i) the
entry of a decree or order for relief by a court or regulatory authority having
jurisdiction in respect of such Person in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; (ii) the commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or any other present
or future federal or state bankruptcy, insolvency or similar law and such case
is not dismissed within 60 days; or (iii) the commencement by such Person of a
voluntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or any other present or future federal or state, bankruptcy, insolvency
or similar law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or other similar official for such Person or for any substantial part of its
property, or the making by such Person of an assignment for the benefit of
creditors or the failure by such Person generally to pay its debts as such debts
become due or the taking of corporate action by such Person in furtherance of
any the foregoing.
"Insolvency Proceeding" shall have the meaning specified in Section
8.06.
"Insolvency Proceeds" shall have the meaning specified in Section
9.01(b).
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"Insurance Agreement" means the Insurance, Indemnity and Pledge
Agreement, dated as of the date hereof, among the Insurer, the Issuer, the
Seller, the Master Servicer, the Company and the Indenture Trustee, the form of
which is attached hereto as Exhibit B.
"Insurance Agreement Obligations" means, as of any date, the aggregate
of amounts owing to the Insurer under the Insurance Agreement as of such date,
other than amounts representing payments made under the Note Policy for which
the Insurer has not yet been reimbursed.
"Insurance Policy" means, with respect to a Financed Vehicle, the
policies of comprehensive and collision insurance and the LDI Policy.
"Insurance Proceeds" means proceeds paid pursuant to any Insurance
Policy and amounts (exclusive of rebated premiums) paid by any insurer under any
other insurance policy related to a Financed Vehicle, a Contract or an Obligor.
"Insurer" means Financial Security Assurance Inc., and its successors.
"Insurer Insolvency" means (i) the entry of a decree or order for relief
by a court or regulatory authority having jurisdiction in respect of the Insurer
in an involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or any other present or future federal or state bankruptcy, insolvency,
rehabilitation or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Insurer or of
any substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Insurer and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days, or (ii) the
commencement by the Insurer of a voluntary case under the federal bankruptcy
laws, as now or hereafter in effect, or any other present or future federal or
state bankruptcy, insolvency, rehabilitation or similar law, or the consent by
the Insurer to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Insurer or of any substantial part of its property or the making by the
Insurer of an assignment for the benefit of creditors or the failure by the
Insurer generally to pay its debts as such debts become due or the taking of
corporate action by the Insurer in furtherance of any of the foregoing.
"Interest Period" means, with respect to any Distribution Date, the
period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including October 1, 20__) to but excluding such Distribution Date.
"Interest Rate" means the Class A-1 Rate, the Class A-2 Rate or the
Class A-3 Rate, as the case may be.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts, other than the Holding Account, to be deposited
into the Collection Account on such Distribution Date pursuant to Section
5.01(b).
"Issuer" means the WFS Financial 20__-_ Owner Trust.
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"LDI Policy" means the limited dual interest policy providing coverage
for physical damage to, or loss of, a Financed Vehicle.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
"Liquidated Contract" means a Contract which (i) has been the subject of
a Full Prepayment; (ii) was a Defaulted Contract and with respect to which the
related Financed Vehicle was repossessed and, after any cure period required by
law has expired, the Master Servicer has charged-off any losses prior to the end
of the four-month period referred to in clause (iv); (iii) has been paid in full
on or after its Maturity Date; or (iv) has become delinquent as to all or part
of four or more payments of Monthly P&I.
"Liquidation Expenses" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Master Servicer in connection with the realization of the full amounts due under
any Contract (including the attempted liquidation of a Contract which is brought
current and is no longer in default during such attempted liquidation) and the
sale of any property acquired in respect thereof which are not recoverable under
any Insurance Policy.
"Liquidation Proceeds" means amounts received by the Master Servicer
(before reimbursement for Liquidation Expenses) in connection with the
realization of the amounts due and to become due under any Defaulted Contract
and the sale of any property acquired in respect thereof.
"Master Servicer" means WFS in its capacity as the master servicer of
the Contracts under Section 4.01, and, in each case upon succession in
accordance herewith, each successor servicer in the same capacity pursuant to
Section 4.01 and each successor master servicer pursuant to Section 8.02.
"Master Servicer Report Date" means, with respect to any Distribution
Date, the fifth Business Day prior to such Distribution Date.
"Maturity Date" means, with respect to any Contract, the date on which
the last scheduled payment of such Contract shall be due and payable (after
giving effect to all Prepayments received prior to the date of determination) as
such date may be extended pursuant to Section 4.02.
"Monthly P&I" means, with respect to any Contract, the amount of each
monthly installment of principal and interest payable to the Obligee of such
Contract in accordance with the terms thereof, exclusive of any charges
allocable to the financing of any insurance premium and charges which represent
late payment charges or extension fees.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., and its successors.
"Net Collections" means, with respect to any Distribution Date and the
related Due Period, the sum of (i) all amounts of principal and interest
collected on or in respect of the
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Contracts during such Due Period (in the case of principal and interest that are
part of any Liquidation Proceeds or Insurance Proceeds, only to the extent of
the related Net Liquidation Proceeds or Net Insurance Proceeds), less (a) the
Retained Yield, if any, (b) any late payments of interest retained by the Master
Servicer as reimbursement for Advances pursuant to Section 5.04 and (c) any
installments of Monthly P&I or Prepayments retained by the Master Servicer as
reimbursement for Nonrecoverable Advances pursuant to Section 5.04; (ii) the
Advance for such Due Period to the extent actually made; (iii) the investment
earnings on funds in the Collection Account for such Distribution Date (which,
except as otherwise provided in Section 5.01, shall be the RIC Reinvestment
Earnings); (iv) amounts withdrawn from the Holding Account and deposited in the
Collection Account in such Due Period pursuant to Section 5.02; and (v) the
aggregate Repurchase Amount for Repurchased Contracts deposited in or credited
to the Collection Account pursuant to Section 5.04(c) on the related Master
Servicer Report Date.
"Net Contract Rate" means, with respect to any Contract, its Contract
Rate less the sum of the Servicing Fee Percent and the Retained Yield Percent.
"Net Insurance Proceeds" means, with respect to any Contract, Insurance
Proceeds net of any such amount applied to the repair of the related Financed
Vehicle, released to the related Obligor in accordance with the normal servicing
procedures of the Master Servicer or representing expenses incurred by the
Master Servicer and recoverable hereunder.
"Net Liquidation Proceeds" means the amount derived by subtracting from
the Liquidation Proceeds of a Contract the related Liquidation Expenses.
"Nonrecoverable Advance" means any Advance proposed to be made or
previously made by the Master Servicer which, in its good faith judgment, would
not be or will not be ultimately recoverable by the Master Servicer from late
payments, Insurance Proceeds or Liquidation Proceeds.
"Note Balance" means with respect to any Distribution Date, the
aggregate outstanding principal amount of the Class A-1 Notes, Class A-2 Notes
and Class A-3 Notes, in each case as of the immediately preceding Distribution
Date (after giving effect to any distributions of principal made on such
preceding Distribution Date).
"Note Deficiency Claim Amount" means, with respect to each Distribution
Date, the amount, if any, by which the Note Distributable Amount for such
Distribution Date exceeds the amount of Net Collections actually deposited in
the Note Distribution Account on such Distribution Date in accordance with
Section 5.05.
"Note Distributable Amount" means, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for such Distribution Date.
"Note Distribution Account" means the account established and maintained
as such pursuant to Section 5.01.
"Note Final Distribution Date" means the Class A-1 Final Distribution
Date, the Class A-2 Final Distribution Date and the Class A-3 Final Distribution
Date, as the case may be.
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"Note Interest Carryover Shortfall" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the sum of the
Note Interest Distributable Amount for such Class for the immediately preceding
Distribution Date plus any outstanding Note Interest Carryover Shortfall for
such Class on such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Note Distribution Account with
respect to such Class on such preceding Distribution Date, plus, to the extent
permitted by applicable law, interest on the amount of interest due but not paid
to Noteholders of such Class on the preceding Distribution Date at the related
Interest Rate for the related Interest Period.
"Note Interest Distributable Amount" means, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Quarterly Interest
Distributable Amount for such Class of Notes for such Distribution Date and the
Note Interest Carryover Shortfall for such Class of Notes for such Distribution
Date. For all purposes of this Agreement and the other Basic Documents, interest
with respect to the (i) Class A-1 Notes shall be computed on the basis of a
360-day year and the actual number of days elapsed since the immediately
preceding Distribution Date (or, with respect to the first Distribution Date,
since October 1, 20__) and (ii) Class A-2 Notes and Class A-3 Notes shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
"Note Percentage" means, (i) for each Distribution Date prior to but
excluding the Distribution Date on which the principal amount of the Class A-3
Notes is reduced to zero, 100%; (ii) for the Distribution Date on which the
principal amount of the Class A-3 Notes is reduced to zero, (A) 100% until the
principal amount of the Class A-3 Notes has been reduced to zero and (B) with
respect to any remaining portion of the Principal Distributable Amount, zero;
and (iii) for any Distribution Date thereafter, zero.
"Note Policy" means the financial guaranty insurance policy issued by
the Insurer to the Indenture Trustee on behalf of the Noteholders, the form of
which is attached as Exhibit C hereto.
"Note Policy Claim Amount" means, with respect to each Distribution
Date, the amount, if any, by which the Note Distributable Amount for such
Distribution Date exceeds the sum of (i) the amount of Net Collections actually
deposited in the Note Distribution Account on such Distribution Date in
accordance with Section 5.05 and (ii) the amount of the Note Deficiency Claim
Amount, if any, paid to the Note Distribution Account from the Spread Account
pursuant to a Deficiency Notice delivered for such Distribution Date.
"Note Pool Factor" means, with respect to any Class of Notes as of any
Distribution Date, a six-digit decimal figure equal to the outstanding principal
amount of such Class of Notes (after giving effect to any reductions thereof to
be made on such Distribution Date) divided by the original outstanding principal
amount of such Class of Notes.
"Note Principal Carryover Shortfall" means, as of any Distribution Date,
the excess of the sum of the Note Quarterly Principal Distributable Amount and
any outstanding Note Principal Carryover Shortfall for the immediately preceding
Distribution Date over the amount in respect of principal that is actually
deposited in the Note Distribution Account on such Distribution Date.
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"Note Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Note Quarterly Principal Distributable Amount
and the Accelerated Principal Distributable Amount, if any, for such
Distribution Date and any outstanding Note Principal Carryover Shortfall for the
immediately preceding Distribution Date; provided, however, that the Note
Principal Distributable Amount with respect to a Class of Notes shall not exceed
the outstanding principal amount of such Class of Notes; and provided, further,
that the Note Principal Distributable Amount on each Note Final Distribution
Date shall not be less than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal amount of the related Class of Notes to zero.
"Note Quarterly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued for the related Interest Period on each
Class of Notes at the related Interest Rate for such Class on the outstanding
principal amount of the Notes of such Class on the immediately preceding
Distribution Date, after giving effect to all payments of principal to the
Noteholders of such Class on or prior to such Distribution Date (or, in the case
of the first Distribution Date, on the original principal amount of such Class
of Notes).
"Note Quarterly Principal Distributable Amount" means, with respect to
any Distribution Date, the Note Percentage of the Principal Distributable Amount
for such Distribution Date.
"Note Register" shall have the meaning specified in the Indenture.
"Obligee" means the Person to whom an Obligor is indebted under a
Contract.
"Obligor" on a Contract means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Contract.
"Offered Securities" shall have the meaning specified in Section
6.03(b)(ii).
"Officers' Certificate" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered. In the case of an Officers' Certificate
of the Master Servicer, at least one of the signing officers must be a Servicing
Officer. Unless otherwise specified, any reference herein to an Officers'
Certificate shall be to an Officers' Certificate of the Master Servicer.
"Opinion of Counsel" means a written opinion of counsel (who may be
counsel to the Seller or the Master Servicer) acceptable to the Indenture
Trustee or the Owner Trustee, as the case may be, and the Insurer.
"Original Certificate Balance" means $______.
"Original Class A-1 Note Balance" means $______.
"Original Class A-2 Note Balance" means $______.
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"Original Class A-3 Note Balance" means $______.
"Original Pool Balance" means $______.
"Outstanding" means,
(i) with respect to a Contract and as of time of reference
thereto, a Contract that has not reached its Maturity Date, has not been
fully prepaid, has not become a Liquidated Contract and has not been
repurchased pursuant to Section 3.02, 4.07 or 9.01; and
(ii) with respect to Securities, as of the date of determination,
all Notes of one Class or of all Classes, all Certificates or all Notes
and Certificates, as the case may be, theretofore authenticated and
delivered except:
(a) Securities theretofore cancelled by the applicable
Registrar or delivered to the applicable Registrar for
cancellation;
(b) Securities or portions thereof the payment for which
money in the necessary amount has been theretofore deposited with
the applicable Trustee or any Paying Agent, as the case may be,
in trust for the Holders of such Securities (provided, however,
that if such Securities are to be redeemed or repurchased, notice
of such redemption or repurchase has been duly given or provision
for such notice has been made, satisfactory to the applicable
Trustee); and
(c) Securities in exchange for or in lieu of other
Securities which have been authenticated and delivered unless
proof satisfactory to the applicable Trustee is presented that
any such Securities are held by a bona fide purchaser;
provided, however, that Securities which have been paid with proceeds of the
Note Policy, as the case may be, shall continue to remain Outstanding until the
Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Insurer delivered
to the applicable Trustee, and the Insurer shall be deemed to be the Holder
thereof to the extent of any payments thereon made by the Insurer; provided,
further, that in determining whether the Holders of a specified Outstanding
Amount of Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Basic Document,
Securities owned by the Issuer, any other obligor upon the Securities, the
Seller, WFS or any of their respective Affiliates shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the applicable
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that the
applicable Trustee knows to be so owned shall be so disregarded. Securities so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the applicable Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is not the
Issuer, any other obligor upon the Securities, the Seller, WFS or any of their
respective Affiliates.
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"Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, of all Certificates or of all Securities, as the
case may be, Outstanding at the date of determination.
"Outstanding Principal Balance" means, with respect to a Contract that
is a (i) Rule of 78's Contract, the amount set forth as the Outstanding
Principal Balance of such Contract on the Schedule of Contracts, such amount
being the total of all Monthly P&I due on or after October 1, 20__ less any
unearned interest as of the Due Date for such Contract next preceding October 1,
20__ computed in accordance with the Rule of 78's, less all amounts received on
or in respect of such Contract on or after October 1, 20__ that are allocable to
principal and (ii) Simple Interest Contract, the actual principal balance under
the terms thereof.
"Owner Trustee" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement.
"Owner Trustee Corporate Trust Office" shall have the meaning specified
in the Trust Agreement.
"Partial Prepayment" means, as to any Rule of 78's Contract, any partial
prepayment received by the Master Servicer that (i) is not accompanied by an
amount specified by the related Obligor to be interest representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of such prepayment and (ii) is required by the terms of such Contract to be
applied to the payment of principal thereunder on or prior to the Due Date next
succeeding the date of receipt.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Physical Property" shall have the meaning specified in the definition
of the term "Delivery".
"Policies" means the Note Policy and the Certificate Policy.
"Pool Balance" as of the time of determination means the Aggregate
Scheduled Balance, exclusive of the Scheduled Balances of all Contracts that are
not Outstanding at the end of the Due Period ending immediately prior to such
time of determination.
"Preference Claim" shall have the meaning specified in Section 8.06.
"Preferential Transfer" shall have the meaning specified for the term
"Preference" in the Insurance Agreement.
"Prepayment" means a Full Prepayment or a Partial Prepayment.
"Principal Distributable Amount" means, with respect to any Distribution
Date, the Aggregate Scheduled Balance Decline for such Distribution Date.
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"Proprietary Fund" means money market funds having a rating from each
Rating Agency in the highest investment category granted by each Rating Agency,
including funds for which the Indenture Trustee or the Owner Trustee or any of
their respective Affiliates is investment manager or advisor.
"Rating Agency" means Moody's and Standard & Poor's.
"Record Date" means, with respect to a Class of Notes or the
Certificates and any Distribution Date, the Business Day immediately preceding
such Distribution Date or, if Definitive Securities are issued, the 15th day of
the month preceding the month in which such Distribution Date occurs.
"Registrar of Titles" means the agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Financed Vehicle is registered.
"Repurchase Amount" means, with respect to any Contract, the amount, as
of the date of repurchase, required to prepay in full the principal of and
accrued interest on such Contract to the last Due Date in the Due Period in
which such repurchase occurs.
"Repurchased Contract" means a Contract repurchased as of the related
Master Servicer Report Date by the Master Servicer pursuant to Section 4.07 or
by the Seller pursuant to Section 3.02.
"Responsible Officer" means any officer within the Corporate Trust and
Agency Group (or any successor group of the Indenture Trustee) including any
Vice President, assistant secretary or any other officer or assistant officer of
the Indenture Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred at the Indenture Trustee's
Corporate Trust Office because of his knowledge of and familiarity with the
particular subject.
"Retained Yield" shall mean the amount, if any, stripped off from the
interest portion of Monthly P&I by the Servicer and paid to the Seller on a
monthly basis. Such monthly payment shall be equal to (i) with respect to each
Rule of 78's Contract, an amount equal to the product of the Retained Yield
Percent and the Scheduled Balance of such Contract (as specified in the Schedule
of Contracts) for such month, but only to the extent that the Monthly P&I for
such Contract for such month has been collected and (ii) with respect to each
Simple Interest Contract, out of each payment of Monthly P&I collected on such
Contract, an amount equal to interest at the Retained Yield Percent of the
Scheduled Balance of such Contract on which, and for the period for which, the
interest portion of such payment of Monthly P&I was calculated.
"Retained Yield Percent" means, with respect to any Contract, the lesser
of (i) 0% per annum or (ii) a percent per annum equal to the APR of such
Contract less the sum of (A) 1% and (B) the Pass-Through Rate.
"RIC" means the reinvestment contract provided by the Bank and WFAL 2
or, with the prior written consent of the Insurer, a subsidiary thereof,
substantially in the form of Exhibit D
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hereto, in consideration of the right to direct the investment of the funds on
deposit in all Trust Accounts other than the Holding Account.
"RIC Reinvestment Earnings" means, with respect to any Distribution
Date, the related Due Period and the Contracts that were Outstanding at the
beginning of such Due Period, the amount by which the sum of the Note Quarterly
Interest Distributable Amount for such Distribution Date exceeds the sum of (i)
the aggregate amount of interest on the Contracts (adjusted with respect to each
Contract to the Class A-3 Rate and exclusive of such collections that have been
paid to the Master Servicer in reimbursement of a previous Advance) that is part
of Net Collections for such Distribution Date and (ii) the amount of the Advance
as to interest for such Distribution Date (assuming for this purpose that an
Advance was made in respect of each delinquent Contract).
"Rule of 78's Contract" means a Contract as to which payments thereunder
are applied on the basis of the Rule of 78's.
"Schedule of Contracts" means the list or lists of Contracts attached as
Schedule A to this Agreement, which Contracts are being transferred to the Owner
Trustee as part of the Trust Estate, which list or lists shall set forth the
following information with respect to each such Contract in numbered columns:
Information Column Number
----------- -------------
Contract Number ("ACCT NBR").............................. 2
Date of Origination ("ORG DT")............................ 9
Maturity Date ("MAT DT").................................. 15
Monthly P&I ("P&I")....................................... 10
Original Principal Balance ("ORIG AMT")................... 16 Top
Outstanding Principal Balance ("PRIN BAL")................ 16 Bottom
Discount Rate ("APR")..................................... 7
In addition, the Scheduled Balance of each Rule of 78's Contract for each Due
Date on or after October 1, 20__, computed in accordance with the definition of
the term "Scheduled Balance," shall be contained on a computer disk or tape (the
"Disk") that shall be delivered by the Company to the Master Servicer not later
than the fifth Business Day following the Closing Date. The Disk shall be a part
of the Schedule of Contracts and shall be made available by the Master Servicer
to the Indenture Trustee and the Owner Trustee upon reasonable request. In
calculating the Outstanding Principal Balance of each Rule of 78's Contract to
be set forth in Column 16 Bottom, it shall be assumed that all payments of
principal and interest due on or before the Cut-Off Date were received and
applied. The Schedule of Contracts or the Disk shall also set forth the Original
Pool Balance and the Retained Yield Percent (if the Retained Yield Percent is
not the same for all the Contracts).
"Scheduled Balance" means, with respect to any Rule of 78's Contract for
each month and as of the Cut-Off Date, the amount set forth as the "Scheduled
Balance" of such Contract for such month or as of the Cut-Off Date on the
Schedule of Contracts. Each such amount shall be the present value (determined
as provided below) for the applicable month of all payments of
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Monthly P&I on the Contract due after such month (due during or after the first
Due Period in the case of a Scheduled Balance at the Cut-Off Date). Such present
value as of a Distribution Date shall be determined by discounting, on a monthly
basis, each such payment of Monthly P&I from the last day of the month in which
such payment of Monthly P&I is due back to the first day of the month during
which such Distribution Date occurs, using the applicable discount rate
specified below. Such present value as of the Cut-Off Date shall be determined
by discounting, on a monthly basis, each such payment of Monthly P&I back from
the last day of the month in which such payment of Monthly P&I is due to the
Cut-Off Date, using the applicable discount rate specified below. The applicable
discount rate (the "Discount Rate") shall be the discount rate that will produce
a present value at the Cut-Off Date equal to the Outstanding Principal Balance
of the Contract. The Scheduled Balance of a Rule of 78's Contract that becomes a
Liquidated Contract or a Repurchased Contract shall be reduced to zero as of the
end of the Due Period in which such Contract became a Liquidated Contract. In
the case of a Simple Interest Contract, the Scheduled Balance thereof is its
actual principal balance. The principal balance of a Simple Interest Contract
that becomes a Repurchased Contract shall be deemed to be reduced to zero upon
the related repurchase thereof and the principal balance of a Simple Interest
Contract that becomes a Liquidated Contract shall be deemed to be reduced to
zero as of the date on which such Contract becomes a Liquidated Contract. If a
Partial Prepayment is received on any Rule of 78's Contract at any time after
the Cut-Off Date, the Schedule of Contracts shall be revised to reflect the new
Scheduled Balance of such Contract for each Due Date after the date of such
Partial Prepayment, any such recalculations being made in the manner described
above, except that "Outstanding Principal Balance" shall be read to mean
"Distribution Date Outstanding Principal Balance" and "Cut-Off Date" shall be
read to mean the Due Date next succeeding the Due Date after which such Partial
Prepayment was received. As used herein, reference to the Scheduled Balance of a
Contract for a Distribution Date shall mean (i) in the case of a Rule of 78's
Contract, the Scheduled Balance of such Contract on the last day for such
Contract in the Due Period ending immediately prior to such Distribution Date,
and (ii) in the case of a Simple Interest Contract, the Scheduled Balance of
such Contract at the close of business of the last day in such Due Period, and
reference to the Scheduled Balance of a Contract in a month shall mean (i) in
the case of a Rule of 78's Contract, the Scheduled Balance of such Contract for
the last day of such month and (ii) in the case of a Simple Interest Contract,
the Scheduled Balance of such Contract at the close of business on the last day
of such month.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Holders of the Notes and the Certificates.
"Seller" means WFS Financial Auto Loans, Inc., in its capacity as the
Seller of the Contracts under this Agreement, and each successor thereto (in the
same capacity) pursuant to Section 6.03.
"Servicer Default" means an event specified in Section 8.01.
"Servicing Fee" means, as to any Distribution Date, the fee payable to
the Master Servicer for services rendered during the related Due Period, which
shall equal with respect to each Contract that is a (i) Rule of 78's Contract,
the amount equal to, for each month in such Due Period, the product of the
Servicing Fee Percent and the Scheduled Balance of such Contract (as
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specified in the Schedule of Contracts) for such month in the related Due
Period, but only to the extent that the Monthly P&I for such Contract for such
month has been collected or advanced by the Master Servicer pursuant to Section
5.04 and (ii) Simple Interest Contract, out of each payment of Monthly P&I
collected or advanced on such Contract an amount equal to interest at the
Servicing Fee Percent on the Scheduled Balance of such Contract on which, and
for the period for which, the interest portion of such payment of Monthly P&I
was calculated.
"Servicing Fee Percent" means one-twelfth of 1.25% per annum.
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers furnished to the Indenture Trustee
and the Owner Trustee by the Master Servicer pursuant to Section 4.01.
"Simple Interest Contract" means a Contract as to which interest is
calculated each day on the basis of the actual principal balance of such
Contract on such day.
"Specified Spread Account Balance" means, with respect to any
Calculation Day or Distribution Date, 7% of the Aggregate Scheduled Balance on
such date of calculation, except that if on any date of calculation (i) the
Charge-Off Percentage for the three calendar month period ending on such date of
calculation exceeds 4% or (ii) the Delinquency Percentage for the three calendar
month period ending on such date of calculation exceeds 2%, then the Specified
Spread Account Balance shall equal 10% of the Aggregate Scheduled Balance on
such date of calculation (but only for so long as such Charge-Off Percentage or
Delinquency Percentage thresholds continue to be exceeded on any subsequent date
of calculation). Notwithstanding the foregoing, in no event shall the Specified
Spread Account Balance be greater than $______ or less than $______; provided,
however, the Specified Spread Account Balance shall not be greater than the
Outstanding Amount of the Securities if such amount is less than $______.
"Spread Account" means the account established and maintained as such
pursuant to Section 5.01.
"Spread Account Balance" means the amount on deposit in the Spread
Account.
"Spread Account Initial Deposit" means $______, 100% of which will be
cash.
"Standard & Poor's" means Standard & Poor's, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors in interest.
"Subservicer" means any subservicer engaged by the Master Servicer to
subservice a Contract pursuant to Section 4.01.
"Subservicing Agreement" means an agreement between the Master Servicer
and a Subservicer relating to the servicing of one or more Contracts,
substantially in the form of Exhibit E hereto.
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"Title Document" means, with respect to any Financed Vehicle, the
certificate of title for, or other evidence of ownership of, such Financed
Vehicle issued by the Registrar of Titles in the jurisdiction in which such
Financed Vehicle is registered.
"Third Party Lender" means an independent finance company which has
originated or acquired one or more Contracts and assigned such Contract(s) to
WFS.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), including the Spread Account Initial Deposit, and all
proceeds of the foregoing.
"Trust Accounts" shall have the meaning specified in Section 5.01(a).
"Trust Agreement" means the Trust Agreement, dated __________ __, 20__,
as amended and restated as of __________ __, 20__, among the Depositor, the
Company, the Insurer and the Owner Trustee.
"Trust Estate" shall have the meaning specified in the Trust Agreement.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
"United States" means the United States of America.
"Unreimbursed Insurer Amounts" means, on any date, the amount that is
the sum of (i) all payments (if any) made under the Policies for which the
Insurer has not yet been reimbursed as of such date, plus (ii) all Insurance
Agreement Obligations as of such date.
"Vehicle Receivables" shall have the meaning specified in Section
6.03(b)(ii).
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.
"WFAL 2" means WFS Financial Auto Loans 2, Inc., a wholly-owned
subsidiary of WFS, and its successors and assigns.
"WFS" means WFS Financial Inc, a majority-owned operating subsidiary of
the Bank, and its successors and assigns.
Section 1.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references
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to Persons include their permitted successors and assigns; and the term
"including" means "including without limitation."
Section 1.03. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.04. Calculations. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day months (or, in the case of the Class A-1
Notes, on the basis of a 360-day year and the actual number of days elapsed
since the immediately preceding Distribution Date or __________ __, 20__, in the
case of the first Distribution Date) and will be carried out to at least six
decimal places. Collections of interest on Rule of 78's Contracts shall be
calculated as if such Contracts were actuarial contracts the scheduled principal
balances of which are the Scheduled Balances thereof, and collections of
interest on Simple Interest Contracts will be calculated in accordance with the
terms thereof.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts.
(a) In consideration of the Issuer's delivery to or upon the order of
the Seller of $______ of Outstanding Principal Balance of Contracts less the
Spread Account Initial Deposit, effective upon the Closing Date, the Seller
hereby sells, grants, transfers, assigns and otherwise conveys to the Issuer,
without recourse (subject to the obligations herein), all of the right, title
and interest of the Seller (exclusive of (i) the Retained Yield in respect of
the Contracts, and (ii) the amount, if any, allocable to any rebatable insurance
premium financed by any Contract) in, to and under the Contracts (which
Contracts shall be listed in the Schedule of Contracts), including, without
limitation, all payments of Monthly P&I (exclusive of the Retained Yield, which
shall be paid directly to the Seller as provided in Section 5.02(b)) due on or
after __________ 1, 20__ (excluding the amount allocable to principal and
interest due prior to __________ 1, 20__); all Net Liquidation Proceeds and Net
Insurance Proceeds with respect to any Financed Vehicle to which a Contract
relates received on or after __________ 1, 20__ and all other proceeds received
on or in respect of such Contracts (other than payments of Monthly P&I due prior
to __________ 1, 20__), and any and all security interests in the Financed
Vehicles; the Contract Documents relating to the Contracts (except the Contract
Documents for Contracts which have been the subject of a Full Prepayment
received on or after __________ 1, 20__ but no later than one Business Day prior
to the Closing Date, in lieu of which the Seller shall have deposited in or
credited to the Collection Account on or prior to the Closing Date an amount
equal to such Full Prepayment); and all proceeds in any way delivered with
respect to the foregoing, all rights to payments with respect to the foregoing
and all rights to enforce the foregoing, provided that $______ of the principal
amount of Contract number __________ is retained by the Seller.
(b) The Bank has filed or caused to be filed UCC-1 financing statements,
executed by the Bank as debtor, naming WFS as secured party and describing the
Contracts originated by the Bank and transferred to WFS on or prior to the
Closing Date as collateral with the Office of the Secretary of State of the
State of California. WFS has filed or caused to be filed UCC-1 financing
statements executed by WFS as debtor, naming the Seller as secured party and
describing the Contracts as collateral with the office of the Secretary of State
of the State of California. The Seller has filed or caused to be filed UCC-1
financing statements, executed by the Seller as debtor, naming the Collateral
Agent, on behalf of the Insurer, as secured party and describing the Contracts
as collateral, with the Office of the Secretary of State of the State of
California. The grant of a security interest to the Collateral Agent on behalf
of the Insurer and the rights of the Collateral Agent and the Insurer in respect
of such security interest shall be governed by the Insurance Agreement. The
Seller has filed or caused to be filed UCC-1 financing statements, executed by
the Seller as debtor, naming the Owner Trust as secured party and describing the
Contracts being sold by it to the Owner Trust as collateral, with the Office of
the Secretary of State of the State of California. The Owner Trust has filed or
caused to be filed UCC-1 financing statements, executed by the Owner Trust as
debtor, naming the Indenture Trustee, on behalf of the Noteholders, as secured
party and describing the Contracts as collateral, with the office of the
Secretary of State of the States of Delaware and California. The grant of a
security interest to the Indenture Trustee and the rights of the Indenture
Trustee in the Contracts shall be governed
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by the Indenture. From time to time, the Master Servicer shall cause to be taken
such actions as are necessary to continue the perfection of the respective
interests of the Indenture Trustee, the Owner Trust and the Collateral Agent on
behalf of the Insurer in the Contracts and to continue the first priority
security interest of the Indenture Trustee (subject to the security interest of
the Insurer pursuant to the Insurance Agreement) in the Financed Vehicles and
their proceeds (other than, as to such priority, any statutory lien arising by
operation of law after the Closing Date which is prior to such interest),
including, without limitation, the filing of financing statements, amendments
thereto or continuation statements and the making of notations on records or
documents of title.
If any change in the name, identity or corporate structure of the Seller
or WFS or the relocation of the chief executive office of any of them would make
any financing or continuation statement or notice of lien filed under this
Agreement or the other Basic Documents seriously misleading within the meaning
of applicable provisions of the UCC or any title statute, the Master Servicer,
within the time period required by applicable law, shall file such financing
statements or amendments as may be required to preserve and protect the
interests of the Indenture Trustee, the Owner Trustee, the Securityholders and
the Insurer in the Contracts, Financed Vehicles and the proceeds thereof.
Promptly thereafter, the Master Servicer shall deliver to the Indenture Trustee,
the Owner Trustee and the Insurer an Opinion of Counsel stating that, in the
opinion of such counsel, all financing statements or amendments necessary fully
to preserve and protect the interests of the Indenture Trustee, the Owner
Trustee, Securityholders and the Insurer in the Contracts, Financed Vehicles and
the proceeds thereof have been filed, and reciting the details of such filings.
During the term of this Agreement, the Seller and WFS shall each
maintain its chief executive office in one of the states of the United States,
other than Louisiana or Tennessee.
The Master Servicer shall pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Indenture Trustee's right, title and interest in and to
the Contracts and in connection with maintaining the first priority security
interest (subject to the security interest of the Insurer pursuant to the
Insurance Agreement) in the Financed Vehicles and the proceeds thereof.
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ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller. The Seller
hereby makes the following representations and warranties on which (i) the
Issuer is deemed to have relied in acquiring the Contracts and (ii) the Insurer
is deemed to have relied in issuing the Note Policy. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date, but shall survive the sale, transfer and assignment of the
Contracts to the Issuer and the pledge thereof to the Indenture Trustee pursuant
to the Indenture.
(a) As to the Seller:
(i) Organization and Good Standing. The Seller is duly
organized and validly existing as a corporation in good standing under
the laws of the State of California, with power and authority to own its
properties and to conduct its business, and has the corporate power,
authority and legal right to acquire and own the Contracts.
(ii) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and shall have
obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of property or the conduct of its business
shall require such qualifications.
(iii) Power and Authority. The Seller has the corporate power
and authority to execute and deliver this Agreement and to carry out its
terms; the Seller has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Issuer, and
has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance
of this Agreement has been duly authorized by the Seller by all
necessary corporate action.
(iv) Binding Obligation. This Agreement constitutes (A) a
valid sale, transfer and assignment of the Contracts, enforceable
against creditors of and purchasers from the Seller and (B) a legal,
valid and binding obligation of the Seller enforceable in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or bylaws of the Seller, or
any indenture, agreement or other instrument to which the Seller is a
party or by which it is bound; nor result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Basic Documents to which the Seller is a party); nor violate any law or,
to the best of the Seller's knowledge, any order, rule or regulation
applicable to the Seller of
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any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Seller or its properties.
(vi) No Proceedings. There are no proceedings or
investigations pending, or to the Seller's best knowledge, threatened,
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties: (A) asserting the invalidity of this Agreement or any of the
other Basic Documents, the Notes or the Certificates, (B) seeking to
prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this Agreement
or any of the other Basic Documents, (C) seeking any determination or
ruling that might materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforceability of,
this Agreement, any of the other Basic Documents, the Notes or the
Certificates or (D) which might adversely affect the federal or state
income tax attributes of the Notes or the Certificates.
(b) As to each Contract or all of the Contracts, as the case may be:
(i) Schedule of Contracts. The information pertaining to such
Contract set forth in the related Schedule of Contracts was true and
correct in all material respects at the Closing Date and the
calculations of the Scheduled Balances appearing in such Schedule of
Contracts for each such Contract at the Closing Date and at each
Distribution Date thereafter prior to the related Maturity Date have
been performed in accordance with this Agreement and are accurate.
(ii) Security Interests. As of the Closing Date, such Contract
granted a valid and enforceable first priority security interest in
favor of WFS (or to the Bank, a Dealer or a Third Party Lender, which
security interest has been assigned to WFS) in the related Financed
Vehicle, and such security interest has been duly perfected and is prior
to all other liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as to
priority, for any lien for unpaid taxes or unpaid storage or repair
charges which may arise after the Closing Date).
(iii) Title Documents. (A) If the related Financed Vehicle was
originated in a state in which notation of a security interest on the
Title Document is required or permitted to perfect such security
interest, the Title Document for such Financed Vehicle shows, or if a
new or replacement Title Document is being applied for with respect to
such Financed Vehicle the Title Document will be received within 180
days of the Closing Date and will show WFS named as the original secured
party under the related Contract as the holder of a first priority
security interest in such Financed Vehicle, and (B) if the related
Financed Vehicle was originated in a state in which the filing of a
financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show WFS named as the original secured party under the related
Contract, and in either case, the Indenture Trustee and the Owner
Trustee have the same rights as such secured party has or would have (if
such secured party were still the owner of the Contract) against all
parties claiming an interest in such Financed Vehicle. With respect to
each Contract for which the Title Document has not yet been returned
from the Registrar of Titles, WFS has received
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written evidence from the related Dealer that such Title Document
showing WFS as first lienholder has been applied for.
(iv) Title to the Contracts. Immediately prior to the issuance
of the Notes and the Certificates, the Seller had good and indefeasible
title to and was the sole owner of each Contract to be transferred to
the Issuer pursuant to Section 2.01 free of liens, claims, encumbrances
and rights of others and, upon transfer of such Contract to the Issuer
pursuant to Section 2.01, the Issuer will have good and indefeasible
title to and will be the sole owner of such Contract free of liens,
encumbrances and rights of others, except for the Lien of the Indenture
Trustee under the Indenture and the security interest granted to the
Insurer under the Insurance Agreement.
(v) Current in Payment. As of the Cut-Off Date, such Contract
is no more than 30 days delinquent in payment as to all or any portion
of any installment of Monthly P&I.
(vi) Tax Liens. As of the Closing Date, there is no lien
against the related Financed Vehicle for delinquent taxes.
(vii) Rescission, Offset, Etc. As of the Closing Date, there
is no right of rescission, offset, defense or counterclaim to the
obligation of the Obligor to pay the unpaid principal or interest due
under such Contract; the operation of the terms of such Contract or the
exercise of any right thereunder will not render such Contract
unenforceable in whole or in part or subject to any right of rescission,
offset, defense or counterclaim, and no such right of rescission,
offset, defense or counterclaim has been asserted.
(viii) Mechanics' Liens. As of the Closing Date, there are no
liens or claims for work, labor, material or storage affecting the
related Financed Vehicle which are or may become a lien prior to or
equal with the security interest granted by such Contract.
(ix) Compliance with Laws. Such Contract, and the sale of the
Financed Vehicle sold thereunder, complied, at the time it was made, in
all material respects with all applicable state and federal laws (and
regulations thereunder), including without limitation usury, equal
credit opportunity, fair credit reporting, truth-in-lending or other
similar laws, the Federal Trade Commission Act, and applicable state
laws regulating retail installment sales contracts and loans in general
and motor vehicle retail installment contracts and loans in particular;
and the consummation of the transactions herein contemplated, including,
without limitation, the transfer of ownership of the Contracts to the
Issuer and the receipt of interest by the Securityholders, will not
involve the violation of any applicable state or federal law.
(x) Valid and Binding. Such Contract is the legal, valid and
binding obligation of the Obligor thereunder and is enforceable in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally; all parties to such Contract had full legal
capacity to execute and deliver such Contract and all other documents
related thereto and to grant the security interest purported to be
granted thereby; and the terms of such
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Contract have not been waived or modified in any respect, except by
instruments that are part of the Contract Documents.
(xi) Enforceability. Such Contract contains customary and
enforceable provisions such as to render the rights and remedies of the
holder or assignee thereof adequate for the realization against the
collateral of the benefits of the security, subject, as to
enforceability, to bankruptcy, insolvency, reorganization or similar
laws affecting the enforcement of creditors' rights generally.
(xii) No Default. As of the Cut-Off Date, there was no
default, breach, violation or event permitting acceleration existing
under such Contract (except payment delinquencies permitted by
subparagraph (v) above) and no event which, with notice and the
expiration of any grace or cure period, would constitute such a default,
breach, violation or event permitting acceleration under such Contract,
and the Seller has not waived any such default, breach, violation or
event permitting acceleration except payment delinquencies permitted by
subparagraph (v) above.
(xiii) Insurance. At the Closing Date, the related Financed
Vehicle will be covered by (A) a comprehensive and collision insurance
policy (i) in an amount at least equal to the lesser of (a) its actual
cash value or (b) the principal amount due from the Obligor under the
related Contract, (ii) naming WFS as a loss payee and (iii) insuring
against loss and damage due to fire, theft, transportation, collision
and other risks generally covered by comprehensive and collision
coverage or (B) an LDI Policy; provided, however, that if such Financed
Vehicle has an unpaid principal balance of less than $______ or the
related Contract has six or fewer months remaining before its Maturity
Date, it will not be required to be covered by the insurance described
in this subparagraph. Each of the Seller, WFS and the Master Servicer
shall at all times comply with all of the provisions of such insurance
policies and the LDI Policy applicable to such Financed Vehicle.
(xiv) Acquisition of Contract. Such Contract was either
acquired by WFS (or its predecessor in interest) from a Dealer or a
Third Party Lender with which it ordinarily does business or the Bank or
originated directly by WFS in the ordinary course of its business, and
no adverse selection procedures have been utilized in selecting such
Contract from all other similar contracts purchased by the Seller.
(xv) Scheduled Payments. As of the Cut-Off Date, scheduled
payments under such Contract are applied in accordance with the Rule of
78's method or the simple interest method and are due monthly in level
payments through its Maturity Date sufficient to fully amortize the
principal balance of such Contract by its Maturity Date, assuming timely
payment by Obligors on Simple Interest Contracts, except that the
payment in the first or last month in the life of the Contract may be
minimally different from the level payment.
(xvi) One Original. There is only one original of such
Contract and such original, together with all other Contract Documents,
is being held by the Master Servicer pursuant to Section 3.04. Each
original Contract has been segregated and marked to
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show the Issuer as owner thereof, unless the Insurer has waived the
requirement for such segregation and marking by notice in writing to the
Owner Trustee, the Indenture Trustee and the Master Servicer.
(xvii) Characteristics. At the Cut-Off Date such Contract had
(i) an Outstanding Principal Balance of not less than $______ nor more
than $______, (ii) an original term not less than 7 months nor greater
than 84 months, (iii) a remaining maturity of not less than 3 months nor
greater than 84 months, and (iv) an APR of not less than ______%.
(xviii) Identification. The Master Servicer and WFS have
clearly marked their electronic records to indicate that such Contract
is owned by the Issuer.
(xix) Maturity. At the Cut-Off Date such Contract did not have
a Maturity Date later than the 90th day prior to the end of the Due
Period immediately preceding the Certificate Final Distribution Date.
(xx) Scheduled Balance. At the Cut-Off Date the initial
Scheduled Balance of such Contract was not greater than the purchase
price of the related vehicle.
(xxi) Location of Contract Files. The Contract Files are kept
at one or more of the locations listed in Schedule B hereto.
(xxii) Finance Charge. Such Contract provides for the payment
of a finance charge calculated at its APR based on the Rule of 78's or
the simple interest method and such APR shall be equal to or greater
than ______% for Rule of 78's Contracts and equal to or greater than
______% for Simple Interest Contracts.
(xxiii) Bank or Third Party Lender Originations. The aggregate
Scheduled Balance as of the Cut-Off Date of Contracts purchased or
originated by the Bank and Third Party Lenders is not more than
approximately 1.00% of the aggregate Scheduled Balance of all Contracts
as of such date.
(xxiv) Simple Interest Contracts. As of the Cut-Off Date,
approximately ______% of the aggregate Scheduled Balances of the
Contracts shall be Simple Interest Contracts and approximately ______%
of the aggregate Scheduled Balances of the Contracts shall be Rule of
78's Contracts.
(xxv) New or Used Vehicles. Approximately ______% of the
Contracts by Cut-Off Date Aggregate Scheduled Balance shall be new
vehicles and approximately ______% shall be used vehicles.
(xxvi) States of Origination. Approximately ______% of the
Contracts by Cut-Off Date Aggregate Scheduled Balance were originated by
WFS or the Bank in California and approximately ______% of the Contracts
by Cut-Off Date Aggregate Scheduled Balance were originated in states
other than California.
(xxvii) No Government Entity Obligors. Each Contract shall
have an Obligor that is not a local, state or federal governmental
entity.
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Section 3.02. Purchase of Certain Contracts. The representations and
warranties of the Seller set forth in Section 3.01 shall survive delivery of the
Contract Documents to the Owner Trustee and shall continue until the termination
of this Agreement. Upon discovery by the Seller, the Master Servicer or the
Owner Trustee, as the case may be, that any of such representations and
warranties was incorrect as of the time made or that any of the Contract
Documents relating to any such Contract has not been properly executed by the
Obligor or contains a material defect or has not been received by the Owner
Trustee, such Person making such discovery shall give prompt notice to the other
such Persons. If any such defect, incorrectness or omission materially and
adversely affects the interest of the Noteholders, the Certificateholders, the
Indenture Trustee, the Owner Trustee, the Issuer or the Insurer, the Seller
shall, within 90 days after discovery thereof or receipt of notice thereof, cure
the defect or eliminate or otherwise cure the circumstances or condition in
respect of which such representation or warranty was incorrect as of the time
made. If the Seller is unable to do so, it shall purchase such Contract on the
Master Servicer Report Date next succeeding the end of such 90-day period from
the Issuer for an amount equal to the related Repurchase Amount in the manner
set forth in Section 5.04. Upon any such purchase, the Owner Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest in the Seller any Contract
purchased hereunder. The sole remedy of the Issuer, the Owner Trustee, the
Indenture Trustee or the Securityholders with respect to a breach of the
Seller's representations and warranties pursuant to Section 3.01 shall be to
require the Seller to enforce the Master Servicer's obligation to repurchase
Contracts pursuant to Section 4.07; provided, however, that the Seller shall
indemnify the Owner Trustee, the Indenture Trustee, the Insurer, the Issuer and
the Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third-party claims
arising out of the events or facts giving rise to such breach.
Section 3.03. Custody of Contract Files. Subject to Sections 3.07, 7.04
and 8.01, the Owner Trustee hereby irrevocably appoints the Master Servicer, and
the Master Servicer hereby accepts such appointment, to act as the agent of the
Owner Trustee as custodian of the Contract Documents and any and all other
documents that the Master Servicer shall keep on file, in accordance with its
customary procedures, relating to a Contract, Obligor or Financed Vehicle, which
are hereby constructively delivered to the Owner Trustee with respect to each
Contract:
(i) the original of the Contract;
(ii) documents evidencing the existence of physical damage
insurance covering the Financed Vehicles;
(iii) the original credit application fully executed by the
Obligor; and
(iv) the original certificate of title or such documents that
the Master Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest of the Master Servicer in
the Financed Vehicle.
The Master Servicer shall maintain the Contract Documents held by it (by
itself or through one or more Subservicers) in a file area physically separate
from the other installment sales contracts and installment loans owned or
serviced by it or any of its Affiliates, which area
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shall be clearly marked to indicate the Trust as the owner of, and the security
interest of the Indenture Trustee and the Insurer in, the Contract Documents and
shall ▇▇▇▇ the Contracts in the same manner; except that if the Indenture
Trustee and the Insurer have waived the requirement for such segregation and
marking by notice in writing to the Owner Trustee, the Indenture Trustee and the
Master Servicer, such file area may contain contract documents for other motor
vehicle retail installment sales contracts and installment loans owned or
serviced by the Master Servicer.
The Master Servicer shall cause the electronic record of the Contracts
maintained by it to be clearly marked to indicate that the Contracts have been
sold to the Trust and shall not in any way assert or claim an ownership interest
in the Contracts. It is intended by the Master Servicer's and the Seller's
agreement pursuant to this Section that the Owner Trustee shall be deemed to
have possession of the Contract Documents for purposes of Section 9-305 of the
UCC of the state in which the Contract Documents are located.
Section 3.04. Duties of Master Servicer as Custodian.
(a) Safekeeping. The Master Servicer shall hold the Contract Files on
behalf of the Owner Trustee, the Indenture Trustee and the Insurer for the use
and benefit of all present and future Securityholders, and maintain such
accurate and complete accounts, records and computer systems pertaining to each
Contract File as shall enable the Issuer to comply with this Agreement. In
performing its duties as custodian the Master Servicer shall act with reasonable
care, using that degree of skill and attention that the Master Servicer
exercises with respect to the files relating to all comparable automobile
contracts that the Master Servicer owns or services for itself or others. The
Master Servicer shall conduct, or cause to be conducted, periodic physical
inspections of the Contract Files held by it under this Agreement and of the
related accounts, records and computer systems, and shall maintain them in such
a manner as shall enable the Owner Trustee, the Indenture Trustee and the
Insurer to verify the accuracy of the Master Servicer's record keeping. The
Master Servicer shall promptly report to the Owner Trustee, the Indenture
Trustee and the Insurer any failure on its part to hold the Contract Files and
maintain its accounts, records and computer systems as herein provided and shall
promptly take appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. The Master Servicer shall
maintain each Contract File at one of its offices specified in Schedule B hereto
or at such other location as shall be specified to the Owner Trustee, the
Indenture Trustee and the Insurer by 30 days' prior written notice. The Master
Servicer shall permit the Owner Trustee, the Indenture Trustee and the Insurer
or their respective duly authorized representatives, attorneys or auditors to
inspect the Contract Files and the related accounts, records and computer
systems maintained by the Master Servicer at such times as such Persons may
request.
(c) Release of Documents. Upon instruction from the Indenture Trustee (a
copy of which shall be furnished to the Owner Trustee and the Insurer), the
Master Servicer shall release any Contract File to the Indenture Trustee, the
Indenture Trustee's agent, or the Indenture Trustee's designee, as the case may
be, at such place or places as the Indenture Trustee may designate, as soon as
practicable.
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(d) Monthly Reports. On the tenth Business Day of each month, other than
a month in which a Distribution Date occurs, commencing with the month next
succeeding the month of the Closing Date, the Master Servicer shall mail to the
Indenture Trustee and the Owner Trustee, by first class mail, a certificate of a
Servicing Officer stating (i) the Contract Number and outstanding principal
balance of each Contract that has become a Liquidated Contract since the
Business Day next preceding the date of the last certificate delivered pursuant
to this subsection (or since the Closing Date in the case of the first such
certificate); (ii) that all proceeds received in respect of such Contract have
been deposited in or credited to the Collection Account or Holding Account as
required by Section 5.02; (iii) that, if such Contract has been the subject of a
Full Prepayment pursuant to clause (i) of the definition of the term "Full
Prepayment" or is a Liquidated Contract pursuant to clause (iii) of the
definition of the term "Liquidated Contract," all proceeds received in respect
thereof have been deposited in or credited to the Collection Account or Holding
Account in accordance with Section 5.02; (iv) that, if such Contract has been
the subject of a Full Prepayment pursuant to clause (ii) of the definition of
the term "Full Prepayment," the correct Repurchase Amount has been deposited in
or credited to the Collection Account in accordance with Section 4.07 or 5.04;
(v) that, if such Contract is a Liquidated Contract pursuant to clause (ii) of
the definition of the term "Liquidated Contract," there have been deposited in
or credited to the Collection Account or Holding Account the related Net
Liquidation Proceeds in accordance with Section 5.02; (vi) the current Aggregate
Scheduled Balance; (vii) the total dollar amount of charged-off Contracts;
(viii) the total dollar amount of delinquent Contracts; (ix) the total dollar
amount of all Contracts in respect of which the related Financed Vehicles have
been repossessed but have not been liquidated; (x) the current Charge-off
Percentage; and (xi) the current Delinquency Percentage. The information called
for in clauses (vi) through (xi) above shall be presented as of the Business Day
next preceding the date of the last certificate so delivered.
(e) Title Documents. The Master Servicer shall deliver to the Indenture
Trustee, the Owner Trustee and the Insurer (i) within 120 days of the Closing
Date, a schedule of Title Documents for Financed Vehicles which, as of the
Closing Date did not show the Master Servicer as first lienholder and (ii)
within 180 days of the Closing Date, a schedule of Title Documents for Financed
Vehicles which as of the date prior to such delivery do not show the Master
Servicer as first lienholder and as to which the Seller is obligated to
repurchase pursuant to the provisions hereof.
Section 3.05. Instructions; Authority to Act. The Master Servicer shall
be deemed to have received proper instructions (a copy of which shall be
furnished to the Owner Trustee and the Insurer) with respect to the Contract
Files upon its receipt of written instructions signed by a Responsible Officer
of the Indenture Trustee.
Section 3.06. Indemnification. Subject to Section 8.02, the Master
Servicer shall indemnify the Trust, the Owner Trustee, the Indenture Trustee,
the Insurer and the Securityholders for any and all liabilities, obligations,
losses, compensatory damages, payments, costs or expenses of any kind whatsoever
(including the reasonable fees and expenses of counsel) that may be imposed on,
incurred by or asserted against the Trust, the Owner Trustee, the Indenture
Trustee, the Insurer, the Noteholders or the Certificateholders as the result of
any improper act or omission in any way relating to the maintenance and custody
by the Master Servicer of the Contract Files, or the failure of the Master
Servicer to perform its duties and service the
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Contracts in compliance with the terms of this Agreement; provided, however,
that the Master Servicer shall not be liable to the Owner Trustee for any
portion of any such amount resulting from the willful misfeasance, bad faith or
negligence of the Owner Trustee and the Master Servicer shall not be liable to
the Indenture Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Indenture Trustee. The
Master Servicer shall also indemnify and hold harmless the Trust, the Trust
Estate and the Securityholders against any taxes that may be asserted at any
time against any of them with respect to the Contracts, including any sales,
gross receipts, general corporation, personal property, privilege or license
taxes (but exclusive of federal or other income taxes arising out of payments on
the Contracts) and the costs and expenses in defending against such taxes. The
Master Servicer shall immediately notify the Owner Trustee and the Indenture
Trustee if a claim is made by a third party with respect to the Contracts, shall
assume, with the consent of the Owner Trustee and the Indenture Trustee, the
defense of any such claim, pay all expenses in connection therewith, including
counsel fees, and shall promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or the Trust.
Section 3.07. Effective Period and Termination. The Master Servicer's
appointment as custodian shall become effective as of the Cut-Off Date and shall
continue in full force and effect until terminated under to this Section or
until the Certificate Final Distribution Date. If the Master Servicer shall
resign in accordance with the provisions of this Agreement or if all of the
rights and obligations of the Master Servicer shall have been terminated
pursuant to Section 8.01, the appointment of the Master Servicer as custodian
shall be terminated by the Indenture Trustee, by the Holders of Notes evidencing
not less than 51% of the Outstanding Amount of the Notes, by the Owner Trustee,
by Certificateholders evidencing not less than 51% of the aggregate Certificate
Percentage Interest, or by the Insurer, in the same manner as the Indenture
Trustee, the Owner Trustee, the Insurer or such Holders may terminate the rights
and obligations of the Master Servicer pursuant to Section 8.01. As soon as
practicable after any termination of such appointment, the Master Servicer
shall, at its own expense, deliver the Contract Files to the Owner Trustee or
its agent at such place or places as the Owner Trustee may reasonably designate
and shall cooperate in good faith to effect such delivery.
Section 3.08. Nonpetition Covenant.
(a) Neither the Seller nor the Master Servicer shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Trust under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Trust.
(b) The Master Servicer shall not, nor cause the Seller to, petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
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Section 3.09. Collecting Title Documents Not Delivered at the Closing
Date. In the case of any Contract in respect of which written evidence from the
Dealer selling or transferring the related Financed Vehicle that the Title
Document for such Financed Vehicle showing the Master Servicer as first
lienholder has been applied for from the Registrar of Titles was delivered to
the Owner Trustee on the Closing Date in lieu of a Title Document, the Master
Servicer shall use its best efforts to collect such Title Document from the
Registrar of Titles as promptly as possible. If such Title Document showing the
Master Servicer as first lienholder is not received by the Master Servicer or
the related Subservicer within 180 days after the Closing Date, then the
representation and warranty in Section 3.01(b)(iii) in respect of such Contract
shall be deemed to have been incorrect in a manner that materially and adversely
affects the Certificateholders.
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ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer. The Master Servicer, acting
alone and/or through one or more Subservicers as provided in this Section,
shall, as agent for the Indenture Trustee, the Owner Trustee and the Insurer,
manage, service, administer and make collections on the Contracts. The Master
Servicer agrees that its servicing of the Contracts shall be carried out in
accordance with customary and usual procedures of financial institutions which
service motor vehicle retail installment sales contracts and installment loans
and, to the extent more exacting, the procedures used by the Master Servicer in
respect of such contracts serviced by it for its own account. In accordance with
the foregoing, the Master Servicer may, whenever an Obligor has become
delinquent or the Master Servicer believes an Obligor may become delinquent, in
order to preserve the ultimate collectability of amounts due on a Contract,
modify the payment schedule on any Contract by reducing the APR on such Contract
without the consent of the Insurer or any Rating Agency; provided, however, that
the new APR shall not be less than the sum of (i) the Class A-3 Rate, (ii) the
Servicing Fee Percent and (iii) the Retained Yield Percent. In addition, in
order to preserve the Trust Estate, the Master Servicer may, without the consent
of any Rating Agency or the Insurer, reduce the principal amount of a Contract
(i.e., write-down a portion of the principal amount due on such Contract and,
accordingly, lower the Monthly P&I on such Contract) to the extent funds are
available in the Spread Account to cover such reduction; provided however, the
total amount of such modifications pursuant to the immediately preceding
sentence and this sentence and reductions (i) may not affect more than 1% of the
Original Pool Balance through the Class A-3 Final Distribution Date and (ii)
during each three-month period between Distribution Dates (or in the case of the
first Distribution Date, from the Cut-Off Date to such Distribution Date) shall
not affect Contracts having an aggregate Scheduled Balance greater than 10/100
of one percent of the Pool Balance at the beginning of such period. Any such
modifications or reductions exceeding such limits may be made only with the
consent of the Insurer and each Rating Agency. The Master Servicer may also
extend the Maturity Date on a Contract in accordance with Section 4.02. The
Master Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on the Contracts, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors, accounting for collections, furnishing monthly and annual statements
to the Indenture Trustee, the Owner Trustee and the Insurer with respect to
distributions and filing applicable U.S. tax returns for the Trust on an annual
basis, based on a tax year for the Trust that is the calendar year. The Master
Servicer shall have, subject to the terms hereof, full power and authority,
acting alone, and subject only to the specific requirements and prohibitions of
this Agreement, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable; provided, however, that the Master Servicer shall commence
repossession efforts in respect of any Financed Vehicle respecting which the
related Contract is four or more months delinquent. Without limiting the
generality of the foregoing, but subject to the provisions of this Agreement,
the Master Servicer is authorized and empowered by the Indenture Trustee and the
Owner Trustee to execute and deliver, on behalf of itself, the Trust, the
Insurer, the Noteholders, the Certificateholders, the Indenture Trustee, the
Owner Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Contracts or to the Financed
Vehicles. The Owner Trustee shall furnish the Master
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Servicer all documents necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder.
On the Closing Date, the Master Servicer shall deliver to the Insurer,
the Indenture Trustee and the Owner Trustee a list of Servicing Officers
involved in, or responsible for, the administration and servicing of the
Contracts, which list shall from time to time be updated by the Master Servicer
on request of the Owner Trustee, the Indenture Trustee or the Insurer.
The Master Servicer may enter into Subservicing Agreements with one or
more Subservicers approved by the Insurer for the servicing and administration
of certain of the Contracts (including holding the related Contract Files as
custodian). The Master Servicer shall notify each Rating Agency promptly if a
Subservicer is hired. References herein to actions taken or to be taken by the
Master Servicer in servicing the Contracts include actions taken or to be taken
by a Subservicer on behalf of the Master Servicer and the Insurer. Each
Subservicing Agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and as the Master Servicer and the Subservicer
have agreed. With the approval of the Master Servicer and the Insurer, a
Subservicer may delegate its servicing obligations to third-party servicers, but
such Subservicer will remain obligated under the related Subservicing Agreement.
The Master Servicer and a Subservicer may enter into amendments thereto or
different forms of Subservicing Agreements and the form attached as Exhibit D
hereto is merely provided for information and shall not be deemed to limit in
any respect the discretion of the Master Servicer to modify or enter into
different Subservicing Agreements; provided, however, that any such amendments
or different forms shall be consistent with and not violate the provisions of
this Agreement or materially adversely affect the rights of Noteholders,
Certificateholders or the Insurer hereunder.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the related Subservicer, the Master Servicer
shall either act directly as servicer of the related Contract or enter into a
Subservicing Agreement with a successor Subservicer approved by the Insurer
which will be bound by the terms of the related Subservicing Agreement.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through such Persons or
otherwise, the Master Servicer shall remain obligated and liable to the
Indenture Trustee, the Owner Trustee and the Securityholders for the servicing
and administering of the Contracts in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from a
Subservicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Contracts. The
Master Servicer shall be entitled to enter into an agreement with a Subservicer
for indemnification of the Master Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement that may be entered into and any other
transactions or servicing arrangements relating to the Contracts involving a
Subservicer or other Affiliate of the
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Master Servicer in its capacity as such and not as an originator shall be deemed
to be between the Subservicer or such other Affiliate, as the case may be, and
the Master Servicer alone, and none of the Indenture Trustee, the Owner Trustee,
the Noteholders nor the Certificateholders shall be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
the Subservicer except as set forth in the immediately succeeding paragraph;
provided that the Insurer may rely upon the representations and warranties of
the Subservicer contained therein.
In the event the Master Servicer shall for any reason no longer be a
servicer (including, but not limited to, by reason of an Event of Default), the
Indenture Trustee or its designee may, at the sole discretion of the Indenture
Trustee, thereupon assume all of the rights and obligations of such Master
Servicer under each Subservicing Agreement selected by the Indenture Trustee in
its sole discretion. In such event, the Indenture Trustee, its designee or the
successor servicer for the Indenture Trustee shall be deemed to have assumed all
of the Master Servicer's interest therein and to have replaced the Master
Servicer as a party to each such Subservicing Agreement to the same extent as if
such Subservicing Agreement had been assigned to the assuming party except that
the Master Servicer shall not thereby be relieved of any liability or
obligations under the Subservicing Agreement. The Master Servicer shall, upon
request of the Indenture Trustee but at the expense of the Master Servicer,
deliver to the assuming party all documents and records relating to each such
Subservicing Agreement and the Contracts then being serviced and an accounting
of amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the Subservicing Agreement to the assuming
party.
On the Closing Date, the Master Servicer shall deposit in the Collection
Account (i) all installments of Monthly P&I due on or after __________ __, 20__
and received by the Master Servicer at least two Business Days prior to the
Closing Date; (ii) the proceeds of each Prepayment (excluding any portion
allocable to principal and interest due before __________ __, 20__) of any such
Contract received by the Master Servicer on or after __________ __, 20__ but no
later than two Business Days prior to the Closing Date; and (iii) all Net
Liquidation Proceeds and Net Insurance Proceeds realized in respect of a
Financed Vehicle at least two Business Days prior to the Closing Date.
Subject to Section 5.02 respecting deposits in the Holding Account, the
Master Servicer shall deposit in or credit to the Collection Account within two
Business Days of receipt all collections of Monthly P&I due on or after
__________ __, 20__ received by it on or in respect of the Contracts together
with the proceeds of all Prepayments and any accompanying interest; provided,
however, that, to the extent any such installment of Monthly P&I or any such
Prepayment proceeds are received in respect of a Contract as to which there is
an outstanding and unreimbursed Advance or Advances, such installment or
proceeds shall, to the extent of any such unreimbursed Advance or Advances, be
retained by the Master Servicer in reimbursement of itself. The Master Servicer
shall likewise deposit in the Collection Account within two Business Days of
receipt all Net Liquidation Proceeds and Net Insurance Proceeds after deducting
therefrom the amount of any outstanding and unreimbursed Advances made by it in
respect of such Contract. The foregoing notwithstanding, the Master Servicer
may, in the event it determines that it has made a Nonrecoverable Advance or
Advances, reimburse itself from unrelated installments of Monthly P&I or
Prepayment proceeds to the extent it shall, concurrently with the withholding of
any such installment or proceeds from deposit in or credit to the Collection
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Account as required above, furnish to the Indenture Trustee, the Owner Trustee
and the Insurer a certificate of a Servicing Officer setting forth the basis for
the Master Servicer's determination, the amount of and Contract with respect to
which such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken. The foregoing
requirements for deposit in the Collection Account are exclusive, it being
understood that collections in the nature of late payment charges or extension
fees or collections allocable to payments to be made by the Master Servicer on
behalf of Obligors for payment of insurance premiums or similar items need not
be deposited in the Collection Account and may be retained by the Master
Servicer as additional servicing compensation or for application on behalf of
Obligors, as the case may be.
Amounts otherwise required to be deposited in the Collection Account
pursuant to the immediately preceding paragraph shall instead be deposited by
the Master Servicer in the Holding Account to the extent such amounts are
payments of Monthly P&I due in one or more months subsequent to the end of the
Due Period during which such payments are received.
With respect to payments of Monthly P&I made by Obligors to the Master
Servicer's lock box, the Master Servicer shall direct the Person maintaining the
lock box to deposit the amount collected on or in respect of the Contracts to
the Collection Account.
In those cases where a Subservicer is servicing a Contract pursuant to a
Subservicing Agreement, the Master Servicer shall cause the Subservicer to remit
to the Master Servicer for deposit in the Collection Account, on a daily basis,
within two Business Days after receipt by the Subservicer, all proceeds of
Contracts and all Net Liquidation Proceeds and Net Insurance Proceeds received
by the Subservicer.
In order to facilitate the servicing of the Contracts by the Master
Servicer, the Master Servicer shall retain, subject to and only to the extent
permitted by the provisions of this Agreement, all collections on or in respect
of the Contracts prior to the time they are remitted or credited, in accordance
with such provisions, to the Collection Account or the Holding Account, as the
case may be. The Master Servicer acknowledges that the unremitted collections on
the Contracts are part of the Trust Estate and the Master Servicer agrees to act
as custodian and bailee of the Indenture Trustee, the Owner Trustee and the
Insurer in holding such monies and collections. The Master Servicer agrees, for
the benefit of the Indenture Trustee, the Owner Trustee, the Securityholders and
the Insurer, to act as such custodian and bailee, and to hold and deal with such
monies and such collections, as custodian and bailee for the Indenture Trustee,
the Owner Trustee and the Insurer, in accordance with the provisions of this
Agreement.
The Master Servicer shall retain all data (including, without
limitation, computerized records) relating directly to or maintained in
connection with the servicing of the Contracts at the address of the Master
Servicer set forth as Schedule B to this Agreement, at the office of any
Subservicer or, upon 15 days' notice to the Insurer, the Indenture Trustee and
the Owner Trustee, at such other place where the servicing offices of the Master
Servicer are located, and shall give the Indenture Trustee, the Owner Trustee
and the Insurer access to all data at all reasonable times. While a Servicer
Default shall be continuing, the Master Servicer shall, on demand of the
Indenture Trustee, the Owner Trustee or the Insurer, deliver or cause to be
delivered to the Indenture Trustee, the Owner Trustee or the Insurer, as the
case may be, all data (including,
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without limitation, computerized records and, to the extent transferable,
related operating software) necessary for the servicing of the Contracts and all
monies collected by it and required to be deposited in or credited to the
Collection Account or the Holding Account, as the case may be.
Section 4.02. Collection of Contract Payments. The Master Servicer shall
use its best efforts to collect all payments called for under the terms and
provisions of the Contracts as and when the same shall become due and shall use
its best efforts to cause each Obligor to make all payments in respect of his or
her Contract to the Master Servicer. Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive any late payment charges in connection
with delinquent payments on a Contract or prepayment charges and (ii) in order
to work out a default or an impending default due to the financial condition of
the Obligor, modify the payment schedule of a delinquent Contract (subject to
the next sentence) or extend the Maturity Date of a delinquent Contract by up to
90 days in the aggregate past the originally scheduled date of the last payment
on such Contract; provided that in the case of any extension granted pursuant to
clause (ii) the Master Servicer makes an Advance in respect of such extension
and in no event can the last payment on such Contract be extended beyond the
last day of the Due Period ending immediately prior to the Class A-3 Final
Distribution Date. The Master Servicer shall not extend the Maturity Date of a
Contract except as provided in clause (ii) of the preceding sentence and shall
not modify any Contracts except in accordance with the criteria and limitations
specified in Section 4.01.
Section 4.03. Realization upon Defaulted Contracts and Liquidated
Contracts. The Master Servicer shall use its best efforts, consistent with the
servicing standard specified in Section 4.01, to repossess or otherwise convert
the ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Master Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual for prudent holders of motor vehicle
retail installment sales contracts and installment loans and as shall be in
compliance with all applicable laws, and, in connection with the repossession of
any Financed Vehicle or any Contract in default, may commence and prosecute any
proceedings in respect of such Contract in its own name or, if the Master
Servicer deems it necessary, in the name of the Owner Trustee or on behalf of
the Owner Trustee. The Master Servicer's obligations under this Section are
subject to the provision that, in the case of damage to a Financed Vehicle from
an uninsured cause, the Master Servicer shall not be required to expend its own
funds in repairing such Financed Vehicle unless it shall determine (i) that such
restoration will increase the proceeds of liquidation of the related Contract,
after reimbursement to itself for such expenses, and (ii) that such expenses
will be recoverable by it either as Liquidation Expenses or as expenses
recoverable under an applicable Insurance Policy. In the event that the Master
Servicer determines that, in its best judgment, further collection efforts by it
as to a Liquidated Contract will not result in the realization of additional Net
Liquidation Proceeds to the Trust, the Master Servicer may, in the name of the
Owner Trustee, and for the benefit of the Trust, sell the Liquidated Contract to
any party not affiliated with the Master Servicer free and clear of the rights
of the Trust. The Master Servicer shall be responsible for all other costs and
expenses incurred by it in connection with any action taken in respect of a
defaulted Contract; provided,
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however, that it shall be entitled to reimbursement of such costs and expenses
to the extent they constitute Liquidation Expenses or expenses recoverable under
an applicable Insurance Policy. All Net Liquidation Proceeds, Net Insurance
Proceeds and proceeds of the sale of Contracts hereunder shall be deposited
directly in or credited to the Collection Account (without deposit in any
intervening account) to the extent required by Section 5.02.
Section 4.04. Insurance. To the extent the Obligor fails to maintain a
comprehensive and collision insurance policy in an amount at least equal to the
lesser of (i) the actual cash value of the Financed Vehicle or (ii) the
principal amount due from the Obligor under the related Contract, the Master
Servicer shall obtain the LDI Policy in respect of such Financed Vehicle;
provided, however, that the Master Servicer shall not be required to maintain
such insurance in respect of any Financed Vehicle as to which the related
Contract has an unpaid principal balance of less than $______ or the related
Contract has six or fewer months remaining before its Maturity Date.
Section 4.05. Maintenance of Security Interests in Financed Vehicles.
The Master Servicer shall take such steps as are necessary to maintain
continuous perfection and priority of the security interest created by each
Contract in the related Financed Vehicle, including but not limited to,
obtaining the execution by the Obligors and the recording, registering, filing,
re-recording, re-registering and refiling of all security agreements, financing
statements, continuation statements or other instruments as are necessary to
maintain the security interest granted by Obligors under the respective
Contracts. The Owner Trustee and the Indenture Trustee each hereby authorizes
the Master Servicer to take such steps as are necessary to re-perfect such
security interest on behalf of the Trust in the event of the relocation of a
Financed Vehicle or for any other reason.
Section 4.06. Covenants, Representations and Warranties of Master
Servicer. The Master Servicer hereby makes the following covenants,
representations and warranties on which (i) the Issuer is deemed to have relied
in acquiring the Contracts and (ii) the Insurer is deemed to have relied in
issuing the Note Policy. Such covenants, representations and warranties speak as
of the execution and delivery of this Agreement and as of the Closing Date, but
shall survive the sale, transfer and assignment of the Contracts to the Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) The Master Servicer covenants as to the Contracts:
(i) Lien in Force. The Financed Vehicle securing each Contract
shall not be released from the lien granted by the Contract in whole or
in part, except as contemplated herein.
(ii) Impairment. The Master Servicer shall not impair the
rights of the Noteholders and Certificateholders in the Contracts.
(iii) Amendments. The Master Servicer shall not amend the
terms of any Contract, except that extensions or modifications may be
granted in accordance with Section 4.02.
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(iv) Transfers. The Master Servicer may consent to the sale or
transfer by an Obligor of any Financed Vehicle if the original Obligor
under the related Contract remains liable under such Contract and the
transferee assumes all of the Obligor's obligations thereunder.
(b) The Master Servicer represents, warrants, and covenants:
(i) Organization and Good Standing. The Master Servicer (A)
has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of California, (B) has qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, and (C) has full power,
authority and legal right to own its property, to carry on its business
as presently conducted and to enter into and perform its obligations
under this Agreement
(ii) Power and Authority. The execution and delivery by the
Master Servicer of this Agreement are within the corporate power of the
Master Servicer and have been duly authorized by all necessary corporate
action on the part of the Master Servicer. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
herein contemplated, nor compliance with the provisions hereof, will
conflict with or result in a breach of, or constitute a default under,
any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Master Servicer or its
properties or the articles of incorporation or bylaws of the Master
Servicer, or any of the provisions of any indenture, mortgage, contract
or other instrument to which the Master Servicer is a party or by which
it is bound or result in the creation or imposition of any lien, charge
or encumbrance upon any of its property pursuant to the terms of any
such indenture, mortgage, contract or other instrument.
(iii) Governmental Consents. The Master Servicer is not
required to obtain the consent of any other party or consent, license,
approval or authorization, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except (in each case) such as have been obtained and are in
full force and effect.
(iv) Binding Obligation. This Agreement has been duly executed
and delivered by the Master Servicer and, assuming the due
authorization, execution and delivery thereof by the Owner Trustee and
the Indenture Trustee, constitutes a legal, valid and binding instrument
enforceable against the Master Servicer in accordance with its terms
(subject to applicable bankruptcy and insolvency laws and other similar
laws affecting the enforcement of creditors' rights generally).
(v) No Proceedings. There are no actions, suits or proceedings
pending or, to the knowledge of the Master Servicer, threatened against
or affecting the Master Servicer, before or by any court, administrative
agency, arbitrator or governmental body with respect to any of the
transactions contemplated by this Agreement, or which will, if
determined adversely to the Master Servicer, materially and adversely
affect it or its business, assets, operations or condition, financial or
otherwise, or adversely affect the Master
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Servicer's ability to perform its obligations hereunder. The Master
Servicer is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to
materially and adversely affect the transactions contemplated by the
above-mentioned documents.
(vi) Other Consents. The Master Servicer has obtained or made
all necessary consents, approvals, waivers and notifications of
creditors, lessors and other nongovernmental persons, in each case in
connection with the execution and delivery of, and the consummation of
the transactions contemplated by, this Agreement.
Section 4.07. Repurchase of Contracts upon Breach of Covenant. The
Master Servicer or the Owner Trustee shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach pursuant to Section 4.02, 4.05 or 4.06. Unless the breach shall have
been cured within 30 days following such discovery, the Master Servicer shall
purchase any Contract materially and adversely affected by such breach. In
consideration of the purchase of such Contract, the Master Servicer shall remit
the Repurchase Amount in the manner specified in Section 5.04. The sole remedy
of the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders
or the Noteholders with respect to a breach pursuant to Section 4.02, 4.05 or
4.06 shall be to require the Master Servicer to purchase Contracts pursuant to
this Section; provided, however, that the Master Servicer shall indemnify the
Owner Trustee, the Indenture Trustee, the Insurer, the Issuer and the
Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third-party claims
arising out of the events or facts giving rise to such breach. The Owner Trustee
shall have no duty to conduct any affirmative investigation as to the occurrence
of any condition requiring the repurchase of any Contract pursuant to this
Section.
Section 4.08. Servicing Compensation. As compensation for the
performance of its obligations under this Agreement and subject to the terms of
this Section, the Master Servicer shall be entitled to receive on each
Distribution Date the Servicing Fee in respect of each Contract that was
Outstanding at the beginning of the Due Period ending immediately prior to such
Distribution Date, to the extent the related payment of Monthly P&I has been
collected or advanced pursuant to Section 5.04. As servicing compensation in
addition to the Servicing Fee, the Master Servicer shall be entitled (i) to
retain all late payment charges, extension fees and similar items paid in
respect of Contracts, and (ii) to receive, in respect of each Rule of 78's
Contract that is prepaid in full prior to its Maturity Date, the amount by which
the outstanding principal balance of such Contract exceeds the Scheduled Balance
of such Contract at the time of such prepayment; provided, however, that the
Master Servicer agrees that each amount payable to it pursuant to clause (ii)
above shall be deposited in the Spread Account and applied in accordance with
Article Five and the Insurance Agreement. The Master Servicer shall pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement of such expenses except to the extent
provided in Section 4.03.
Section 4.09. Reporting by the Master Servicer.
(a) On each Master Servicer Report Date, the Master Servicer shall
transmit to the Owner Trustee, the Indenture Trustee, each Rating Agency and the
Insurer a statement, substantially in
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the form of Exhibit F hereto (the "Distribution Date Statement"), setting forth
with respect to the next succeeding Distribution Date:
(i) the Note Interest Distributable Amount for such
Distribution Date;
(ii) the the Note Principal Distributable Amount for such
Distribution Date and the portion thereof constituting the Accelerated
Principal Distributable Amount;
(iii) the Net Collections and the Note Percentage for such
Distribution Date;
(iv) the amount otherwise distributable to each Class of
Noteholders and the Certificateholders that will be distributed to a
different Class of Noteholders on such Distribution Date;
(v) the amount to be on deposit in the Spread Account on such
Distribution Date, before and after giving effect to deposits thereto
and withdrawals therefrom to be made in respect of such Distribution
Date;
(vi) the Servicing Fee with respect to the related Due Period;
(vii) the amount of any Note Interest Carryover Shortfall and
Note Principal Carryover Shortfall on such Distribution Date and the
change in such amounts from those with respect to the immediately
preceding Distribution Date;
(viii) the aggregate amount of Monthly P&I which was due on
the Contracts during the related Due Period and was delinquent as of the
end of the related Due Period (any such payment of Monthly P&I being
presumed to be delinquent to the extent that it was not deposited in or
credited to the Collection Account during such Due Period);
(ix) the amount set forth in clause (viii) above which is
being advanced concurrently with such Distribution Date Statement by the
Master Servicer pursuant to Section 5.04, the amount of any such Advance
being deposited in or credited to the Collection Account on such Master
Servicer Report Date;
(x) the aggregate amount of any Nonrecoverable Advances
deducted by the Master Servicer from amounts otherwise required to be
deposited by the Master Servicer in the Collection Account during the
related Due Period;
(xi) the aggregate amount of Retained Yield for the related
Due Period;
(xii) the Aggregate Net Liquidation Losses for the related Due
Period;
(xiii) the Delinquency Percentage and the Charge-Off
Percentage for the most recent Calculation Day;
(xiv) the amount of Contracts which have had their APR or
principal amount modified pursuant to Section 4.01 and the percentage
that amount constitutes of the Original Principal Balance on a
cumulative basis; in addition the aggregate Scheduled
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Balance of Contracts so modified as a percentage of the Pool Balance for
the most recent Distribution Date;
(xv) the Certificate Distributable Amount;
(xvi) the Note Deficiency Claim Amount, if any, for such
Distribution Date, separately setting forth the amount thereof payable
in respect of each Class of Notes;
(xvii) the Note Policy Claim Amount, if any, for such
Distribution Date, separately setting forth the amount thereof payable
in respect of each Class of Notes; and
(xviii) if the data becomes available, the principal amount of
Contracts originated by WFS in respect of clauses (viii) and (xii)
above.
Each such Distribution Date Statement shall be accompanied by an Officers'
Certificate of the Master Servicer stating that the computations reflected in
such statement were made in conformity with the requirements of this Agreement.
(b) On each Master Servicer Report Date, the Master Servicer shall
deliver to the Owner Trustee, the Indenture Trustee, each Rating Agency and the
Insurer a report, in respect of the immediately preceding Due Period, setting
forth the following:
(i) the aggregate amount, if any, paid by or due from it for
the purchase of Contracts which the Seller or the Master Servicer has
become obligated to purchase pursuant to Section 3.02 or 4.07 or the
Seller has elected to purchase pursuant to Section 9.01;
(ii) the net amount of funds which have been deposited in or
credited to the Collection Account or the Holding Account in respect of
such Due Period (including amounts, if any, collected during the
immediately preceding Due Period and deposited in the Holding Account
pursuant to Section 5.02) after giving effect to all permitted
deductions therefrom pursuant to Section 5.02;
(iii) with respect to each Contract that became a Liquidated
Contract during such Due Period, the following information:
(A) its Contract Number;
(B) the effective date as of which such Contract became a
Liquidated Contract;
(C) its Monthly P&I and Scheduled Balance as of the
immediately preceding Distribution Date (or as of the Cut-Off
Date in the case of the first Distribution Date); and
(D) if less than 100% of the outstanding principal balance
of and accrued and unpaid interest was recovered on such
Liquidated Contract, the amount of the Net Liquidation Proceeds
or Net Insurance Proceeds;
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(iv) with respect to each Contract which was the subject of a
Partial Prepayment during such Due Period, the following information:
(A) its Contract Number;
(B) the date of such Partial Prepayment;
(C) its new Maturity Date;
(D) the total amount received with respect to such Partial
Prepayment; and
(E) its Scheduled Balance as of the prior Distribution
Date (or as of the Cut-Off Date in the case of the first
Distribution Date) and its Scheduled Balance for each
Distribution Date having a Due Period prior to the Due Period of
its Maturity Date, computed on the basis set forth under the
definition of the term "Scheduled Balance";
(v) the Contract Numbers, Monthly P&I, Scheduled Balances and
Maturity Dates of all Contracts which became Defaulted Contracts during
such Due Period;
(vi) any other information relating to the Contracts
reasonably requested by the Owner Trustee, the Indenture Trustee, each
Rating Agency or the Insurer; and
(vii) the amount of Net Liquidation Proceeds and Net Insurance
Proceeds which have been deposited in or credited to the Collection
Account or the Holding Account in respect of the Due Period ending
immediately prior to such Master Servicer Report Date and the cumulative
amount of Net Liquidation Proceeds and Net Insurance Proceeds deposited
in or credited to the Collection Account or the Holding Account during
the preceding Due Periods.
Section 4.10. Annual Statement as to Compliance. The Master Servicer
shall deliver to the Owner Trustee, the Indenture Trustee, each Rating Agency
and the Insurer, on or before 90 days after the end of each fiscal year of the
Master Servicer, beginning with the fiscal year ended December 31, 20__, an
Officers' Certificate of the Master Servicer stating that (i) a review of the
activities of the Master Servicer during the preceding fiscal year (or since the
Closing Date in the case of the first such Officers' Certificate) and of its
performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Master Servicer has fulfilled all its obligations under this Agreement
throughout such year and that no default under this Agreement has occurred and
is continuing, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. A copy of such certificate and the report referred to in
Section 4.11 may be obtained by any Certificateholder, Certificate Owner,
Noteholder or Note Owner by a request in writing to the Owner Trustee addressed
to the Owner Trustee Corporate Trust Office. Upon the telephone request of the
Owner Trustee, the Indenture Trustee will promptly furnish the Owner Trustee a
list of Noteholders as of the date specified by the Owner Trustee.
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Section 4.11. Annual Independent Certified Public Accountants' Report.
On or before 90 days after the end of the first fiscal year of the Master
Servicer which ends more than three months after the Closing Date and each
fiscal year thereafter, the Master Servicer at its expense shall cause a firm of
nationally-recognized independent certified public accountants (who may also
render other services to the Master Servicer) to furnish a report to the
Indenture Trustee, the Owner Trustee, each Rating Agency and the Insurer to the
effect that (i) they have audited the balance sheet of the Master Servicer as of
the last day of said fiscal year and the related statements of operations,
retained earnings and cash flows for such fiscal year and have issued an opinion
thereon, specifying the date thereof, (ii) they have also audited certain
documents and the records relating to the servicing of the Contracts and the
distributions on the Notes and the Certificates hereunder, (iii) their audit as
described under clauses (i) and (ii) above was made in accordance with generally
accepted auditing standards and accordingly included such tests of the
accounting records and such other auditing procedures as they considered
necessary in the circumstances, and (iv) their audits described under clauses
(i) and (ii) above disclosed no exceptions which, in their opinion, were
material, relating to the servicing of such Contracts in accordance with this
Agreement and the making of distributions on the Notes and Certificates in
accordance with this Agreement, or, if any such exceptions were disclosed
thereby, setting forth such exceptions which, in their opinion, were material.
Section 4.12. Access to Certain Documentation and Information Regarding
Contracts. The Master Servicer shall provide to the Insurer, the Indenture
Trustee and the Securityholders access to the Contract Files in such cases where
the Certificateholders or Noteholders shall be required by applicable statutes
or regulations to review such documentation. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the designated offices of the Master Servicer and each related Subservicer, if
any. Nothing in this Section shall affect the obligation of the Master Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Obligors and the failure of the Master Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
Section 4.13. Fidelity Bond. The Master Servicer shall maintain a
fidelity bond in such form and amount as is customary for banks acting as
custodian of funds and documents in respect of mortgage loans or consumer
contracts on behalf of institutional investors.
Section 4.14. Indemnification; Third Party Claims. Subject to Section
8.02, the Master Servicer agrees to indemnify and hold the Indenture Trustee,
the Owner Trustee and the Securityholders harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and any reasonable other costs, fees and expenses that the Indenture
Trustee, the Owner Trustee, the Noteholders or the Certificateholders may
sustain because of the failure of the Master Servicer to perform its duties and
service the Contracts in compliance with the terms of this Agreement. The Master
Servicer shall immediately notify the Indenture Trustee and the Owner Trustee if
a claim is made by a third party with respect to the Contracts, assume, with the
consent of the Indenture Trustee and the Owner Trustee, the defense of any such
claim and pay all expenses in connection therewith, including counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against it or Indenture Trustee, the Owner Trustee, the Noteholders or the
Certificateholders.
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ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts.
(a) Prior to the Closing Date, the Master Servicer shall open, at a
depository institution (which may be the Indenture Trustee, the Bank or the
Master Servicer), the following accounts (the "Trust Accounts"):
(i) an account in the name of the Indenture Trustee (the
"Collection Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Securityholders;
(ii) an account in the name of the Indenture Trustee (the
"Holding Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Securityholders;
(iii) an account in the name of the Indenture Trustee (the
"Spread Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Securityholders;
(iv) an account in the name of the Indenture Trustee (the
"Note Distribution Account") bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Noteholders; and
(v) an account in the name of the Owner Trustee (the
"Certificate Distribution Account") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Certificateholders.
The Trust Accounts shall be Eligible Accounts and relate solely to the
Securities and to the Contracts and Eligible Investments. The Master Servicer
shall give the Indenture Trustee, the Owner Trustee and the Insurer at least
five Business Days' written notice of any change in the location of any Trust
Account and any related account identification information. All monies
(exclusive of the Retained Yield) deposited in or credited to, from time to
time, the Trust Accounts shall be part of the Trust Estate and all monies
deposited in or credited to, from time to time, the Collection Account, the
Spread Account, the Certificate Distribution Account and the Note Distribution
Account shall be invested by the Indenture Trustee in Eligible Investments
pursuant to Section 5.01(b). On the Business Day following each Distribution
Date, all amounts, if any, on deposit in or credited to the Holding Account
(excluding any installments of Monthly P&I that are due in one or more Due
Periods ending subsequent to the Distribution Date immediately succeeding such
Distribution Date) shall be transferred to the Collection Account.
(b) All funds in the Collection Account, the Spread Account, the Note
Distribution Account and the Certificate Distribution Account shall be invested
by the Indenture Trustee in Eligible Investments and/or Proprietary Funds.
Unless and until the RIC is no longer an Eligible Investment, all funds in such
Trust Accounts, in each case that are available for investment in
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Eligible Investments or in Proprietary Funds, shall be invested in the RIC or in
Proprietary Funds. If the RIC is no longer an Eligible Investment then, subject
to the limitations set forth herein, the Master Servicer may direct the
Indenture Trustee in writing to invest funds in the foregoing Trust Accounts in
Eligible Investments or Proprietary Funds other than the RIC; provided that in
the absence of such directions from the Master Servicer, the Insurer may so
direct the Indenture Trustee. All such investments shall be in the name of the
Indenture Trustee for the benefit of the Noteholders and the Certificateholders,
as applicable. All income or other gain from investment of monies deposited in
or credited to the Collection Account (including without limitation the RIC
Reinvestment Earnings) shall be deposited in or credited to the Collection
Account immediately upon receipt, and any loss resulting from such investment
shall be charged to the Collection Account. All income or other gain from
investment of monies deposited in or credited to the Spread Account (including
without limitation the RIC Reinvestment Earnings) shall be deposited in or
credited to the Spread Account immediately upon receipt, and any loss resulting
from such investment shall be charged to the Spread Account. All income or other
gain from investment of monies deposited in or credited to the Note Distribution
Account (including without limitation the RIC Reinvestment Earnings) shall be
deposited in or credited to the Note Distribution Account immediately upon
receipt, and any loss resulting from such investment shall be charged to the
Note Distribution Account. All income or other gain from investment of monies
deposited in or credited to the Certificate Distribution Account (including
without limitation the RIC Reinvestment Earnings) shall be deposited in or
credited to the Certificate Distribution Account immediately upon receipt, and
any loss resulting from such investment shall be charged to the Certificate
Distribution Account. The maximum permissible maturities of any investments of
funds in the Collection Account, the Spread Account, the Note Distribution
Account and the Certificate Distribution Account on any date shall not be later
than the fifth Business Day immediately preceding the Distribution Date next
succeeding the date of such investment; provided, however, that such funds may
be invested by the Indenture Trustee in Eligible Investments (other than the
RIC) that mature on the Business Day before the Distribution Date or in
Proprietary Funds for a period not to exceed one Business Day. No investment in
Eligible Investments may be sold prior to its maturity and all investments in
Proprietary Funds shall be for a period not to exceed one Business Day.
(c) Funds in the Holding Account shall not be invested.
(d)(i) The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts (exclusive of
Retained Yield, if any) and in all proceeds thereof (including all income
thereon) and all such funds, investments, proceeds and income shall be part of
the Trust Estate. The Trust Accounts, other than the Certificate Distribution
Account, shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholders, as the case may
be. The Certificate Distribution Account shall be in the name of the Owner
Trustee for the benefit of the Certificateholders. If, at any time, any of the
Trust Accounts ceases to be an Eligible Account, the Indenture Trustee (or the
Master Servicer on its behalf) shall within ten Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Trust Account as an Eligible Account and shall transfer
any cash and/or any investments to such new Trust Account.
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(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Accounts, subject
to the last sentence of Section 5.01(d)(i); and each such
Eligible Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture Trustee shall
have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in
accordance with paragraph (i) of the definition of the term
"Delivery" and shall be held, pending maturity or disposition,
solely by the Indenture Trustee or a Financial Intermediary
acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations shall be delivered in accordance
with paragraph (ii) of the definition of the term "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article Eight of the UCC and that is not governed
by clause (C) above shall be delivered to the Indenture Trustee
in accordance with paragraph (iii) of the definition of the term
"Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued registration
of the Indenture Trustee's (or its nominee's) ownership of such
security.
(iii) The Master Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make withdrawals
and payments from the Trust Accounts for the purpose of permitting the
Master Servicer or the Owner Trustee to carry out its respective duties
hereunder or permitting the Indenture Trustee to carry out its duties
under the Indenture.
Section 5.02. Collections; Realization Upon Note Policy; Net Deposits.
(a) Subject to Section 5.03 and subsections (b) and (e) hereof, the
Master Servicer shall remit or credit all payments by the Obligors on the
Contracts, all payments on behalf of Obligors on the Contracts, and all Net
Liquidation Proceeds and Net Insurance Proceeds to the Collection Account
(within two Business Days as specified in Section 4.01); provided that the
Master Servicer shall retain from collection of late payments and Net
Liquidation Proceeds or Net Insurance Proceeds in respect of a Contract an
amount equal to previously unreimbursed Advances in respect of such Contract
made pursuant to Section 5.04. Amounts otherwise required to be deposited in or
credited to the Collection Account pursuant to the immediately preceding
sentence shall instead be deposited in or credited to the Holding Account to the
extent
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that such amounts are installments of Monthly P&I which are due in a Due Period
for a Distribution Date subsequent to the Distribution Date immediately
succeeding the date of receipt.
(b) Notwithstanding anything in this Agreement to the contrary, the
Retained Yield will be collected by the Master Servicer and paid out on a
monthly basis to the Seller without ever becoming part of the Trust's assets.
(c) Not later than 12:00 p.m., New York City time, on the fifth Business
Day prior to each Distribution Date, based on the information set forth in the
related Distribution Date Statement to the extent that there are insufficient
funds to make the distributions required to be made to each Class of Notes as
described in Sections 5.05 and 5.06, the Master Servicer shall deliver to the
Indenture Trustee, with a copy to the Insurer, the Owner Trustee and the Fiscal
Agent, if any, by hand delivery, telex or facsimile transmission, a written
notice (a "Deficiency Notice") specifying the Note Deficiency Claim Amount, if
any, for such Distribution Date, separately identifying the amount of the
applicable Deficiency Claim Amount payable in respect of each Class of Notes.
Such Deficiency Notice shall direct the Indenture Trustee to remit such
Deficiency Claim Amount (to the extent of funds then on deposit in the Spread
Account) to the Indenture Trustee for deposit in the Note Distribution Account.
(d) Not later than 12:00 p.m., New York City time, on the fourth
Business Day prior to each Distribution Date, the Indenture Trustee shall make a
claim under the Note Policy for any Note Policy Claim Amount for such
Distribution Date, in each case by delivering to the Insurer and the Fiscal
Agent, if any, with a copy to the Master Servicer, by hand delivery, telex or
facsimile transmission, a claim for the related Note Policy Claim Amount, as the
case may be. In making any such claim, the Owner Trustee or the Indenture
Trustee, as the case may be, shall comply with all the terms and conditions of
the related Policy. The notice of such claim shall direct the Insurer to remit
such Note Policy Claim Amount, as the case may be, to the Owner Trustee or the
Indenture Trustee for deposit in the Note Distribution Account.
(e) So long as the Master Servicer is WFS, the Master Servicer shall
have the right, on a basis not more frequently than once per month (although
deposits shall be made into the Collection Account within two Business Days
pursuant to Section 4.01), to deduct from amounts received that are otherwise
required to be deposited in or credited to the Collection Account and, to the
extent such amounts are insufficient, to require that the Indenture Trustee
withdraw and deliver to it from the Collection Account, amounts due to be paid
hereunder to the Master Servicer or to the Seller after giving effect to
application of the payment priorities specified in this Article for the month
(or other applicable period), and to pay such amounts to itself as Master
Servicer or to the Seller, as the case may be. Notwithstanding the foregoing,
the Master Servicer shall maintain the records and accounts for such deposits
and credits on a gross basis.
Section 5.03. Application of Collections. As of each Record Date, all
collections for the related Due Period shall be applied by the Master Servicer
as follows: with respect to each Contract (including a Defaulted Contract),
payments by or on behalf of an Obligor shall be applied first to late payment
and extension fees, second to interest accrued on the Contract, third to
principal due on the Contract and fourth to administrative charges, if any. Any
excess shall be applied to prepay the principal balance of the Contract.
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Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts.
(a) If, as of the end of any Due Period, one or more payments of Monthly
P&I due under any Contract (other than a Liquidated Contract) Outstanding at the
end of such Due Period shall not have been received by the Master Servicer and
deposited in or credited to the Collection Account pursuant to Section 5.02(a),
the Master Servicer shall make, concurrently with the furnishing of the related
Distribution Date Statement to the Indenture Trustee and the Owner Trustee, the
Advance for such Due Period by depositing in or crediting to the Collection
Account (i) with respect to a Rule of 78's Contract, the amount of delinquent
Monthly P&I and (ii) with respect to a Simple Interest Contract, 30 days of
interest on the Outstanding Principal Balance of such Contract at a rate equal
to the sum of (A) the Pass-Through Rate and (B) the Servicing Fee Percent for
each month that the related Monthly P&I is delinquent at the end of such Due
Period. The Master Servicer shall account for such deposit or credit in
accordance with Section 4.01. The foregoing notwithstanding, the Master Servicer
shall not make an Advance in respect of a Contract if the Master Servicer shall
have determined that any such Advance, if made, would constitute a
Nonrecoverable Advance. Any such determination shall be evidenced by an
Officers' Certificate furnished to the Indenture Trustee, the Owner Trustee and
the Insurer setting forth the basis for such determination.
(b) If the Master Servicer determines that it has made a Nonrecoverable
Advance or Advances, the Master Servicer shall reimburse itself, without
interest, from unrelated installments of Monthly P&I or Prepayment proceeds to
the extent it shall, concurrently with the withholding of any such installment
or proceeds from deposit in or credit to the Collection Account as required by
Section 5.02, furnish to the Indenture Trustee, the Owner Trustee and the
Insurer a certificate of a Servicing Officer setting forth the basis for the
Master Servicer's determination, the amount of, and Contract with respect to
which, such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken.
(c) The Master Servicer or the Seller, as the case may be, shall remit
or credit to the Collection Account the aggregate Repurchase Amount with respect
to Repurchased Contracts on the Master Servicer Report Date next succeeding the
last day of the related cure period specified in Section 3.02 or 4.07, as the
case may be. In addition, the Master Servicer and the Seller shall deposit or
cause to be deposited in the Collection Account the aggregate Repurchase Amount
with respect to Repurchased Contracts and the Master Servicer shall deposit
therein all amounts to be paid under Section 9.01.
Section 5.05. Distributions.
(a) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09) to make the following deposits and distributions for receipt by
the Master Servicer or deposit in the applicable account by 11:00 a.m. (New York
time), to the extent of the Net Collections for such Distribution Date, in the
following order of priority:
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(i) to the Master Servicer, the Servicing Fee, including any
unpaid Servicing Fees with respect to one or more prior Due Periods;
(ii) to the Indenture Trustee and the Owner Trustee from Net
Collections (after giving effect to the reduction in Net Collections
described in clause (i) above), any accrued and unpaid Trustees' fees,
in each case to the extent such fees have not been previously paid by
the Master Servicer;
(iii) to the Note Distribution Account, from Net Collections
(after giving effect to the reduction in Net Collections described in
clauses (i) and (ii) above), the Note Interest Distributable Amount;
(iv) to the Note Distribution Account, from Net Collections
(after giving effect to the reduction in Net Collections described in
clauses (i) through (iii) above), the Note Principal Distributable
Amount, (which amount includes, if such Distribution Date is a Note
Final Distribution Date, the remaining principal amount of the related
Class of Notes) first to the holders of the Class A-1 Notes until the
principal amount of the Class A-1 Notes has been reduced to zero, second
to the holders of the Class A-2 Notes until the principal amount of the
Class A-2 Notes has been reduced to zero and third to the holders of the
Class A-3 Notes until the principal amount of the Class A-3 Notes has
been reduced to zero; and
(v) to the Insurer, from Net Collections (after giving effect
to the reduction in Net Collections described in clauses (i) through
(vi) above), any Unreimbursed Insurer Amounts.
(b) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09), to distribute any excess amounts remaining from Net Collections
after making the distributions described in Section 5.05(a) ("Excess Amounts")
to the Spread Account. On each Distribution Date, the Master Servicer shall
instruct the Indenture Trustee to distribute the Excess Spread Amount pursuant
to Section 5.06(b).
(c) To the extent that on any Distribution Date the amount on deposit in
the Note Distribution Account (after giving effect to any deposits thereto on
such Distribution Date) is less than the Note Distributable Amount, Noteholders
shall be entitled to receive distributions in respect of such deficiency first,
from amounts on deposit in the Spread Account pursuant to a Deficiency Notice;
and second, if such amounts are still insufficient, from a claim made under the
Note Policy for the Note Policy Claim Amount pursuant to Section 5.02(d).
Section 5.06. Spread Account.
(a) On or prior to the Closing Date, the Owner Trustee, on behalf of the
Seller, shall deposit the Spread Account Initial Deposit into the Spread Account
from the net proceeds of the sale of the Notes. The Spread Account will be held
for the benefit of the Securityholders and the Insurer in order to effectuate
the subordination of the rights of the Securityholders to the extent described
above.
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(b) On each Calculation Day and Distribution Date, the Master Servicer
shall instruct the Indenture Trustee to distribute the Excess Spread Amount, (i)
first, to the Insurer, to the extent of any Unreimbursed Insurer Amounts, (ii)
second, to the Seller until the Seller has received an aggregate amount equal to
the Spread Account Initial Deposit and (iii) third, to the Certificate
Distribution Account for distribution to Certificateholders in accordance with
Section 5.02 of the Trust Agreement. Upon any such distribution to the Insurer,
neither Seller, nor the Securityholders will have further rights in, or claims
to, such amounts.
(c) Amounts held in the Spread Account shall be invested in the manner
specified in Section 5.01(b), and such investments shall be made in accordance
with written instructions from the Master Servicer; provided that, if the
Indenture Trustee does not receive any such written instructions prior to any
date on which an investment decision must be made, the Indenture Trustee shall
invest such amounts held in the Spread Account in Eligible Investments
consisting of commercial paper given the highest rating by each Rating Agency at
the time of such investment. All such investments shall be made in the name of
the Indenture Trustee or its nominee and such investments shall not be sold or
disposed of prior to their maturity.
(d) Upon termination of the Trust pursuant to Section 9.01, any amounts
on deposit in the Spread Account, after payments of amounts due to the
Securityholders or the Insurer (if there exists any Unreimbursed Insurer
Amounts), will be paid to the Seller.
Section 5.07. Statements to Securityholders.
(a) On each Distribution Date, the Indenture Trustee shall include with
each distribution to each Noteholder of record as of the related Record Date, a
statement, prepared by the Master Servicer, based on the information in the
Distribution Date Statement furnished pursuant to Section 4.09, setting forth
for such Distribution Date the following information as of the related Record
Date or such Distribution Date, as the case may be:
(i) the amount of such distribution allocable to principal
(stated separately for each Class of Notes);
(ii) the amount of such distribution allocable to interest
(stated separately for each Class of Notes);
(iii) the Aggregate Scheduled Balance as of the close of
business on the last day of such Due Period;
(iv) the amount of the Servicing Fee paid to the Master
Servicer with respect to the related Due Period;
(v) the amount of any Certificate Interest Carryover
Shortfall, Certificate Principal Carryover Shortfall, Note Interest
Carryover Shortfall and Note Principal Carryover Shortfall on such
Distribution Date and the change in such amounts from those with respect
to the immediately preceding Distribution Date;
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(vi) the Note Pool Factor for each Class of Notes and the
Certificate Pool Factor as of such Distribution Date, after giving
effect to payments allocated to principal reported under clause (i)
above; and
(vii) the Certificate Distributable Amount
(viii) the amount on deposit in the Spread Account on such
Distribution Date, after giving effect to distributions made on such
Distribution Date, and the change in such balance from the immediately
preceding Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii), (iv) or (v) above shall
be expressed as a dollar amount per $1,000.00 of original principal amount of a
Note.
(b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Indenture Trustee
shall mail to each Person who at any time during such calendar year shall have
been a Holder of a Note a statement or statements, prepared by the Master
Servicer, which in the aggregate contain the sum of the amounts set forth in
clauses (i), (ii), (iv) and (v) above for such calendar year or, in the event
such Person shall have been a Holder of a Note during a portion of such calendar
year, for the applicable portion of such year, for the purposes of such
Noteholder's preparation of federal income tax returns. In addition, the Master
Servicer shall furnish to the Indenture Trustee for distribution to such Person
at such time any other information necessary under applicable law for the
preparation of such income tax returns.
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ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence. During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the other Basic
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.
Section 6.02. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Master Servicer from and against
any taxes that may at any time be asserted against any such Person with respect
to the transactions contemplated herein and in the other Basic Documents,
including any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer, not
including any taxes asserted with respect to, and as of the date of, the sale of
the Contracts to the Issuer or the issuance and original sale of the Securities,
or asserted with respect to ownership of the Contracts, or federal or other
income taxes arising out of distributions on the Certificates or the Notes) and
costs and expenses in defending against the same.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Securityholders from and against
any loss, liability or expense incurred by reason of the Seller's willful
misfeasance, bad faith or negligence (other than errors in judgment) in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee and the Indenture Trustee from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in connection
with the acceptance or performance of the trusts and duties herein and, in the
case of the Owner Trustee, in the Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability, in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Seller shall have made any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are
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made thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
Section 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, Seller; Certain Limitations.
(a) The Seller shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which the Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the obligations of the Seller hereunder and executes and
delivers to the Insurer, the Owner Trustee and the Indenture Trustee an
agreement in form and substance reasonably satisfactory to the Owner Trustee,
the Indenture Trustee and the Insurer, which contains an assumption by such
successor entity of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Seller under this
Agreement. The Seller shall provide notice of any merger, consolidation or
succession pursuant to this Section to each Rating Agency and will deliver to
the Insurer, the Owner Trustee and the Indenture Trustee a letter from each
Rating Agency to the effect that such merger, consolidation or succession will
not result in a qualification, downgrading or withdrawal of its then-current
ratings of each Class of Notes or the Certificates. The Seller and WFS shall
maintain separate corporate offices.
(b)(i) Subject to paragraph (ii) below, the purpose of the Seller shall
be to engage in any lawful activity for which a corporation may be organized
under the General Corporation Law of California and which is permitted for
operating subsidiaries of federally chartered savings associations other than
the banking business, the trust company business or the practice of a profession
permitted to be incorporated by the California Corporations Code.
(ii) Notwithstanding paragraph (b)(i) above, the actual business
activities of the Seller shall be limited to those activities permitted an
operating subsidiary of a federally chartered savings association pursuant to 12
CFR Section 545.81 including the following purposes, and activities incident to
and necessary or convenient to accomplish the following purposes: (A) to
acquire, own, hold, sell, transfer, assign, pledge, finance, refinance and
otherwise deal with, retail installment sales contracts and installment loans
secured by automobiles and light duty trucks (the "Vehicle Receivables"); (B) to
authorize, issue, sell and deliver one or more series of obligations, consisting
of one or more classes of notes, certificates or other securities (the "Offered
Securities") that are collateralized by or evidence an interest in Vehicle
Receivables and are rated in the highest available category by at least one
nationally recognized statistical rating agency; and (C) to negotiate,
authorize, execute, deliver and assume the obligations of any agreement relating
to the activities set forth in clauses (A) and (B) above, including but not
limited to any pooling and servicing agreement, indenture, reimbursement
agreement, credit support agreement, receivables purchase agreement or
underwriting agreement or to engage in any lawful activity which is incidental
to the activities contemplated by any such agreement. So long as any outstanding
debt of the Seller or Offered Securities are rated by any nationally recognized
statistical rating organization, the Seller shall not issue notes or otherwise
incur debt unless (I) the Seller has made a written request to the related
nationally recognized statistical rating organization to issue notes or incur
borrowings which notes or borrowings are rated by the
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related nationally recognized statistical rating organization the same as or
higher than the rating afforded such debt or securities, or (II) such notes or
borrowings (X) are fully subordinated (and which shall provide for payment only
after payment in respect of all outstanding rated debt and/or Offered
Securities) or are nonrecourse against any assets of the Seller other than the
assets pledged to secure such notes or borrowings, (Y) do not constitute a claim
against the Seller in the event such assets are insufficient to pay such notes
or borrowings, and (Z) where such notes or borrowings are secured by the rated
debt or Offered Certificates, are fully subordinated (and which shall provide
for payment only after payment in respect of all outstanding rated debt and/or
Offered Securities) to such rated debt or Offered Securities.
(c) Notwithstanding any other provision of this Section and any
provision of law, the Seller shall not do any of the following:
(i) engage in any business or activity other than as set forth
in clause (b) above;
(ii) without the affirmative vote of a majority of the members
of the Board of Directors of the Seller (which must include the
affirmative vote of at least two duly appointed Independent directors)
(A) dissolve or liquidate, in whole or in part, or institute proceedings
to be adjudicated bankrupt or insolvent, (B) consent to the institution
of bankruptcy or insolvency proceedings against it, (C) file a petition
seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, (D) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the corporation or a substantial part of
its property, (E) make a general assignment for the benefit of
creditors, (F) admit in writing its inability to pay its debts generally
as they become due, or (G) take any corporate action in furtherance of
the actions set forth in clauses (A) through (F) above; provided,
however, that no director may be required by any shareholder of the
Seller to consent to the institution of bankruptcy or insolvency
proceedings against the Seller so long as it is solvent; or
(iii) merge or consolidate with any other corporation, company
or entity or sell all or substantially all of its assets or acquire all
or substantially all of the assets or capital stock or other ownership
interest of any other corporation, company or entity (except for the
acquisition of Vehicle Receivables and the sale of Vehicle Receivables
to one or more trusts in accordance with the terms of clause (b)(ii)
above, which shall not be otherwise restricted by this Section 6.03(c)).
Section 6.04. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on any document of any kind, prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Seller and any
director or officer or employee or agent of the Seller shall be reimbursed by
the Owner Trustee or the Indenture Trustee, as the case may be, for any
contractual damages, liability or expense incurred by reason of the Owner
Trustee's or the Indenture Trustee's willful misfeasance, bad faith or
negligence (except for errors in judgment) in the performance of their
respective duties hereunder, or by reason of reckless disregard of their
respective obligations and duties hereunder. The Seller shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under
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this Agreement, and that in its opinion may involve it in any expense or
liability. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement.
Section 6.05. Seller Not to Resign. Subject to the provisions of Section
6.03, the Seller shall not resign from the obligations and duties hereby imposed
on it as Seller hereunder.
Section 6.06. Seller May Own Securities. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Securities with the same rights as it would have if it were not the Seller or
an Affiliate thereof, except as expressly provided herein or in any Basic
Document. Securities so owned by or pledged to the Seller or such Affiliate
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority or distinction as among all of the Notes
or Certificates, as the case may be.
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ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities. Subject to
Section 8.02, the Master Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Master Servicer
under this Agreement. Such obligations shall include the following:
(a) The Master Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the
Securityholders and the Insurer from and against any and all costs,
expenses, losses, damages, claims and liabilities, arising out of or
resulting from the use, ownership or operation by the Master Servicer,
any Subservicer or any of their respective Affiliates of a Financed
Vehicle.
(b) The Master Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee and the Insurer
from and against any taxes that may at any time be asserted against the
Owner Trustee, the Indenture Trustee or the Issuer with respect to the
transactions contemplated herein, including, without limitation, any
sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but not including any taxes asserted with
respect to, and as of the date of, the sale of the Contracts to the
Issuer or the issuance and original sale of the Securities, or asserted
with respect to ownership of the Contracts, or federal or other income
taxes arising out of distributions on the Securities) and costs and
expenses in defending against the same.
(c) The Master Servicer shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee, the Insurer and
the Securityholders from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost,
expense, loss, claim, damage or liability arose out of, or was imposed
upon any such Person through, the negligence, willful misfeasance or bad
faith of the Master Servicer in the performance of its duties under this
Agreement or by reason of reckless disregard of its obligations and
duties under this Agreement.
(d) The Master Servicer shall indemnify, defend and hold harmless
the Owner Trustee, the Indenture Trustee and the Insurer from and
against any and all costs, expenses, losses, claims, damages and
liabilities arising out of or incurred in connection with the acceptance
or performance of the trusts and duties herein contained, except to the
extent that such cost, expense, loss, claim, damage or liability (i)
shall be due to the willful misfeasance, bad faith or negligence (except
for errors in judgment) of the Owner Trustee or the Indenture Trustee,
as the case may be; (ii) relates to any tax other than the taxes with
respect to which either the Seller or Master Servicer shall be required
to indemnify the Owner Trustee and the Indenture Trustee; (iii) shall
arise from the Owner Trustee's or the Indenture Trustee's breach of any
of their respective representations or warranties set forth herein, in
the Trust Agreement or in the Indenture; or (iv) shall be one as to
which the Seller is required to indemnify the Owner Trustee or the
Indenture Trustee, as the case may be.
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Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement and shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Master Servicer shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Master Servicer, without
interest.
Section 7.02. Corporate Existence; Status as Master Servicer; Merger.
The Master Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any Person unless the corporation formed by such consolidation
or into which the Master Servicer has merged or the Person which acquires by
conveyance, transfer or lease substantially all the assets of the Master
Servicer as an entirety can lawfully perform the obligations of the Master
Servicer hereunder and executes and delivers to the Indenture Trustee and the
Owner Trustee an agreement in form and substance reasonably satisfactory to the
Indenture Trustee, the Owner Trustee and the Insurer, which contains an
assumption by such successor entity of the due and punctual performance or
observance of each covenant and condition to be performed or observed by the
Master Servicer under this Agreement. Notice shall be sent to each Rating Agency
by the Master Servicer of any consolidation, merger or succession pursuant to
this Section.
Section 7.03. Performance of Obligations.
(a) The Master Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Master Servicer shall not take any action, or permit any action
to be taken by others, which would excuse any person from any of its covenants
or obligations under any of the Contract Documents or under any other instrument
included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
Section 7.04. Master Servicer Not to Resign; Assignment.
(a) The Master Servicer shall not resign from the duties and obligations
hereby imposed on it except upon determination by its Board of Directors that by
reason of change in applicable legal requirements the continued performance by
the Master Servicer of its duties hereunder would cause it to be in violation of
such legal requirements in a manner which would result in a material adverse
effect on the Master Servicer or its financial condition, said determination to
be evidenced by a resolution of its Board of Directors to such effect
accompanied by an Opinion of Counsel, satisfactory to the Owner Trustee and the
Indenture Trustee, to such effect. No such resignation shall become effective
unless and until (i) a new servicer acceptable to the Owner Trustee, the
Indenture Trustee and the Insurer is willing to service the Contracts and enters
into a servicing agreement with the Trust and the Insurer in form and substance
substantially similar to this Agreement and satisfactory to the Owner Trustee,
the Indenture Trustee and the Insurer and (ii) each Rating Agency confirms that
the selection of such new servicer will not result in the qualification,
reduction or withdrawal of its then-current rating of each Class of Notes and
the
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Certificates assigned by such Rating Agency. No such resignation shall affect
the obligation of the Master Servicer to repurchase Contracts pursuant to
Section 4.07.
(b) Except as specifically permitted in this Agreement, the Master
Servicer may not assign this Agreement or any of its rights, powers, duties or
obligations hereunder; provided that (i) the Master Servicer may assign this
Agreement in connection with a consolidation, merger, conveyance, transfer or
lease made in compliance with Section 7.02.
(c) Except as provided in Sections 7.04(a) and (b), the duties and
obligations of the Master Servicer under this Agreement shall continue until
this Agreement shall have been terminated as provided in Section 9.01 or the
Trust shall have been terminated as provided by the terms of the Trust
Agreement, and shall survive the exercise by the Owner Trustee, the Indenture
Trustee or the Insurer of any right or remedy under this Agreement, or the
enforcement by the Owner Trustee, the Indenture Trustee, any Certificateholder
or Noteholder, or the Insurer of any provision of the Notes, the Certificates,
the Insurance Agreement or this Agreement.
(d) The resignation of the Master Servicer in accordance with this
Section shall not affect the rights of the Seller hereunder. If the Master
Servicer resigns pursuant to this Section, its appointment as custodian can be
terminated pursuant to Section 3.07.
Section 7.05. Limitation on Liability of Master Servicer and Others.
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Issuer, the Noteholders or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence (except errors in judgment) in the performance of duties
or by reason of reckless disregard of obligations and duties under this
Agreement. The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any person respecting any matters
arising under this Agreement.
(b) The Master Servicer and any director or officer or employee or agent
of the Master Servicer shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of such Trustee's willful misfeasance, bad faith or
negligence (except errors in judgment) in the performance of such Trustee's
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
Except as provided in this Agreement, the Master Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Master Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and
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the other Basic Documents and the rights and duties of the parties to this
Agreement and the other Basic Documents and the interests of the Securityholders
under the Basic Documents.
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ARTICLE EIGHT
DEFAULT
Section 8.01. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) A claim being made under either the Note Policy or the
Certificate Policy;
(b) Any failure by the Master Servicer or the Issuer to deposit
or credit, or to deliver to the Indenture Trustee for deposit, in any of
the Trust Accounts any amount required hereunder to be as deposited,
credited or delivered or to direct the Indenture Trustee to make any
required distributions therefrom, that shall continue unremedied for a
period of three Business Days after written notice of such failure is
received from the Owner Trustee, the Indenture Trustee or the Insurer or
after discovery of such failure by an officer of the Master Servicer;
(c) Any failure by the Master Servicer to deliver to the Insurer,
the Indenture Trustee or the Owner Trustee a report in accordance with
Section 4.09 and/or Section 4.10 by the fourth Business Day prior to the
Distribution Date with respect to which such report is due, or the
Master Servicer shall have defaulted in the due observance of any
provision of Section 7.02 (other than failure to enter into an
assumption agreement under Section 7.02, which is a Servicer Default
only if such failure continues for ten Business Days);
(d) Failure on the part of the Seller, the Issuer or the Master
Servicer duly to observe or to perform in any material respect any other
covenants or agreements of the Master Servicer or the Seller set forth
in this Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of the Insurer, the Owner
Trustee, the Indenture Trustee, the Certificateholders or Noteholders
and (ii) continue unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given (A) to the Master Servicer or the Seller (as the
case may be) by the Insurer, the Owner Trustee or the Indenture Trustee
or (B) to the Master Servicer or the Seller (as the case may be), and to
the Owner Trustee and the Indenture Trustee by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes or,
if the Notes have been paid in full, by Certificateholders evidencing
not less than 25% of the aggregate Certificate Percentage Interest, or,
so long as no default under the Note Policy has occurred and is
continuing and no insolvency of the Insurer has occurred, by the
Insurer;
(e) The occurrence of an Insolvency Event with respect to the
Seller, the Issuer or the Master Servicer; or
(f) Any representation, warranty or statement of the Master
Servicer, the Issuer or the Seller made in this Agreement or any
certificate, report or other writing delivered pursuant hereto shall
prove to be incorrect in any material respect as of the time when the
same shall have been made (excluding, however, any representation or
warranty
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to which Section 3.01 or 4.06 shall be applicable so long as the Master
Servicer or the Seller shall be in compliance with Section 3.02 or 4.07,
as the case may be), and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Noteholders
or the Certificateholders and, within 30 days after written notice
thereof shall have been given to the Master Servicer or the Seller by
the Indenture Trustee or the Owner Trustee or by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, or
Certificateholders evidencing not less than 25% of the aggregate
Certificate Percentage Interest or, so long as no default has occurred
under either Policy and is continuing and no Insurer Insolvency has
occurred, by the Insurer, the circumstance or condition in respect of
which such representation, warranty or statement was incorrect shall not
have been eliminated or otherwise cured;
then, and in each and every case, so long as such Servicer Default shall not
have been remedied and subject to the limitations set forth in Section 6.07 of
the Insurance Agreement, either the Indenture Trustee, the Insurer, the Holders
of Notes evidencing not less than 25% of the Outstanding Amount of the Notes
(or, if the Notes have been paid in full and the Indenture has been discharged
in accordance with its terms, by the Owner Trustee or by Certificateholders
evidencing not less than 25% of the aggregate Certificate Percentage Interest),
by notice then given in writing to the Master Servicer (and to the Insurer, the
Indenture Trustee and the Owner Trustee if given by the Noteholders) may
terminate all the rights and obligations of the Master Servicer under this
Agreement. Upon such termination, termination of the Master Servicer as
custodian can be made pursuant to Section 3.07. On or after the receipt by the
Master Servicer of such written notice, all authority and power of the Master
Servicer under this Agreement, whether with respect to the Notes, the
Certificates, the Contracts or otherwise, shall, without further action, pass to
and be vested in the Indenture Trustee or such successor Master Servicer as may
be appointed under Section 8.02; and, without limitation, the Indenture Trustee
and the Owner Trustee are hereby authorized and empowered to execute and
deliver, for the benefit of the predecessor Master Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Contracts and related documents, or otherwise. The Master
Servicer shall cooperate with the Indenture Trustee and the Owner Trustee in
effecting the termination of the responsibilities and rights of the predecessor
Master Servicer under this Agreement, including the transfer to the Indenture
Trustee for administration by it of all cash amounts that shall at the time be
held by the predecessor Master Servicer for deposit, or shall thereafter be
received by it with respect to any Contract.
Section 8.02. Indenture Trustee to Act; Appointment of Successor. Upon
the Master Servicer's receipt of notice of termination pursuant to Section 8.01
or resignation pursuant to Section 7.04, the Indenture Trustee shall be the
successor to the Master Servicer in its capacity as servicer under this
Agreement, and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions of this Agreement, except that the Indenture Trustee shall not be
obligated to purchase Contracts pursuant to Section 4.07 unless the obligation
to repurchase arose after the date of the notice of termination given to the
Master Servicer pursuant to Section 8.01 or be subject to any obligation of the
Master Servicer to indemnify or hold harmless any Person as set forth in this
Agreement arising from the acts or omissions of the previous Master Servicer. As
compensation therefor,
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the Indenture Trustee shall be entitled to such compensation (whether payable
out of the Collection Account or otherwise) as the Master Servicer would have
been entitled to under this Agreement if no such notice of termination shall
have been given. If, however, a bankruptcy trustee or similar official has been
appointed for the Master Servicer, and no Servicer Default other than such
appointment has occurred, such trustee or official may have the power to prevent
the Indenture Trustee, Insurer or the Noteholders (or Certificateholders) from
effecting a transfer of servicing. Notwithstanding the above, the Indenture
Trustee may, if it shall be unwilling to act, or shall, if it shall be legally
unable so to act, appoint, or petition a court of competent jurisdiction to
appoint, any established financial institution, having a net worth of not less
than $______ and whose regular business shall include the servicing of motor
vehicle retail installment sales contracts, as the successor to the Master
Servicer under this Agreement. Pending appointment of any such successor Master
Servicer, the Indenture Trustee shall act in such capacity as provided above. In
connection with such appointment, the Indenture Trustee may make such
arrangements for the compensation of such successor out of payments on Contracts
it and such successor shall agree; provided, however, that no such compensation
shall be in excess of that permitted the Master Servicer under this Agreement
without the consent of the Insurer. The Indenture Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
Section 8.03. Repayment of Advances. If the identity of the Master
Servicer shall change, the predecessor Master Servicer shall be entitled to
receive reimbursement for outstanding Advances pursuant to Section 5.04 with
respect to all Advances made by the predecessor Master Servicer.
Section 8.04. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Master Servicer
pursuant to this Article, the Owner Trustee shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders at their respective addresses appearing in the Note
Register and to each Rating Agency.
Section 8.05. Waiver of Past Defaults. The Holders of Notes evidencing
not less than 51% of the Outstanding Amount of the Notes, or, if all the Notes
have been paid in full and the Indenture has been discharged in accordance with
its terms, Certificateholders evidencing not less than 51% of the aggregate
Certificate Percentage Interest (in the case of any default which does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
Securityholders, with the consent of the Insurer, waive in writing any default
by the Master Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with this Agreement or in respect
of a covenant or provisions hereof which cannot be modified without the consent
of each Securityholder. Upon any such waiver of a past default, such default
shall cease to exist, and any Servicer Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.
Section 8.06. Insurer Direction of Insolvency Proceedings. Upon receipt
of actual knowledge thereof by a Responsible Officer, the Indenture Trustee
shall promptly notify the
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Insurer of (i) the commencement of any of the events or proceedings
(individually, an "Insolvency Proceeding") described in the definition of the
term "Insolvency Event" or any such event or proceeding applicable to an Obligor
under a Contract and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of, or interest on, a Contract
or any Notes or Certificates. Each Noteholder and Note Owner, by its purchase of
Notes or a beneficial interest therein, each Certificateholder, by its purchase
of Certificates or a beneficial interest therein, the Owner Trustee and the
Indenture Trustee hereby agree that, so long as neither a default under the Note
Policy nor an Insurer Insolvency has occurred and is continuing, the Insurer may
at any time during the continuation of an Insolvency Proceeding direct all
matters relating to such Insolvency Proceeding, including, without limitation,
(i) all matters relating to any Preference Claim, (ii) the direction of any
appeal of any order relating to any Preference Claim and (iii) the posting of
any surety, supersedes or performance bond pending any such appeal. The Insurer
shall be subrogated to the rights of the Indenture Trustee, the Owner Trustee
and each Securityholder in the conduct of any Insolvency Proceeding, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Insolvency
Proceeding.
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ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts.
(a) On each Distribution Date as of which the Aggregate Scheduled
Balance is less than 10% of the Cut-Off Date Aggregate Scheduled Balance, the
Seller shall have the option to purchase the remaining Contracts from the Trust.
Notice of the exercise of such option shall be given by the Seller to the Owner
Trustee, the Indenture Trustee and the Insurer not later than the 25th day of
the month immediately preceding the month of such Distribution Date. To exercise
such option, the Seller shall pay to the Indenture Trustee for the benefit of
the Securityholders, by deposit in the Collection Account on the Business Day
immediately preceding the related Distribution Date, the aggregate Repurchase
Amount of all Contracts that were Outstanding at the beginning of the Due Period
ending immediately prior to such Distribution Date, and shall succeed to all
interests in and to the Trust. Such purchase shall be deemed to have occurred on
the last day of such Due Period. Notwithstanding the foregoing, the Seller shall
not be permitted to exercise such option unless the amount to be deposited in
the Collection Account pursuant to the preceding sentence is greater than or
equal to the sum of the outstanding principal amount of the Notes and the
aggregate Certificate Percentage Interest and all unpaid interest (including any
overdue interest) thereon that has accrued through the related Interest Period.
In addition, if the Master Servicer or the Seller has outstanding senior debt
and such debt is not rated "investment grade" by Moody's at the time of
exercising the option pursuant to this Section, then the Master Servicer or the
Seller shall deliver to the Owner Trustee, the Indenture Trustee and Moody's, an
Opinion of Counsel to the effect that such optional purchase is not a fraudulent
conveyance.
(b) Upon any sale of the assets of the Trust pursuant to Section 5.02(b)
of the Indenture, the Master Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Master
Servicer shall instruct the Indenture Trustee to make the following deposits
(after the application on such Distribution Date of Net Collections and funds on
deposit in the Spread Account pursuant to Sections 5.05 and 5.06) from the
Insolvency Proceeds and any funds remaining on deposit in the Spread Account
(including the proceeds of any sale of investments therein as described in the
following sentence):
(i) to the Note Distribution Account, any portion of the Note
Interest Distributable Amount not otherwise deposited into the Note
Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding
principal amount of the Notes (after giving effect to the reduction in
the outstanding principal amount of the Notes to result from the
deposits made in the Note Distribution Account on such Distribution Date
and on prior Distribution Dates); and
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(iii) to the Certificate Distribution Account, for
distribution in accordance with Section 5.02 of the Trust Agreement.
(c) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Master Servicer to the Owner
Trustee, the Insurer and the Indenture Trustee as soon as practicable after the
Master Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
Section 9.02. Transfer to the Insurer. If (i) there is one or more
Outstanding Contracts at the end of the Due Period ending immediately prior to
the Class A-3 Final Distribution Date and (ii) an amount sufficient to pay the
Class A-3 Distributable Amount on the Class A-3 Final Distribution Date has been
deposited with the Indenture Trustee by the Insurer for the benefit of the Class
A-3 Noteholders, then on the Class A-3 Final Distribution Date the Class A-3
Notes shall be deemed to be transferred by the Class A-3 Noteholders to the
Insurer or its designee as purchaser thereof at the opening of business on the
Class A-3 Final Distribution Date and the Owner Trustee, on behalf of the Trust,
shall execute, and the Owner Trustee shall authenticate and deliver to the
Insurer or its designee, in the name of the Insurer or its designee, as the case
may be, a new Class A-3 Note evidencing the entire Note Balance. Such new
Certificate shall have the same terms as the Certificates deemed transferred by
the Class A-3 Noteholders. No service charge shall be made for the issuance of
such Class A-3 Note to the Insurer or its designee, but the Owner Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith. Such transfer shall not diminish or
restrict the Insurer's rights hereunder or under the Insurance Agreement.
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ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment.
(a) This Agreement may be amended by the Seller, the Master Servicer and
the Owner Trustee on behalf of the Issuer, collectively, without the consent of
any Securityholders, (i) to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions herein,
or to add any other provisions with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of this
Agreement, (ii) to add or provide any credit enhancement for any Class of Notes
and (iii) to change any provision applicable for determining the Specified
Spread Account Balance or the manner in which the Spread Account is funded (in
each case with the approval of the Insurer); provided, however, that any such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Securityholder and provided, further, that
in connection with any amendment pursuant to clause (ii) and (iii) above, the
Master Servicer shall deliver to the Owner Trustee, the Indenture Trustee and
the Insurer a letter from Standard & Poor's to the effect that such amendment
will not cause its then-current rating on any Class of Notes to be qualified,
reduced or withdrawn, without giving any consideration to the effect of the
guaranty under either Policy of payments owing to Noteholders, and the Master
Servicer shall provide Moody's notice of such amendment; and provided, further,
that this Agreement may not be amended to alter the rights or obligations of the
Indenture Trustee without the prior consent of the Indenture Trustee.
(b) This Agreement may also be amended from time to time by the Seller,
the Master Servicer and the Owner Trustee on behalf of the Issuer, with the
consent of the Holders of Notes evidencing not less than 51% of the Outstanding
Amount of the Notes, and the consent of Certificateholders evidencing not less
than 51% of the aggregate Certificate Percentage Interest, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that no such amendment
shall increase or reduce in any manner the amount of, or accelerate or delay the
timing of (i)(a) collections of payments on the Contracts or distributions that
shall be required to be made on any Note or Certificate or any Interest Rate,
(b) except as otherwise provided in Section 10.01(a), the Specified Spread
Account Balance, or the manner in which the Spread Account is funded or (ii)
reduce the aforesaid percentage of the Outstanding Amount of the Notes, the
Holders of which are required to consent to any such amendment, without the
consent of the Insurer and the Holders of all Notes and Certificates of the
relevant Class then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, as prepared by the Seller, the Master Servicer and the
Owner Trustee on behalf of the Issuer, at the expense of the such party,
together with a copy thereof, to each Rating Agency and the Insurer.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish the
written notification of the
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substance of the amendment or consent described in paragraph (c) above, at the
expense of the Seller, the Master Servicer or the Owner Trustee on behalf of the
Issuer, as the case may be, to each Certificateholder and Noteholder,
respectively. It shall not be necessary for the consent of Noteholders and
Certificateholders pursuant to Section 10.01(b) to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization by Noteholders and Certificateholders of the
execution thereof shall be subject to such reasonable requirements as the Owner
Trustee or the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 10.02. Protection of Title to Trust.
(a) The Master Servicer shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the interest of the Issuer, the Securityholders, the Indenture
Trustee, the Owner Trustee and the Insurer in the Contracts and in the proceeds
thereof. The Master Servicer shall deliver (or cause to be delivered) to the
Owner Trustee and the Indenture Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the WFS, the Seller nor the Master Servicer shall change its
name, identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance with
Section 10.02(a) seriously misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Insurer, the Owner Trustee and the
Indenture Trustee at least 60 days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) WFS, the Seller and the Master Servicer shall give the Insurer, the
Owner Trustee and the Indenture Trustee at least 60 days' prior written notice
of any relocation of the principal executive office of WFS or the Seller and the
Master Servicer or the Subservicers (in the case of notice provided by the
Master Servicer) if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and shall
promptly file any such amendment or new financing statement. The Master Servicer
shall at all times maintain each office from which it shall service Contracts,
and its principal executive office, within the United States.
(d) The Master Servicer shall maintain or cause to be maintained
accounts and records as to each Contract accurately and in sufficient detail to
permit (i) the reader thereof to know at any time the status of such Contract,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries on (or with
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respect to) each Contract and the amounts from time to time deposited in or
credited to the Collection Account and the Holding Account in respect of such
Contract.
(e) The Master Servicer shall maintain or cause to be maintained its
computer systems and those of Subservicers so that, from and after the time of
sale under this Agreement of the Contracts, the Master Servicer's and
Subservicer's master computer records (including any backup archives) that shall
refer to a Contract indicate clearly the interest of the Issuer and the
Indenture Trustee in such Contract and that such Contract is owned by the Issuer
and has been pledged to the Indenture Trustee. Indication of the Issuer's
ownership of and the Indenture Trustee's interest in a Contract shall be deleted
from or modified on the Master Servicer's computer systems when, and only when,
the related Contract shall have been paid in full or repurchased or shall have
become a Liquidated Contract.
(f) If at any time the Seller, the Master Servicer or a Subservicer
shall propose to sell, grant a security interest in, or otherwise transfer any
interest in automotive retail installment sales contracts to any prospective
purchaser, lender or other transferee, the Master Servicer shall give or cause
to be given to such prospective purchaser, lender or other transferee computer
tapes, records or print-outs (including any restored from back-up archives)
that, if they shall refer in any manner whatsoever to any Contract, shall
indicate clearly that such Contract has been sold and is owned by the Issuer and
has been pledged to the Indenture Trustee.
(g) The Master Servicer shall permit the Owner Trustee, the Indenture
Trustee and the Insurer and its agents, at any time during normal business
hours, to inspect, audit and make copies of and abstracts from the Master
Servicer's records regarding any Contract.
(h) Upon request, the Master Servicer shall furnish to the Owner
Trustee, the Indenture Trustee and the Insurer, within five Business Days, a
list of all Contracts then held as part of the Trust Estate, together with a
reconciliation of such list to the Schedule of Contracts and to each of the
Distribution Date Statements furnished before such request indicating removal of
Contracts from the Trust.
(i) The Master Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, each Rating Agency and the Insurer:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto, an Opinion of Counsel stating that, in the
opinion of such counsel, the Indenture Trustee holds a perfected
security interest in the Contracts, that the Trust holds title to the
Contracts subject to the security interest of the Indenture Trustee and
the lien of the Insurer pursuant to the Insurance Agreement, and that
the Insurer holds a lien on the Contracts under the Insurance Agreement,
subject to applicable subordination; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-Off Date, an Opinion of Counsel, dated as of a date during
such 90-day period, either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Indenture Trustee in the
Contracts, and reciting the details of such
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filings or referring to prior Opinions of Counsel in which such details
are given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest.
Section 10.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee and the
Indenture Trustee shall be governed by the laws of the State of New York.
Section 10.04. Notices. All demands, notices and communications upon or
to the Seller, the Master Servicer, the Owner Trustee, the Indenture Trustee,
the Insurer or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt in the case of (a) the
Seller, at ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (b) the Master Servicer, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Legal Department, (c) the Issuer
or the Owner Trustee, at the Corporate Trust Office (with, in the case of the
Issuer, a copy to the Seller), (d) the Indenture Trustee, at Four Albany Street
- 10th Floor, New York, New York 10006, Attention: Corporate Trust Department -
Asset Backed Group, (e) Moody's, to ▇▇▇▇▇'▇ Investors Service, Inc., ABS
Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (f) Standard
& Poor's, to Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention of Asset Backed Surveillance Department and (g) the Insurer, at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Surveillance Department, with
a copy to the Senior Vice President -- Surveillance; or, as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties. Any notice required or permitted to be to be mailed to a
Securityholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Note Register or the Certificate
Register, as the case may be. Any notice so mailed within the time prescribed
herein shall be conclusively presumed to have been duly given, whether or not
such Securityholder shall receive such notice.
Section 10.05. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificates or the rights of the Holders thereof.
Section 10.06. Assignment. Notwithstanding anything to the contrary
contained herein, as provided in Sections 6.03, 7.02 and 8.04, this Agreement
may not be assigned by the Seller or the Master Servicer without the prior
written consent of Holders of Notes of each Class evidencing not less than 66
2/3% of the Outstanding Amount of Notes of such Class and Certificateholders
evidencing not less than 66 2/3% of the aggregate Certificate Percentage
Interest.
Section 10.07. Third Party Beneficiaries. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party other than the Insurer shall be deemed a third party
beneficiary of this Agreement, and specifically that the Obligors are not third
party beneficiaries of this Agreement.
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Section 10.08. Insurer Default or Insolvency. If a default under the
Note Policy has occurred and is continuing or a Insurer Insolvency has occurred,
any provision giving the Insurer the right to direct, appoint or consent to,
approve of, or take any action under this Agreement, shall be inoperative during
the period of such default or the period from and after such Insurer Insolvency
and such consent or approval shall be deemed to have been given for the purpose
of such provisions.
Section 10.09. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
Section 10.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 10.11. Assignment by Issuer. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of the Issuer in, to and under
the Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
Section 10.12. Limitation of Liability of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been
countersigned by Chase Manhattan Bank Delaware not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
Chase Manhattan Bank Delaware in its individual capacity or any beneficial owner
of the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles Six, Seven and Eight of the Trust
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
WFS FINANCIAL 20__-_ OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By:
-------------------------------------------
Name:
Title:
WFS FINANCIAL AUTO LOANS, INC., as Seller
By:
-------------------------------------------
Name:
Title:
WFS FINANCIAL INC, as Master Servicer
By:
-------------------------------------------
Name:
Title:
Acknowledged and accepted as of the day
and year first above written:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee
By:
-----------------------------------
Name:
Title:
81
SCHEDULE A
SCHEDULE OF CONTRACTS
[Omitted--Schedule of Contracts on file at the offices of the Seller,
the Master Servicer, the Owner Trustee and the Indenture Trustee.]
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LOCATION OF CONTRACT FILES
WFS Financial Inc WFS Financial Inc
▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
WFS Financial Inc WFS Financial Inc
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ 1883 NE ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
WFS Financial Inc WFS Financial Inc
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
SB-1
83
EXHIBIT A
[FORM OF INSURANCE AGREEMENT]
A-1
84
EXHIBIT B
[FORM OF NOTE POLICY]
B-1
85
EXHIBIT C
[FORM OF RIC]
C-1
86
EXHIBIT D
[FORM OF SUBSERVICING AGREEMENT]
D-1
87
EXHIBIT E
[FORM OF DISTRIBUTION DATE STATEMENT]
E-1