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EXHIBIT 10.2
▇▇▇▇▇ & ▇▇▇▇ LLP
Draft of
8/4/97
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SALE AND SERVICING AGREEMENT
among
WFS FINANCIAL 1997-C OWNER TRUST,
as Issuer,
WFS FINANCIAL AUTO LOANS, INC.,
as Seller,
and
WFS FINANCIAL INC,
as Master Servicer
Dated as of September 1, 1997
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TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Usage of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 1.03. Section References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 1.04. Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 1.05. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3.02. Purchase of Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.03. Custody of Contract Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.04. Duties of Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.05. Instructions; Authority to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.06. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.07. Effective Period and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.08. Nonpetition Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.09. Collecting Title Documents Not Delivered at the Closing Date . . . . . . . . . . . . . . . . . 39
ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.02. Collection of Contract Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.03. Realization upon Defaulted Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.05. Maintenance of Security Interests in Financed Vehicles . . . . . . . . . . . . . . . . . . . . 46
Section 4.06. Covenants, Representations and Warranties of Master Servicer . . . . . . . . . . . . . . . . . 46
Section 4.07. Repurchase of Contracts upon Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.08. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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Section 4.09. Reporting by the Master Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.10. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.11. Annual Independent Certified Public Accountants' Report . . . . . . . . . . . . . . . . . . . 52
Section 4.12. Access to Certain Documentation and Information Regarding Contracts . . . . . . . . . . . . . 53
Section 4.13. Fidelity Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.14. Indemnification; Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.02. Collections; Realization Upon Policies; Net Deposits . . . . . . . . . . . . . . . . . . . . . 56
Section 5.03. Application of Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts . . . . . . . . . . . . . . . . . . . 58
Section 5.05. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 5.06. Spread Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.07. Statements to Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.02. Liability of Seller; Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.03. Merger or Consolidation of, or Assumption of the Obligations of, Seller;
Certain Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.04. Limitation on Liability of Seller and Others . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 6.05. Seller Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.02. Corporate Existence; Status as Master Servicer; Merger . . . . . . . . . . . . . . . . . . . . 70
Section 7.03. Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.04. Master Servicer Not to Resign; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.05. Limitation on Liability of Master Servicer and Others . . . . . . . . . . . . . . . . . . . . 71
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ARTICLE EIGHT
DEFAULT
Section 8.01. Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.02. Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 8.03. Repayment of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 8.04. Notification to Noteholders and Certificateholders . . . . . . . . . . . . . . . . . . . . . . 75
Section 8.05. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 8.06. Insurer Direction of Insolvency Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 9.02. Transfer to the Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.02. Protection of Title to Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 10.03. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.04. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.05. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.06. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.07. Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.08. Insurer Default or Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.09. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.11. Assignment by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.12. Limitation of Liability of Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 83
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 Certificate Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B Form of Insurance Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C Form of Note Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D Form of RIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
Exhibit E Form of Subservicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
Exhibit F Form of Distribution Date Statement . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
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This SALE AND SERVICING AGREEMENT, dated as of September 1, 1997, is
among WFS Financial 1997-C 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 new or used 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 ____% 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 or the Certificate Principal Distributable Amount, as the
case may be. The Accelerated Principal Distributable Amount shall be allocated
and distributed as follows: (i) on each Distribution Date to but excluding the
Distribution Date on which the principal amount of the Class A-4 Notes has been
reduced to zero, to the Note Distribution Account; (ii) on the Distribution
Date on which the principal amount of the Class A-4 Notes is reduced to zero,
(A) to the Note Distribution Account in the amount necessary to reduce the
principal amount of the Class A-4 Notes to zero and (B) to the Certificate
Distribution Account, any remaining portion; and (ii) on each Distribution Date
thereafter, to and including the Distribution Date on which the principal
amount of the Certificates is reduced to zero, to the Certificate 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).
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"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 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 immediately preceding Distribution Date (or the Cut-Off Date Aggregate
Scheduled Balance in the case of the first Distribution Date) exceeds the
Aggregate Scheduled Balance as of such Distribution Date.
"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
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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, F.S.B., 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.
"Calculation Day" means the last day of each calendar month.
"Certificate Balance" equals $______________ on the Closing Date, and,
on any date thereafter, equals the Original Certificate Balance, reduced by all
amounts allocable to principal previously distributed to Certificateholders.
"Certificate Deficiency Claim Amount" means, with respect to each
Distribution Date, the amount, if any, by which the Certificate Distributable
Amount for such Distribution Date exceeds the amount of Net Collections
actually deposited in the Certificate Distribution Account on such Distribution
Date in accordance with Section 5.05.
"Certificate Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificate Principal Distributable Amount
and the Certificate Interest Distributable Amount for such Distribution Date.
"Certificate Distribution Account" shall have the meaning specified in
the Trust Agreement.
"Certificate Final Distribution Date" means the ________ 20, 20__
Distribution Date.
"Certificate Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the sum of the Certificate Quarterly Interest
Distributable Amount for the immediately preceding Distribution Date and any
outstanding Certificate Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest on the Certificates
that is actually deposited in the Certificate Distribution Account on such
preceding Distribution Date, plus interest on such excess, to the extent
permitted by law, at the Pass-Through Rate for the related Interest Period.
"Certificate Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificate Quarterly Interest Distributable
Amount for such Distribution Date and the Certificate Interest Carryover
Shortfall for such Distribution Date. Interest with
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respect to the Certificates shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of this Agreement and the
other Basic Documents.
"Certificate Percentage" means (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of the Class A-3
Notes is reduced to zero, zero, and (ii) for each Distribution Date on and
after the Distribution Date on which the principal amount of the Class A-3
Notes is reduced to zero, a percentage equal to 100% minus the Note Percentage
for such Distribution Date.
"Certificate Policy" means the financial guaranty insurance policy
issued by the Insurer to the Owner Trustee on behalf of the Certificateholders,
the form of which is attached as Exhibit A hereto.
"Certificate Policy Claim Amount" means, with respect to each
Distribution Date, the amount, if any, by which the Certificate Distributable
Amount for such Distribution Date exceeds the sum of (i) the amount of Net
Collections actually deposited in the Certificate Distribution Account on such
Distribution Date in accordance with Section 5.05 plus (ii) the amount of the
Certificate Deficiency Claim Amount, if any, paid to the Certificate
Distribution Account from the Spread Account pursuant to a Deficiency Notice
delivered for such Distribution Date.
"Certificate Pool Factor" means, as of any Distribution Date, a
six-digit decimal figure equal to the Certificate Balance (after giving effect
to any reductions therein to be made on such Distribution Date) divided by the
Original Certificate Balance.
"Certificate Principal Carryover Shortfall" means, as of any
Distribution Date, the excess of the sum of the Certificate Quarterly Principal
Distributable Amount and any outstanding Certificate Principal Carryover
Shortfall for the immediately preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such Distribution Date.
"Certificate Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificate Quarterly Principal
Distributable Amount for such Distribution Date and any outstanding Certificate
Principal Carryover Shortfall for the immediately preceding Distribution Date;
provided, however, that the Certificate Principal Distributable Amount shall
not exceed the Certificate Balance. In addition, on the Distribution Date on
which the principal amount of the Class A-4 Notes has been reduced to zero, any
Accelerated Principal Distributable Amounts remaining after such reduction
shall be included in the Certificate Principal Distributable Amount, and on
each Distribution Date thereafter, to and including the Distribution Date on
which the Certificate Balance is reduced to zero, the Accelerated Principal
Distributable Amount, if any, will be included in the Certificate Principal
Distributable Amount. Further, on the Certificate Final Distribution Date, the
amount required to be deposited into the Certificate Distribution Account will
include the amount necessary to reduce the Certificate Balance to zero.
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"Certificate Quarterly Interest Distributable Amount" means, with
respect to any Distribution Date, 90 days of interest (or, in the case of the
first Distribution Date, interest accrued from and including the Cut-Off Date
to but excluding such Distribution Date) at the Pass- Through Rate on the
Certificate Balance on the immediately preceding Distribution Date, after
giving effect to all payments of principal on such preceding Distribution Date
(or, in the case of the first Distribution Date, the Original Certificate
Balance).
"Certificate Quarterly Principal Distributable Amount" means, with
respect to any Distribution Date, the Certificate Percentage of the Principal
Distributable Amount for such Distribution Date.
"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 ________ 20, ____
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.
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"Class A-3 Final Distribution Date" means the ________ 20, ____
Distribution Date.
"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.
"Class A-4 Final Distribution Date" means the ________ 20, ____
Distribution Date.
"Class A-4 Noteholder" means the Person in whose name a Class A-4 Note
is registered in the Note Register.
"Class A-4 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 June __, 1997.
"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
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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.
"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, 1997.
"Cut-Off Date Aggregate Scheduled Balance" means $____________, the
aggregate Scheduled Balance 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.
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"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.
"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
other obligations that constitute "instruments" within the meaning of
Section 9-105(1)(i) of the UCC and are susceptible of physical
delivery (collectively, "Physical Property") and transfer thereof to
the Indenture Trustee or the Owner Trustee, as the case may be, in
accordance with Sections 8-313(1)(a), 8-313(d)(i) or 8-313(1)(g) of
the UCC, evidence that any such Physical Property that is in
registrable form has been registered in the name of the Indenture
Trustee or the Owner Trustee, as the case may be, its custodian or its
nominee and that any other procedures have occurred that are necessary
under such Sections (as applicable) or otherwise under the UCC 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 laws or regulations or
the interpretation thereof;
(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
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(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.
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement, and its successors.
"Distribution Date" means each ________ 20, ________ 20, ________ 20
and ________ 20, or, if any such date shall not be a Business Day, the next
succeeding Business Day, commencing ________ 20, 1997.
"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 the Cut-Off Date 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 or the Certificates (without giving effect to the guaranty under either
Policy of payments owing to Securityholders). If any Eligible Account falls
below the ratings
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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;
(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 or the Certificates (without giving
effect to the guaranty under either Policy of payments owing to
Securityholders); 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
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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 long-term unsecured debt rating
of at least A1 from Moody's and A+ from Standard & Poor's;
(vii) the RIC, if guaranteed by an entity which has
long-term, unsecured debt obligations rated "AAA" by Standard & Poor's
and at least "Aa2" by Moody's or otherwise 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 or the
Certificates (without giving effect to the guaranty under either
Policy of payments owing to Securityholders); 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 and the Certificates.
"Excess Amounts" shall have the meaning specified in Section 5.05(b).
"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 with respect to (i) the Notes, the
Class A-1 Final Distribution Date, the Class A-2 Final Distribution Date, the
Class A-3 Final Distribution Date or the Class A-4 Final Distribution Date, as
the case may be, and (ii) the Certificates, the Certificate Final Distribution
Date.
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"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.
"Fiscal Agent" shall have the meaning set forth in the Policies.
"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 purchase price of a Contract in
connection with the purchase of all Contracts pursuant to Section 9.01.
"Funded Amount" means, as of any Calculation Date or Distribution
Date, the cash amount on deposit in the Spread Account.
"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
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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).
"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 Policies 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,
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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 the Cutoff Date) to but excluding such Distribution Date.
"Interest Rate" means the Class A-1 Rate, the Class A-2 Rate, the
Class A-3 Rate or the Class A-4 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 1997-B Owner Trust.
"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.
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"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.
"Minimum Funded Amount" means, with respect to the amount of cash on
deposit in the Spread Account as of any Calculation Day or Distribution Date, an
amount equal to the greater of (i) ___% of the Aggregate Scheduled Balance as of
such Calculation Day or Distribution Date, as the case may be, or (ii) ___% of
the Cut-Off Date Aggregate Scheduled Balance.
"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 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.
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"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 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, the Class A-3 Final Distribution
Date or the Class A-4 Final Distribution Date, as the case may be.
"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 the Cut-Off Date) and
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(ii) Class A-2, Class A-3 and Class A-4 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 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% of the
Principal Distributable Amount 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, the percentage calculated as set forth in
clause (iii); (iii) for each Distribution Date after the Distribution Date on
which the principal amount of the Class A-3 Notes is reduced to zero, a
percentage, expressed as a fraction the numerator of which is the aggregate
principal amount of the Class A-4 Notes as of the immediately preceding
Distribution Date and the denominator of which is the sum of the aggregate
principal amount of the Class A-4 Notes and the principal amount of the
Certificates as of the immediately preceding Distribution Date, in each
instance after giving effect to all payments of principal on such preceding
Distribution Date; and (iv) 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.
"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
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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 $______________.
"Original Class A-3 Note Balance" means $______________.
"Original Class A-4 Note Balance" means $______________.
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"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 or the Certificate 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 after the Cut-Off Date less any unearned
interest as of the Due Date for such Contract next preceding the Cut-Off Date
computed in accordance with the Rule of 78's, less all amounts received on or
in respect of such Contract after the Cut-Off Date that are allocable to
principal and (ii) Simple Interest Contract, the actual principal balance under
the terms thereof.
"Overcollateralization Amount" means, with respect to any Calculation
Day or Distribution Date, the amount by which (i) the sum of (A) the Aggregate
Scheduled Balance as of such date of calculation plus (B) the portion of Net
Collections constituting principal payments on or in respect of the Contracts
on deposit in the Collection Account on such date of calculation plus (C)
amounts on deposit in the Holding Account constituting principal payments as of
such date of calculation exceeds (ii) the Outstanding Amount of the Securities
as of such date of calculation.
"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.
"Pass-Through Rate" means ____% per annum.
"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.
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"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.
"Proprietary Fund" means money market mutual 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.
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"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) 0.00% 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 or, with
the prior written consent of the Insurer, a subsidiary thereof, substantially
in the form of Exhibit D 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 and the Certificate 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 Pass-Through 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.
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"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 after the Cut-Off Date, 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 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 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
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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 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 1.00% 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
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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, ____% 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 ____% or (ii) the Delinquency Percentage for the three
calendar month period ending on such date of calculation exceeds ____%, then
the Specified Spread Account Balance shall equal ____% 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. The Spread Account will be comprised of the Funded
Amount and the Overcollateralization Amount.
"Spread Account Initial Deposit" means $______________, 100% of which
will be cash.
"Standard & Poor's" means Standard & Poor's Ratings Services, 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.
"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.
"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.
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"Trust Accounts" shall have the meaning specified in Section 5.01(a).
"Trust Agreement" means the Amended and Restated Trust Agreement,
dated as of __________, 1997, as amended and restated as of __________, 1997,
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.
"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 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 the Cut-Off Date, 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.
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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 $______________, 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 after the Cut-Off Date
(excluding the amount allocable to principal and interest due on or prior to
the Cut-Off Date); all Net Liquidation Proceeds and Net Insurance Proceeds with
respect to any Financed Vehicle to which a Contract relates received on or
after the Cut-Off Date and all other proceeds received on or in respect of such
Contracts (other than payments of Monthly P&I due prior to the Cut-Off Date),
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
the Cut-Off Date 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
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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 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 Policies. 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
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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 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, 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
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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 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
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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 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
maximum insurable 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 and (B) an LDI Policy; provided,
however, that if such Financed Vehicle has an unpaid principal balance
of less than $4,000 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 with
which it ordinarily does business 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
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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 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 $1,000.00
nor more than $__________, (ii) an original term not less than __
months nor greater than __ months, (iii) a remaining maturity of not
less than __ months nor greater than __ months, (iv) a Contract Rate
at least equal to the Pass-Through Rate plus the sum of the Servicing
Fee Percent and the Retained Yield Percent and (v) 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 Originations. The aggregate Scheduled Balance
as of the Cut-Off Date of Contracts purchased or originated by the
Bank 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.
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(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. Except as otherwise provided
in the immediately succeeding sentence, all Simple Interest Contracts
were originated by new and used motor vehicle dealers located in
[California, Texas, Arizona, Nevada, Oregon, Washington, Colorado,
Missouri, Florida, New Mexico, Illinois, Idaho, North Carolina, Utah,
Tennessee, Oklahoma, Kansas, Indiana, Wisconsin, Hawaii, Virginia,
Ohio, New Jersey, South Carolina and Pennsylvania]. Not more than
____% of the Contracts by Cut-Off Date Aggregate Scheduled Balance
were originated by WFS or the Bank in California, not more than ____%
of the Contracts by Cut-Off Date Aggregate Scheduled Balance were
originated by WFS or the Bank in ________ and not more than ____% of
the Contracts by Cut-Off Date Aggregate Scheduled Balance were
originated in a state other than California or Texas. All Contracts
originated in Arizona, Colorado, Florida, Georgia, Hawaii, Idaho,
Kansas, New Jersey, North Carolina, Oregon, Pennsylvania, South
Carolina, Tennessee, Utah, Virginia or Washington are Simple Interest
Contracts.
(xxvii) No Government Entity Obligors. Each Contract shall
have an Obligor that is not a local, state or federal governmental
entity.
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,
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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 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.
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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.
(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
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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 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,
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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
Certificate Balance, 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.
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
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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
Pass-Through 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 Certificate 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,
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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 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 E 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
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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 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 the
Cut-Off Date 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 the Cut-Off Date) of any
such Contract received by the Master Servicer after the Cut-Off Date 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 after the
Cut-Off Date 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
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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 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
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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, 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 Certificate 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. 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
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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. 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, 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 and Net Insurance
Proceeds 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. The Master Servicer shall cause the LDI
Policy to be maintained in respect of each 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 $4,000.
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 Policies. 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.
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(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.
(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,
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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
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
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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 the form of Exhibit F hereto (the
"Distribution Date Statement"), setting forth with respect to the next
succeeding Distribution Date:
(i) the Certificate Interest Distributable Amount and the
Note Interest Distributable Amount for such Distribution Date;
(ii) the Certificate Principal Distributable Amount and
the Note Principal Distributable Amount for such Distribution Date and
the portion thereof constituting the Accelerated Principal
Distributable Amount;
(iii) the Net Collections, the Note Percentage and the
Certificate 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,
Note Principal Carryover Shortfall, Certificate Interest Carryover
Shortfall and Certificate 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);
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(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 Balance of
Contracts so modified as a percentage of the Pool Balance for the most
recent Distribution Date;
(xv) the Certificate Deficiency Claim Amount, if any, for
such Distribution Date;
(xvi) the Certificate Policy Claim Amount, if any, for such
Distribution Date;
(xvii) 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;
(xviii) 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
(xix) 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:
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(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;
(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";
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(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, 1997, 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.
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
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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.
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(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
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
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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.
(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
(as such term is defined in Section 8-313(4) of the UCC)
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 Policies; Net Deposits.
(a) Subject to Section 5.03 and subsections (d) and (e) hereof,
the Master Servicer shall remit or credit all payments by the Obligors on the
Contracts, all payments on behalf of
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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 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 and the Certificates 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 Certificate Deficiency Claim Amount or 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 and the Certificates. 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) (i) with respect to any Certificate Deficiency
Claim Amount, to the Owner Trustee for deposit in the Certificate Distribution
Account and (ii) with respect to any Note Deficiency Claim Amount, 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, (i) the Owner Trustee shall make
a claim under the Certificate Policy for any Certificate Policy Claim Amount
for such Distribution Date and/or (ii) 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 Certificate Policy Claim Amount or 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 Certificate Policy Claim Amount or Note Policy
Claim Amount, as the case may be, to the Owner Trustee or the Indenture Trustee
for deposit in the Certificate Distribution Account or the Note Distribution
Account, as the case may be.
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(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.
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
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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:
(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, 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 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, 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 fourth to the holders of the
Class A-4 Notes until the principal amount of the Class A-4 Notes has
been reduced to zero;
(v) to the Note Distribution Account, if such
Distribution Date is a Note Final Distribution Date, the remaining
principal amount of the related Class of Notes from Net Collections
(after giving effect to the reduction in Net Collections described in
clauses (i) through (iv) above);
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(vi) to the Certificate Distribution Account, from Net
Collections (after giving effect to the reduction in Net Collections
described in clauses (i) through (v) above), the Certificate Interest
Distributable Amount;
(vii) to the Certificate Distribution Account, from Net
Collections (after giving effect to the reduction in Net Collections
described in clauses (i) through (vi) above), the Certificate
Principal Distributable Amount;
(viii) to the Certificate Distribution Account, if such
Distribution Date is the Certificate Final Distribution Date, from Net
Collections (after giving effect to the reduction in Net Collections
described in clauses (i) through (vii) above), the Certificate
Balance, as such balance has been reduced by payments thereon in
respect of such Distribution Date; and
(ix) to the Insurer, from Net Collections (after giving
effect to the reduction in Net Collections described in clauses (i)
through (viii) 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 any Distribution Date on which both (i) the Funded
Amount (after giving effect to all deposits to, and withdrawals from, the
Spread Account on such Distribution Date) equals or exceeds the Minimum Funded
Amount and (ii) the sum of the Funded Amount and the Overcollateralization
Amount equals or exceeds than the Specified Spread Account Balance, the Master
Servicer shall instruct the Indenture Trustee to distribute an amount in cash
equal to the lesser of (A) the amount by which the Funded Amount exceeds the
Minimum Funded Amount and (B) the amount by which the sum of the Funded Amount
and the Overcollateralization Amount exceeds the Specified Spread Account
Balance, first, to the Insurer, to the extent of any Unreimbursed Insurer
Amounts, second, to the Seller until the Seller has received an aggregate
amount equal to the Spread Account Initial Deposit and third, to the Seller and
the Company, in the proportions of 99% and 1%, respectively.
Notwithstanding that the Notes have been paid in full, the Indenture Trustee
shall continue to maintain the Collection Account hereunder until the
Certificate Balance is reduced to zero.
(c) To the extent that on any Distribution Date:
(i) 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; second, if such amounts are
insufficient, from amounts otherwise payable to Certificateholders in
respect of the Certificate Distributable Amount and
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third, 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); and
(ii) the amount on deposit in the Certificate Distribution
Account (after giving effect to any deposits thereto on such
Distribution Date) is less than the Certificate Distributable Amount,
Certificateholders shall be entitled to receive distributions in
respect of such deficiency, first, from amounts on deposit in the
Spread Account, to the extent that such amounts remain available after
giving effect to the immediately preceding paragraph, pursuant to a
Deficiency Notice and second, if such amounts are insufficient, from a
claim made under the Certificate Policy for the Certificate 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 and the Certificates.
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 or Distribution Date on which both (i)
the Funded Amount (after giving effect to all deposits to, and withdrawals
from, the Spread Account on such Distribution Date) equals or exceeds the
Minimum Funded Amount and (ii) the sum of the Funded Amount and the
Overcollateralization Amount equals or exceeds than the Specified Spread
Account Balance, the Master Servicer shall instruct the Indenture Trustee to
distribute an amount in cash equal to the lesser of (A) the amount by which the
Funded Amount exceeds the Minimum Funded Amount and (B) the amount by which the
sum of the Funded Amount and the Overcollateralization Amount exceeds the
Specified Spread Account Balance, first, to the Insurer, to the extent of any
Unreimbursed Insurer Amounts, second, to the Seller until the Seller has
received an amount equal to the Spread Account Initial Deposit and third, to
the Seller and the Company in the proportions of 99% and 1%, respectively.
Upon any such distribution to the Insurer, the Seller or the Company,
Securityholders will have no 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, (i) the Indenture Trustee shall
include with each distribution to each Noteholder of record as of the related
Record Date, and (ii) the Owner Trustee shall include with each distribution to
each Certificateholder 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 and the
Certificates);
(ii) the amount of such distribution allocable to interest
(stated separately for each Class of Notes and the Certificates);
(iii) the Note Percentage and the Certificate Percentage as
of the close of business on the last day of such Due Period;
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(iv) the Aggregate Scheduled Balance as of the close of
business on the last day of such Due Period;
(v) the amount of the Servicing Fee paid to the Master
Servicer with respect to the related Due Period;
(vi) 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;
(vii) 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
(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 of original principal amount of a
Note or original Certificate Balance, as the case may be.
(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 Owner
Trustee and the Indenture Trustee, as the case may be, shall mail to each
Person who at any time during such calendar year shall have been a Holder of a
Note or a Certificate, respectively, 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 or a Certificate
during a portion of such calendar year, for the applicable portion of such
year, for the purposes of such Noteholder's or Certificateholder's preparation
of federal income tax returns. In addition, the Master Servicer shall furnish
to the Owner Trustee and 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
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indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are 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
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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 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,
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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 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
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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.
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
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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 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
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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 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
Certificate Balance, or, so long as no default under either 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
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(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 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 Certificate Balance 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 Certificate Balance), 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 or the Certificateholders)
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. 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
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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, 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 $50,000,000 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 Certificate Balance (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
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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 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 and Certificate Owner, 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 Policies 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. In addition, for so long as the Insurer guarantees amounts owing
under the RIC and has not defaulted in the making of any payment required to be
made by it pursuant to such guaranty, the Insurer shall have the right to
initiate and control a proceeding against the obligor under the RIC but only to
the extent such proceeding relates to the amounts so guaranteed and no
settlement of any other proceeding or claim that would adversely affect the
Insurer's rights to recover such amounts shall be effected without the prior
written consent of the Insurer.
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ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts.
(a) On each Distribution Date as of which (i) the Outstanding
Amount of the Securities is less than 5% of the Outstanding Amount of the
Securities on the Closing Date and (ii) 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 Certificate Balance and all accrued but unpaid interest
(including any overdue interest) thereon. In addition, if the Master Servicer
or the Seller has outstanding senior debt and such debt is not rated
"investment grade" by ▇▇▇▇▇'▇ 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
9.02 of the Trust Agreement, 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
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the Notes to result from the deposits made in the Note Distribution
Account on such Distribution Date and on prior Distribution Dates);
(iii) to the Certificate Distribution Account, any portion
of the Certificate Interest Distributable Amount not otherwise
deposited into the Certificate Distribution Account on such
Distribution Date; and
(iv) to the Certificate Distribution Account, the
Certificate Balance (after giving effect to the reduction in the
Certificate Balance to result from the deposits made in the
Certificate Distribution Account on such Distribution Date).
(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 Certificate Final Distribution Date and (ii) an amount sufficient to pay
the Certificate Distributable Amount on the Certificate Final Distribution Date
has been deposited with the Indenture Trustee by the Insurer for the benefit of
the Certificateholders, then on the Certificate Final Distribution Date the
Certificates shall be deemed to be transferred by the Certificateholders to the
Insurer or its designee as purchaser thereof at the opening of business on the
Certificate 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 Certificate evidencing the entire Certificate Balance. Such
new Certificate shall have the same terms as the Certificates deemed
transferred by the Certificateholders. No service charge shall be made for the
issuance of such Certificate 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 or the Certificates and (iii) to change any provision
applicable for determining the Specified Spread Account Balance, the Minimum
Funded Amount, the Overcollateralization Amount 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 (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 or the Certificates to be qualified, reduced or withdrawn,
without giving any consideration to the effect of the guaranty under either
Policy of payments owing to Noteholders or to Certificateholders, 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 Certificate Balance, 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 or the Pass-Through Rate, (b) except as otherwise provided in
Section 10.01(a), the Specified Spread Account Balance, the Minimum Funded
Amount, the Overcollateralization Amount or the manner in which the Spread
Account is funded or (ii) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Balance, 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
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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 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
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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
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
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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
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 Ratings
Services, ▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇), ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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
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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 and 7.02, 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 Certificate Balance.
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.
Section 10.08. Insurer Default or Insolvency. If a default under
either 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. Notwithstanding anything herein to the
contrary, Section 2.07(a) of the Trust Agreement shall remain in full force and
effect.
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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 1997-C 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:
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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.]
▇▇-▇
▇▇
▇▇▇▇▇▇▇▇ ▇
LOCATION OF CONTRACT FILES
Western Financial Bank, WFS Financial Inc
F.S.B. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇ or ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
WFS Financial Inc
WFS Financial Inc ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
WFS Financial Inc
WFS Financial Inc ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
WFS Financial Inc
WFS Financial Inc E. 13817 ▇▇▇▇▇▇▇, Suite 5
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇-▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
WFS Financial Inc
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
SB-1
92
EXHIBIT A
[FORM OF CERTIFICATE POLICY]
A-1
93
EXHIBIT B
[FORM OF INSURANCE AGREEMENT]
B-1
94
EXHIBIT C
[FORM OF NOTE POLICY]
C-1
95
EXHIBIT D
[FORM OF RIC]
D-1
96
EXHIBIT E
[FORM OF SUBSERVICING AGREEMENT]
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
[FORM OF DISTRIBUTION DATE STATEMENT]
F-1