EXHIBIT 10.2
SALE AND SERVICING AGREEMENT
among
WFS FINANCIAL 2002-2 OWNER TRUST,
as Issuer,
WFS RECEIVABLES CORPORATION,
as Seller,
and
WFS FINANCIAL INC,
as Master Servicer
Dated as of May 1, 2002
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ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions..................................................... 2
Section 1.02. Usage of Terms.................................................. 23
Section 1.03. Section References.............................................. 24
Section 1.04. Calculations.................................................... 24
Section 1.05. Accounting Terms................................................ 24
ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts......................................... 25
ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller.................... 27
Section 3.02. Purchase of Certain Contracts................................... 33
Section 3.03. Custody of Contract Files....................................... 33
Section 3.04. Duties of Master Servicer as Custodian.......................... 34
Section 3.05. Instructions; Authority to Act.................................. 36
Section 3.06. Indemnification................................................. 36
Section 3.07. Effective Period and Termination................................ 36
Section 3.08. Nonpetition Covenant............................................ 37
Section 3.09. Collecting Title Documents Not Delivered at the Closing Date.... 37
Section 3.10. Optional Repurchase of Contracts by the Certificateholders...... 37
ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer....................................... 39
Section 4.02. Collection of Contract Payments................................. 42
Section 4.03. Realization upon Defaulted Contracts and Liquidated Contracts... 43
Section 4.04. Insurance....................................................... 43
Section 4.05. Maintenance of Security Interests in Financed Vehicles.......... 44
Section 4.06. Covenants, Representations and Warranties of the Master Servicer 44
Section 4.07. Repurchase of Contracts upon Breach of Covenant................. 46
Section 4.08. Servicing Compensation.......................................... 46
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Section 4.09. Reporting by the Master Servicer................................ 46
Section 4.10. Annual Statement as to Compliance............................... 49
Section 4.11. Annual Independent Certified Public Accountants' Report......... 49
Section 4.12. Access to Certain Documentation and Information Regarding
Contracts....................................................... 50
Section 4.13. Fidelity Bond................................................... 50
Section 4.14. Indemnification; Third Party Claims............................. 50
ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts................................. 51
Section 5.02. Collections; Realization Upon Note Policy; Net Deposits......... 53
Section 5.03. Application of Collections...................................... 54
Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts........ 54
Section 5.05. Distributions................................................... 55
Section 5.06. Spread Account.................................................. 56
Section 5.07. Statements to Securityholders................................... 57
ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence............................................. 59
Section 6.02. Liability of Seller; Indemnities................................ 59
Section 6.03. Merger or Consolidation of, or Assumption of the Obligations
of, the Seller; Certain Limitations ............................ 60
Section 6.04. Limitation on Liability of Seller and Others.................... 61
Section 6.05. Seller Not to Resign............................................ 62
Section 6.06. Seller May Own Securities....................................... 62
ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities........................ 63
Section 7.02. Corporate Existence; Status as Master Servicer; Merger........... 64
Section 7.03. Performance of Obligations....................................... 64
Section 7.04. Master Servicer Not to Resign; Assignment........................ 64
Section 7.05. Limitation on Liability of Master Servicer and Others............ 65
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ARTICLE EIGHT
DEFAULT
Section 8.01. Servicer Default................................................. 67
Section 8.02. Indenture Trustee to Act; Appointment of Successor............... 68
Section 8.03. Repayment of Advances............................................ 69
Section 8.04. Notification to Noteholders and Certificateholders............... 69
Section 8.05. Waiver of Past Defaults.......................................... 69
Section 8.06. Insurer Direction of Insolvency Proceedings...................... 69
ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts............................... 71
Section 9.02. Transfer to the Insurer.......................................... 72
ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment....................................................... 74
Section 10.02. Protection of Title to Trust.................................... 75
Section 10.03. Governing Law................................................... 77
Section 10.04. Notices......................................................... 77
Section 10.05. Severability of Provisions...................................... 77
Section 10.06. Assignment...................................................... 77
Section 10.07. Third Party Beneficiaries....................................... 77
Section 10.08. Insurer Default or Insolvency................................... 78
Section 10.09. Counterparts.................................................... 78
Section 10.10. Headings........................................................ 78
Section 10.11. Assignment by Issuer............................................ 78
Section 10.12. Limitation of Liability of Owner Trustee........................ 78
Section 10.13. Effect of Policy Expiration Date................................ 78
Section 10.14. Limitation on Recourse Against WFSRC............................ 79
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SCHEDULES
Schedule A Schedule of Contracts....................................... SA-1
Schedule B Location of Contract Files.................................. SB-1
Schedule C Net Charge-Off Percentage Triggers.......................... SC-1
EXHIBITS
Exhibit A Form of Insurance Agreement................................. A-1
Exhibit B Form of Note Policy......................................... B-1
Exhibit C Form of RIC................................................. C-1
Exhibit D Form of Subservicing Agreement.............................. D-1
Exhibit E Form of Distribution Date Statement......................... E-1
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This SALE AND SERVICING AGREEMENT, dated as of May 1, 2002, is among
WFS Financial 2002-2 Owner Trust, as issuer (the "Issuer"), WFS Receivables
Corporation, as seller (the "Seller"), and WFS Financial Inc ("WFS"), as master
servicer (the "Master Servicer").
WHEREAS, the Issuer desires to purchase from the Seller a portfolio of
receivables arising in connection with automobile retail installment sales
contracts and installment loans (collectively, the "Contracts") primarily
originated by motor vehicle dealers and purchased by WFS, which Contracts were
subsequently sold by WFS to the Seller;
WHEREAS, the Seller is willing to sell the Contracts to the Issuer
pursuant to the terms hereof; and
WHEREAS, the Master Servicer is willing to service the Contracts
pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions.
(a) Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
"Advance" means the aggregate amount, as of a Master Servicer Report
Date, that the Master Servicer is required to advance in respect of the
Contracts pursuant to Section 5.04(a).
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Net Liquidation Losses" means, with respect to any Due
Period, the aggregate of the amounts by which (i) the principal amount of each
Contract that became a Liquidated 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 Principal Balance" means, with respect to any Distribution
Date and the Outstanding Contracts, the aggregate of the Principal Balances of
such Contracts as of the end of the Due Period immediately preceding such
Distribution Date.
"Aggregate Repurchase Amount" means, with respect to the purchase of
Contracts pursuant to Section 9.01(a), an amount equal to the outstanding
principal amount of the Notes and all unpaid interest (including any overdue
interest) thereon that has accrued through the related Interest Period.
"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 Issuer (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 Issuer), and (ii) the original instrument granting a security interest in
such Contract and other documents made by the Issuer 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
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security interest in the related Financed Vehicle arises to permit the Insurer,
as a secured party, to exercise, upon default, all rights granted by the Obligor
under such Contract and such other documents and all rights available under
applicable law to the Obligee under such Contract and which, in the case of
either clause (i) or (ii) above, may, to the extent permitted by the laws of
such jurisdiction, be a blanket instrument of assignment covering other
Contracts as well and which may also, to the extent permitted by the laws of the
jurisdiction governing such Contract, be an instrument of assignment running
directly from the related Seller to the Issuer and the Insurer.
"Bank" means Western Financial Bank, and its successors.
"Base Price" means, with respect to any Repurchase Distribution Date,
the lesser of (i) the sum of the Principal Balances of the Contracts purchased
pursuant to Section 3.10 on such Repurchase Distribution Date or (ii) the sum of
the outstanding principal amount on the Notes and all unpaid interest thereon
that has accrued through the related Interest Period on such Repurchase
Distribution Date.
"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, Newark, 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 Distributable Amount" means the aggregate amount of the
Excess Spread Amount distributed to Certificateholders pursuant to Section
5.06(b).
"Certificate Distribution Account" shall have the meaning specified in
the Trust Agreement.
"Certificate Final Principal Distribution Date" means the February 2010
Distribution Date.
"Certificateholders" shall have the meaning specified in the Trust
Agreement.
"Certificate Percentage Interest" means, with respect to a Certificate,
the percentage specified on such Certificate as the Certificate Percentage
Interest, which percentage represents the beneficial interest of such
Certificate in the Issuer. The initial Certificate Percentage Interest held by
the Seller shall be 100%.
"Certificate Register" shall have the meaning specified in the Trust
Agreement.
"Certificates" means the Trust Certificates (as such term is defined in
the Trust Agreement).
"Chapter 13 Bankruptcy Proceeding" means a bankruptcy proceeding under
Chapter 13 of Title 11 of the United States Code, as amended.
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"Chapter 13 Contract" means a Contract with respect to which the
related Obligor is subject to a Chapter 13 Bankruptcy Proceeding and is in
compliance with a Chapter 13 Plan of Reorganization.
"Chapter 13 Plan of Reorganization" means a plan of reorganization (as
such plan may be modified with court approval) that has been approved by a court
with jurisdiction over an Obligor under a Contract in a Chapter 13 Bankruptcy
Proceeding.
"Charge-Off Date" means, with respect to a Repossessed Vehicle
Contract, the earlier of (i) the date the related Repossessed Vehicle is sold
and (ii) the date sixty days (or longer if required by applicable law) from the
date the related Repossessed Vehicle is repossessed.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A-1 Final Scheduled Distribution Date" means the May 2003
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 1.938% per annum.
"Class A-2 Final Scheduled Distribution Date" means the May 2005
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 2.82% per annum.
"Class A-3 Final Scheduled Distribution Date" means the February 2007
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 3.81% per annum.
"Class A-4 Final Scheduled Distribution Date" means the February 2010
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 4.50% per annum; provided, however, for any
Distribution Date subsequent to a Distribution Date on which the Aggregate
Principal Balance of the Contracts is less than or equal to $175,000,000, the
Class A-4 Rate means 5.50% per annum.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
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"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 May 30, 2002.
"Collateral Agent" means Deutsche Bank Trust Company Americas (formerly
known as 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.
"Commercial Paper" means 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
"Aaa" from Moody's and "AAA" from Standard & Poor's or have a short-term
unsecured debt rating of at least "Prime-1" from Moody's and "A-1+" from
Standard & Poor's.
"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 Issuer pursuant to this Agreement.
"Contract Documents" means, with respect to each Contract, (i) the
Contract; (ii) either the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof, together with evidence of perfection
of the security interest in the related Financed Vehicle granted by such
Contract, as determined by the Master Servicer to be permitted or required to
perfect such security interest under the laws of the applicable jurisdiction
(or, in the case of a Contract listed on the Schedule of Contracts, written
evidence from the Dealer selling such Financed Vehicle that the Title Document
for such Financed Vehicle showing the Seller as first lienholder has been
applied for); (iii) the related Assignments; (iv) any agreement(s) modifying the
Contract (including, without limitation, any extension agreement(s)); and (v)
documents evidencing the existence of physical damage insurance covering such
Financed Vehicle.
"Contract Files" means the Contract Documents and all other papers and
computerized records customarily kept by the Master Servicer and all
Subservicers, as the case may be, in servicing contracts and loans comparable to
the Contracts.
"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.
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"Contract Rate" means, with respect to a Contract, the interest rate
borne by such Contract.
"Contracts" means the Contracts sold to the Issuer by the Seller.
"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 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust
& Agency Services -- Structured Finance Services; 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 May 30, 2002.
"Cut-Off Date Aggregate Principal Balance" means $1,750,000,000, the
aggregate of the Principal Balances of the Contracts as of the Cut-Off Date.
"Dealer" means the seller of a Financed Vehicle, which seller
originated and assigned the related Contract, including the Bank.
"Defaulted Contract" means, with respect to any Due Period, a Contract
(i) which is, at the end of such Due Period, delinquent in the amount of at
least two monthly payments or (ii) with respect to which the related Financed
Vehicle has been repossessed or repossession efforts have been commenced.
"Deficiency Notice" means, with respect to any Distribution Date, the
notice delivered pursuant to Section 5.02(c) by the Master Servicer to the
Indenture Trustee, with a copy to the Insurer and the Owner Trustee.
"Delinquency Percentage" means, with respect to any three calendar
month period, the average of the percentages of delinquent Contracts for each
month in such period. For each month the percentage of delinquent Contracts
shall be the percentage equivalent of a fraction, the numerator of which is the
sum of (i) the aggregate Principal Balance of all Outstanding Contracts 60 days
or more delinquent (after taking into account permitted extensions), plus (ii)
the aggregate Principal 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 Principal Balance of all outstanding
Contracts, in each case, on the last day of such calendar month.
"Delinquent Contract" means any Contract that is 60 days or more
delinquent.
"Delivery" means, when used with respect to Trust Account Property:
(i) with respect to certificated securities, bankers'
acceptances, commercial paper, negotiable certificates of deposit and
any other obligations which evidence a right to the payment of money
and is not itself a security agreement or lease and is of a type which
is in ordinary course of business transferred by delivery with
necessary endorsement or assignment (collectively, "Physical
Property"): (A) the Indenture Trustee or the
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Owner Trustee, as the case may be, or its Financial Intermediary
acquires possession of the Physical Property, and evidence that any
such Physical Property that is in registerable form has been registered
in the name of the Trustee, its Financial Intermediary, its custodian
or its nominee; (B) the Financial Intermediary, not a clearing
corporation, sends the Indenture Trustee or the Owner Trustee, as the
case may be, confirmation of the transfer and also by book entry or
otherwise identifies as belonging to the Indenture Trustee or the Owner
Trustee, as the case may be, the Physical Property in the Financial
Intermediary's possession; or (C) with respect to a clearing
corporation, appropriate entries to the account of the Indenture
Trustee or the Owner Trustee, as the case may be, or a Person
designated by him or her and, if certificated, it is both, in the
custody of the clearing corporation or another clearing corporation, a
custodian bank or a nominee of any of them and, in bearer form or
endorsed in blank by the appropriate person or registered in the name
of the clearing corporation, custodian bank, or a nominee of any of
them;
(ii) with respect to any Trust Account Property that is a
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations, the following procedures, all in
accordance with applicable law, including applicable Federal
regulations and Articles 8 and 9 of the UCC: (A) book-entry
registration of such property to an appropriate book-entry account
maintained with a Federal Reserve Bank by the Indenture Trustee or the
Owner Trustee, as the case may be, of a deposit advice or other written
confirmation of such book-entry registration, (B) the making by any
such custodian of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to
federal book-entry regulations as belonging to the Indenture Trustee or
the Owner Trustee, as the case may be, and indicating that such
custodian holds such Trust Account Property solely as agent for the
Indenture Trustee or the Owner Trustee, as the case may be, and the
making by the Indenture Trustee or the Owner Trustee, as the case may
be, of entries in its books and records establishing that it holds such
Trust Account Property solely as trustee pursuant to Section 5.01, and
(C) such additional or alternative procedures as may hereafter become
necessary to effect complete transfer of ownership of any such Trust
Account Property to the Indenture Trustee or the Owner Trustee, as the
case may be, consistent with changes in applicable law or regulations
or the interpretation thereof; and
(iii) with respect to any Trust Account Property that is
an uncertificated security under Article 8 of the UCC and that is not
governed by clause (ii) above, registration of the transfer to, and
ownership of such Trust Account Property by, the Indenture Trustee or
the Owner Trustee, as the case may be, its custodian or its nominee by
the issuer of such Trust Account Property.
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement, and its successors.
"Distribution Date" means each February 20, May 20, August 20 and
November 20 or, if any such date shall not be a Business Day, the next
succeeding Business Day, commencing August 20, 2002.
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"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 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, 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 "Prime-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 "Prime-1"
or (B) that otherwise will not result in the qualification, reduction or
withdrawal by any Rating Agency of its then-applicable rating on any Class of
Notes (without giving effect to the guaranty under the Note Policy of payments
owing to the Noteholders). If any Eligible Account falls below the ratings
specified in (i) or (ii) above, all monies in such Eligible Account will be
moved within 15 days to an account meeting the requirements of an Eligible
Account.
"Eligible Investments" means any one or more of the following
obligations or securities, all of which shall be denominated in United
States dollars:
(i) direct obligations of, and obligations fully
guaranteed as to timely payment of principal and interest by, the
United States or any agency or instrumentality of the United States the
obligations of which are backed by the full faith and credit of the
United States;
(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
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rated at least "A-1+" by Standard & Poor's and "Prime-1" by Moody's or
(B) the investment is guaranteed by an entity the long-term, unsecured
debt obligations of which have been rated "AAA" by Standard & Poor's
and at least "Aa2" by Moody's or otherwise will not result in the
qualification, reduction or withdrawal by Moody's or Standard & Poor's
of its then-applicable rating on any Class of Notes (without giving
effect to the guaranty under the Note Policy of payments owing to the
Noteholders); if the investments in this paragraph (iii) fall below the
specified ratings, the invested monies shall be moved to Eligible
Investments as soon as the investment matures; however, no new monies
may be invested in any instrument that is not currently an Eligible
Investment;
(iv) repurchase obligations with respect to (A) any
security described in clause (i) above or (B) any other security issued
or guaranteed as to timely payment of principal and interest by an
agency or instrumentality of the United States, in either case entered
into with a depository institution or trust company (including the
Indenture Trustee or the Owner Trustee), acting as principal and the
counterparty, the long-term unsecured debt obligations of which are
rated "AAA" by Standard & Poor's and at least "Aa2" by Moody's and
commercial paper or other short-term debt obligations are rated at
least "A-1+" by Standard & Poor's and "Prime-1" by Moody's;
(v) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United
States or any state thereof which at the time of such investment or
contractual commitment providing for such investment have long-term,
unsecured debt obligations rated "AAA" by Standard & Poor's and at
least "Aa2" by Moody's or better and shall have commercial paper or
other short-term debt obligations rated at least "A-1+" by Standard &
Poor's and "Prime-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 Issuer to exceed 10% of the sum of the Aggregate 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 "A-1" from Moody's and "AAA" 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 (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
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(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.
"Estimated Sale Value" means, with respect to a Repossessed Vehicle,
the estimated sale value determined in good faith by the Master Servicer as of
the related Charge-Off Date.
"Excess Amounts" shall have the meaning specified in Section 5.05(b).
"Excess Spread Amount" means, with respect to a Distribution Date or
Calculation Day, the excess of the Spread Account Balance over the Specified
Spread Account Balance (after giving effect to all deposits to, and withdrawals
(other than withdrawals pursuant to Section 5.06(b)) from the Spread Account on
such Distribution Date or Calculation Day, as the case may be).
"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 Scheduled Distribution Date" means the Class A-1 Final Scheduled
Distribution Date, the Class A-2 Final Scheduled Distribution Date, the Class
A-3 Final Scheduled Distribution Date or the Class A-4 Final Scheduled
Distribution Date, as the case may be.
"Financed Vehicle" means, as to any Contract, an automobile or
light-duty truck, together with all accessions thereto, securing the related
Obligor's indebtedness under such Contract.
"Financial Intermediary" means a bank, broker, clearing corporation or
the Person (or the nominee of any of them) that in the ordinary course of its
business maintains security accounts for its customers and is acting in that
capacity.
"Fiscal Agent" shall have the meaning set forth in the Note Policy.
"Full Prepayment" means any of the following: (i) payment to the Master
Servicer of 100% of the outstanding principal balance of a Contract, exclusive
of any Contract referred to in clause (ii), (iii) or (iv) of the definition of
the term "Liquidated Contract", together with all accrued and unpaid interest
thereon to the date of such payment, or (ii) payment by the Seller or the Master
Servicer, as the case may be, of the purchase price of a Contract in connection
with the purchase of a Contract pursuant to Section 3.02 or 4.07, or payment by
the Seller or the Certificateholder, as the case may be, of the purchase price
of a Contract in connection with the purchase of all Contracts pursuant to
Section 9.01 or 3.10.
"Gross Charge-Off Amount" means, with respect to any Due Period, the
sum of (i) the excess of the outstanding Principal Balances of all Repossessed
Vehicle Contracts as to which the related Charge-Off Dates have occurred during
the related Due Period over the aggregate
10
Estimated Sale Values of the related Repossessed Vehicles, (ii) the excess of
the aggregate Estimated Sale Values of Repossessed Vehicles sold during the
related Due Period over the net sales proceeds of such Repossessed Vehicles,
(iii) the outstanding Principal Balances of Contracts, other than Repossessed
Vehicle Contracts and Chapter 13 Contracts, that have become 120 days past due
during the related Due Period, (iv) the amount by which the outstanding
Principal Balances of Contracts that have become Chapter 13 Contracts during the
related Due Period have been reduced by the related Chapter 13 Plans of
Reorganization and (v) the outstanding Principal Balances, as such balances have
been previously reduced by the related Plans of Reorganizations, of Chapter 13
Contracts that are no longer in compliance with their Plans of Reorganization
and are more than 120 days past due as of the last day of the related Due
Period; provided that, with respect to any Contract, in no event shall the
aggregate amount included in the Gross Charge-Off Amounts for all Due Periods
exceed the outstanding Principal Balance of such Contract as of the date it
becomes a Defaulted Contract.
"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.
"Indenture" means the Indenture, dated as of May 1, 2002, between the
Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture and, initially, will be Deutsche Bank Trust Company Americas (formerly
known as Bankers Trust Company).
"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 the
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;
provided that a person who is an Independent director or Independent officer of
the Seller may be an Independent director or Independent officer of an Affiliate
of the Seller which is a special purpose bankruptcy remote entity.
"Insolvency Event" means, with respect to a specified Person, (i) the
entry of a decree or order for relief by a court or regulatory authority having
jurisdiction in respect of such Person in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; (ii) the commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or any other present
or future federal or state bankruptcy, insolvency or similar law and such case
is not dismissed within 60 days; or (iii) the commencement by such Person of a
voluntary case under the federal bankruptcy laws, as now or hereinafter
11
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 and the Indenture Trustee, the form of which is
attached hereto as Exhibit A.
"Insurance Agreement Obligations" means, as of any date, the aggregate
of amounts owing to the Insurer under the Insurance Agreement as of such date,
other than amounts representing payments made under the Note Policy for which
the Insurer has not yet been reimbursed.
"Insurance Policy" means, with respect to a Financed Vehicle, the
policies of comprehensive and collision insurance and the LDI Policy.
"Insurance Proceeds" means proceeds paid pursuant to any Insurance
Policy and amounts (exclusive of rebated premiums) paid by any insurer under any
other insurance policy related to a Financed Vehicle, a Contract or an Obligor.
"Insurer" means Financial Security Assurance Inc., and its successors.
"Insurer Insolvency" means (i) the entry of a decree or order for
relief by a court or regulatory authority having jurisdiction in respect of the
Insurer in an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or any other present or future federal or state bankruptcy,
insolvency, rehabilitation or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Insurer or of any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Insurer and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days, or
(ii) the commencement by the Insurer of a voluntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future
federal or state bankruptcy, insolvency, rehabilitation or similar law, or the
consent by the Insurer to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Insurer or of any substantial part of its property or the making by the
Insurer of an assignment for the benefit of creditors or the failure by the
Insurer generally to pay its debts as such debts become due or the taking of
corporate action by the Insurer in furtherance of any of the foregoing.
"Interest Period" means, with respect to any Distribution Date and (i)
the Class A-1 Notes, 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, May 30, 2002) to, but excluding, such
Distribution Date and (ii) the Class A-2 Notes, the Class A-3 Notes
12
and the Class A-4 Notes, the period from, and including, the 20th day of the
month in which the Distribution Date immediately preceding such Distribution
Date occurs (or in the case of the first Distribution Date from and including
May 30, 2002) to, but excluding, the 20th day of the month of such Distribution
Date.
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate, the Class A-3 Interest Rate or the Class A-4 Interest Rate, as
applicable.
"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 to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.01(b).
"Issuer" means the WFS Financial 2002-2 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. The Principal Balance of a
Liquidated Contract will be deemed to be zero.
"Liquidation Expenses" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Master Servicer in connection with the realization of the full amounts due under
any Contract (including the attempted liquidation of a Contract which is brought
current and is no longer in default during such attempted liquidation) and the
sale of any property acquired in respect thereof which are not recoverable under
any Insurance Policy.
"Liquidation Proceeds" means amounts received by the Master Servicer
(before reimbursement for Liquidation Expenses) in connection with the
realization of the amounts due and to become due under any Defaulted Contract
and the sale of any property acquired in respect thereof.
"Master Servicer" means WFS in its capacity as the master servicer of
the Contracts under Section 4.01, and, in each case upon succession in
accordance herewith, each successor servicer in the same capacity pursuant to
Section 4.01 and each successor master servicer pursuant to Section 8.02.
"Master Servicer Report Date" means, with respect to any Distribution
Date, the fifth Business Day prior to such Distribution Date.
13
"Maturity Date" means, with respect to any Contract, the date on which
the last scheduled payment of such Contract shall be due and payable (after
giving effect to all Prepayments received prior to the date of determination) as
such date may be extended pursuant to Section 4.02.
"Monthly P&I" means, with respect to any Contract, the amount of each
monthly installment of principal and interest payable to the Obligee of such
Contract in accordance with the terms thereof, exclusive of any charges
allocable to the financing of any insurance premium and charges which represent
late payment charges or extension fees.
"Moody's" means Xxxxx'x Investors Service and its successors.
"Net Charge-Off Percentage" means, with respect to any Due Period, the
percentage equivalent of a fraction, (a) the numerator of which is equal to the
excess of the sum of the Gross Charge-Off Amounts for such Due Period and all
prior Due Periods over the sum of Recoveries for such Due Period and all prior
Due Periods and (b) the denominator of which is equal to the Cut-Off Date
Aggregate Principal Balance.
"Net Charge-Off Percentage Trigger" means, with respect to any
Calculation Day, the percentage set forth in Schedule C.
"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) any late payments of interest retained by the
Master Servicer as reimbursement for Advances pursuant to Section 5.04 and (B)
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); and (iv) 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.
"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
14
recoverable by the Master Servicer from late payments, Insurance Proceeds or
Liquidation Proceeds.
"Note" has the meaning set forth in the Indenture.
"Note Balance" means with respect to any Distribution Date, the
aggregate outstanding principal amount of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, and Class A-4 Notes, in each case as of the immediately
preceding Distribution Date (after giving effect to any distributions of
principal made on such preceding Distribution Date). Notwithstanding the
foregoing, any payments of the Repurchase Premium shall not reduce the Note
Balance.
"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 Scheduled Distribution Date" means the Class A-1 Final
Scheduled Distribution Date, the Class A-2 Final Scheduled Distribution Date,
the Class A-3 Final Scheduled Distribution Date and the Class A-4 Final
Scheduled 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 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 May 30, 2002) and (ii) Class A-2 Notes, Class A-3 Notes and Class A-4
Notes shall be computed on the basis of a 360-day year consisting of twelve
30-day months.
15
"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 B 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
for such Distribution Date 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 the related Distribution Date.
"Note Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Note Quarterly Principal Distributable Amount
for such Distribution Date and the Note Principal Carryover Shortfall for the
immediately preceding Distribution Date; provided, however, that the Note
Principal Distributable Amount with respect to a Class of Notes shall not exceed
the outstanding principal amount of such Class of Notes; -provided, further,
that the Note Principal Distributable Amount on each Note Final Scheduled
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, the sum of all 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 amount by which the Aggregate Principal Balance as of
the beginning of the related Due Period (or the Cut-Off Date Aggregate Principal
Balance in the case of the first Distribution Date) exceeds the Aggregate
Principal Balance at the end of such Due Period.
"Note Register" shall have the meaning specified in the Indenture.
"Obligee" means the Person to whom an Obligor is indebted under a
Contract.
16
"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.
"Optional Repurchase" means the repurchase of Contracts by the
Certificateholders pursuant to Section 3.10.
"Optional Repurchase Payment" means, with respect to the repurchase by
the Seller of Contracts pursuant to Section 3.10, an amount equal to the sum of
accrued and unpaid interest on the Contracts, the Base Price and the Repurchase
Premium; provided, however, on any Repurchase Distribution Date on which the
Aggregate Principal Balance is less than $350,000,000, the Optional Repurchase
Payment will equal the greater of (i) an amount equal to the sum of accrued but
unpaid interest on such Contracts, the Base Price and the Repurchase Premium and
(ii) an amount equal to the sum of the outstanding principal on the Notes and
all unpaid interest thereon that has accrued through the related Interest
Period.
"Original Class A-1 Note Balance" means $325,000,000.
"Original Class A-2 Note Balance" means $462,000,000.
"Original Class A-3 Note Balance" means $575,000,000.
"Original Class A-4 Note Balance" means $388,000,000.
"Original Pool Balance" means $1,750,000,000.
"Outstanding" means, with respect
(i) 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, 3.10, 4.07 or 9.01; and
(ii) to the 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:
17
(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 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
prior to the Policy Expiration Date, 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.
"Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, as the case may be, Outstanding at the date of
determination.
"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 and, initially, will be Chase Manhattan Bank USA,
National Association.
"Owner Trustee Corporate Trust Office" shall have the meaning specified
in the Trust Agreement.
"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".
18
"Policy Expiration Date" means the date on which the Notes have been
paid in full and all outstanding Reimbursement Obligations and other amounts due
to the Insurer have been paid in full and the Term Of this Policy (as defined in
the Note Policy) has expired.
"Pool Balance" as of the time of determination means the Aggregate
Principal Balance, exclusive of the Principal 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 Balance" means, with respect to a Contract that is a (i)
Rule of 78's Contract, the amount set forth as the Principal Balance of such
Contract on the Schedule of Contracts, such amount being the total of all
Monthly P&I received on or after May 30, 2002 less any unearned interest as of
the Due Date for such Contract immediately preceding May 30, 2002, computed in
accordance with the Rule of 78's, less all amounts received on or in respect of
such Contract on or after May 30, 2002 that are allocable to principal and (ii)
Simple Interest Contract, the actual principal balance under the terms thereof.
"Proprietary Fund" means money market funds having a rating from each
Rating Agency in the highest investment category granted by each Rating Agency,
including funds for which the Indenture Trustee or the Owner Trustee or any of
their respective Affiliates is investment manager or advisor.
"Rating Agency" means Moody's and Standard & Poor's.
"Record Date" means, with respect to a Class of Notes or the
Certificates and any Distribution Date, the Business Day immediately preceding
such Distribution Date or, in the case of the Notes, in the event that
Definitive Notes are issued, the 15th day of the month preceding the month in
which such Distribution Date occurs.
"Recoveries" means, with respect to any Due Period, the sum of (i) the
excess of actual sales proceeds for Repossessed Vehicles sold during such Due
Period over the sum of (a) the Estimated Sales Values of such Repossessed
Vehicles and (b) any amounts required by law to be remitted to the related
Obligor and (ii) any insurance proceeds and other amounts received in that Due
Period from the related Obligors or otherwise in connection with Repossessed
Vehicle Contracts, Chapter 13 Contracts and Contracts that have become 120 days
past due.
"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.
"Related Contracts" means, with respect to a particular Seller, the
Contracts sold to the Issuer by such Seller.
19
"Repossessed Vehicle" means the Financed Vehicle under a Repossessed
Vehicle Contract.
"Repossessed Vehicle Contract" means a Defaulted Contract for which the
related Financed Vehicle has been repossessed by the Master Servicer.
"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.
"Repurchase Distribution Date" means any Distribution Date on which
Contracts are purchased pursuant to Section 3.10.
"Repurchase Premium" means an amount equal to:
(i) on any Distribution Date on or prior to the May 2003
Distribution Date, the product of the Base Price and 15%;
(ii) on a Distribution Date from, but excluding, the May
2003 Distribution Date to, and including, the May 2004 Distribution
Date, the product of the Base Price and 10%;
(iii) on a Distribution Date from, but excluding, the May
2004 Distribution Date to, and including, the May 2005 Distribution
Date Distribution Date, the product of the Base Price and 7%; and
(iv) on a Distribution Date from, but excluding, the May
2005 Distribution Date to, and including, the February 2010
Distribution Date, the product of the Base Price and 4%.
Notwithstanding the foregoing, the Repurchase Premium shall equal zero
if the Aggregate Principal Balance of the Contracts is less than or equal to
$175,000,000.
"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.
"RIC" means the reinvestment contract provided by the Bank and WFAL2
or, with the prior written consent of the Insurer, a subsidiary thereof,
substantially in the form of Exhibit C hereto, in consideration of the right to
direct the investment of the funds on deposit in all Trust Accounts.
20
"RIC Reinvestment Earnings" means, with respect to any Distribution
Date, the related Due Period and the Contracts that were Outstanding at the
beginning of such Due Period, the amount by which the sum of the Note Quarterly
Interest Distributable Amount for such Distribution Date exceeds the sum of (i)
the aggregate amount of interest on the Contracts (adjusted with respect to each
Contract to the Class A-4 Rate and exclusive of such collections that have been
paid to the Master Servicer in reimbursement of a previous Advance) that is part
of Net Collections for such Distribution Date and (ii) the amount of the Advance
as to interest for such Distribution Date (assuming for this purpose that an
Advance was made in respect of each delinquent Contract).
"Rule of 78's Contract" means a Contract as to which payments
thereunder are applied on the basis of the Rule of 78's.
"Schedule of Contracts" means the list or lists of Contracts attached
as Schedule A to this Agreement, which Contracts are being transferred to the
Owner Trustee as part of the Trust Estate, which list or lists shall set forth
the following information with respect to each such Contract in numbered
columns:
Information Column Number
----------- -------------
Contract Number ("ACCT NBR").......................................... 2
Date of Origination ("ORG DT")........................................ 9
Maturity Date ("MAT DT").............................................. 15
Monthly P&I ("P&I")................................................... 10
Original Principal Balance ("ORIG AMT")............................... 16 Top
Principal Balance ("PRIN BAL")........................................ 16 Bottom
Discount Rate ("APR")................................................. 7
"Securities" means the Notes and the Certificates.
"Securityholders" means the Holders of the Notes and the Certificates.
"Seller" means WFSRC, in its capacity as the Seller of 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 an amount equal to, for each month in such Due Period, the product
of the Servicing Fee Percent and the Principal 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.
"Servicing Fee Percent" means one-twelfth of 1.25% per annum.
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing
21
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, 4.0% of the Aggregate Principal Balance on
such Calculation Day, except that if on any Calculation Day (i) the Net
Charge-Off Percentage for the related Calculation Day exceeds the Net Charge-Off
Percentage Trigger or (ii) the Delinquency Percentage for the three calendar
month period ending on such Calculation Day exceeds 2.5%, then the Specified
Spread Account Balance shall equal 9.0% of the Aggregate Principal Balance on
such Calculation Day (but only for so long as such Net Charge-Off Percentage or
Delinquency Percentage thresholds continue to be exceeded on any subsequent
Calculation Day). Notwithstanding the foregoing, in no event shall the Specified
Spread Account Balance be greater than $157,500,000 or less than $31,500,000;
provided, however, the Specified Spread Account Balance shall not be greater
than the Outstanding Amount of the Securities if such amount is less
$31,500,000.
"Spread Account" means the account established and maintained as such
pursuant to Section 5.01.
"Spread Account Balance" means the amount on deposit in the Spread
Account.
"Spread Account Initial Deposit" means $35,000,000, 100% of which will
be cash.
"Standard & Poor's" means Standard & Poor's, a Division of The
XxXxxx-Xxxx Companies, Inc., and its successors in interest.
"Statistical Calculation Date" means May 11, 2002.
"Statistical Calculation Date Aggregate Principal Balance" means the
aggregate Principal Balances of the Contracts as of the Statistical Calculation
Date.
"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 D hereto.
"Third Party Lender" means an independent finance company which has
originated or acquired one or more Contracts and assigned such Contract(s) to
WFS.
"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.
22
"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) and all proceeds of the foregoing.
"Trust Accounts" shall have the meaning specified in Section 5.01(a).
"Trust Agreement" means the Trust Agreement, dated May 17, 2002, as
amended and restated as of May 30, 2002, among the Depositor, 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 Note Policy 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.
"WFAL2" means WFS Financial Auto Loans 2, Inc., a wholly owned
subsidiary of WFS, and its successors and assigns.
"WFS" means WFS Financial Inc, a majority-owned operating subsidiary of
the Bank, and its successors and assigns.
"WFSRC" means WFS Receivables Corporation, a wholly-owned subsidiary of
WFS, and its successors and assigns.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Indenture.
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."
23
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 the actual number of days elapsed since the immediately
preceding Distribution Date or the Closing Date, in the case of the first
Distribution Date (or, in the case of the Class A-2 Notes, Class A-3 and Class
A-4 Notes, on the basis of a 360-day year and twelve 30-day months) 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 Principal Balances thereof,
and collections of interest on Simple Interest Contracts will be calculated in
accordance with the terms thereof.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
24
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 the Certificates and $1,750,000,000 aggregate principal balance
of Notes, the Seller hereby grants, transfers, assigns and otherwise conveys to
the Issuer, without recourse (subject to the obligations herein), all of its
right, title and interest (exclusive of 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 received on or after
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 received prior to the Cut-Off
Date) and any and all security interests in the Financed Vehicles; the Contract
Documents relating to the Contracts; 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 __________ is retained by the Seller.
(b) The Bank has caused the filing of UCC-1 financing statements,
naming the Bank as debtor and 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 caused the filing of UCC-1 financing statements naming WFS as debtor and
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
caused the filing of UCC-1 financing statements, naming the Seller as debtor and
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 caused the filing of UCC-1 financing statements, naming the
Seller as debtor and the Trust as secured party and describing the Contracts
being sold by it to the Trust as collateral, with the Office of the Secretary of
State of the State of California. The Trust has caused the filing of UCC-1
financing statements, naming the Trust as debtor and the Indenture Trustee, on
behalf of the Noteholders, as secured party and describing the Contracts as
collateral, with the office of the Secretary of State of the State of Delaware.
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 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,
25
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.
26
ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller. The Seller
hereby makes the following representations and warranties on which (i) the
Issuer is deemed to have relied in acquiring the Contracts and (ii) the Insurer
is deemed to have relied in issuing the Note Policy. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date, but shall survive the sale, transfer and assignment of the
Contracts to the Issuer and the pledge thereof to the Indenture Trustee pursuant
to the Indenture. The Representations and Warranties set forth in Sections
3(b)(ii), (iv), (xvi), (xxviii) and (xxix) may not be waived.
(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
27
bylaws of the Seller, or any indenture, agreement or other
instrument to which the Seller is a party or by which it is
bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant
to the Basic Documents to which the Seller is a party); nor
violate any law or, to the best of the Seller's knowledge, any
order, rule or regulation applicable to the Seller of 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 Principal
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,
the Seller has taken all steps necessary to perfect its
security interest against the Obligors in the Financed
Vehicles securing the Contracts and such Contract granted a
valid and enforceable first priority security interest in
favor of WFS (or to the Bank, a Dealer or a Third Party
Lender, which security interest has been assigned to WFS) in
the related Financed Vehicle, and such security interest has
been duly perfected and is prior to all other liens upon and
security interests in such Financed Vehicle which now exist or
may hereafter arise or be created (except, as to priority, for
any lien for unpaid taxes or unpaid storage or repair charges
which may arise after the Closing Date). The Seller has caused
the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the security interest in
the Contracts granted to the Issuer hereunder. All financing
statements filed against the Seller in favor of the Issuer in
connection herewith describing the Contracts contain a
statement to the following effect: "A purchase of or security
interest in any collateral described in
28
this financing statement will violate the rights of the Issuer
unless the Issuer authorizes it."
(iii) Title Documents. (A) If the related
Financed Vehicle was originated in a state in which notation
of a security interest on the Title Document is required or
permitted to perfect such security interest, the Title
Document for such Financed Vehicle shows, or if a new or
replacement Title Document is being applied for with respect
to such Financed Vehicle the Title Document will be received
within 180 days of the Closing Date and will show WFS named as
the original secured party under the related Contract as the
holder of a first priority security interest in such Financed
Vehicle, and (B) if the related Financed Vehicle was
originated in a state in which the filing of a financing
statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have
been duly made and show WFS named as the original secured
party under the related Contract, and in either case, the
Indenture Trustee and the Owner Trustee have the same rights
as such secured party has or would have (if such secured party
were still the owner of the Contract) against all parties
claiming an interest in such Financed Vehicle. With respect to
each Contract for which the Title Document has not yet been
returned from the Registrar of Titles, WFS has received
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 any
Person 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, claims, encumbrances and rights of any
Person, 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 Statistical
Calculation 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.
29
(viii) Mechanics' Liens. As of the Closing Date,
there are no liens or claims for work, labor, material or
storage affecting the related Financed Vehicle which are or
may become a lien prior to or equal with the security interest
granted by such Contract.
(ix) Compliance with Laws. Such Contract, and the
sale of the Financed Vehicle sold thereunder, complied, at the
time it was made, in all material respects with all applicable
state and federal laws (and regulations thereunder), including
without limitation usury, equal credit opportunity, fair
credit reporting, truth-in-lending or other similar laws, the
Federal Trade Commission Act, and applicable state laws
regulating retail installment sales contracts and loans in
general and motor vehicle retail installment contracts and
loans in particular; and the consummation of the transactions
herein contemplated, including, without limitation, the
transfer of ownership of the Contracts to the Issuer and the
receipt of interest by the Securityholders, will not involve
the violation of any applicable state or federal law.
(x) Valid and Binding. Such Contract is the
legal, valid and binding obligation of the Obligor thereunder
and is enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights
generally; all parties to such Contract had full legal
capacity to execute and deliver such Contract and all other
documents related thereto and to grant the security interest
purported to be granted thereby; and the terms of such
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 Statistical
Calculation 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 (1) in an amount
at least equal to the lesser of (a) its actual cash value or
(b) the principal amount due from the Obligor under the
related Contract, (2) naming WFS as a loss payee and (3)
insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and
30
collision coverage or (B) a LDI Policy; provided, however,
that if such Financed Vehicle has an unpaid principal balance
of less than $4,000.00 or the related Contract has six or
fewer months remaining before its Maturity Date, it will not
be required to be covered by the insurance described in this
subparagraph. Each of the Seller, WFS and the Master Servicer
shall at all times comply with all of the provisions of such
insurance policies and the LDI Policy applicable to such
Financed Vehicle.
(xiv) Acquisition of Contract. Such Contract was
either acquired by WFS (or its predecessor in interest) from a
Dealer or a Third Party Lender with which it ordinarily does
business or the Bank or originated directly by WFS in the
ordinary course of its business, and no adverse selection
procedures have been utilized in selecting such Contract from
all other similar contracts purchased by the Seller.
(xv) Scheduled Payments. As of the Statistical
Calculation Date, scheduled payments under such Contract are
applied in accordance with the Rule of 78's method or the
simple interest method and are due monthly in level payments
through its Maturity Date sufficient to fully amortize the
principal balance of such Contract by its Maturity Date,
assuming timely payment by Obligors on Simple Interest
Contracts, except that the payment in the first or last month
in the life of the Contract may be minimally different from
the level payment.
(xvi) One Original. There is only one original of
such Contract and such original, together with all other
Contract Documents, is being held by the Master Servicer
pursuant to Section 3.04. The Seller has received a written
acknowledgement from the Master Servicer that the Master
Servicer is holding the Contract Documents that constitute or
evidence the Contracts solely on behalf and for the benefit of
the Issuer. None of the Contract Documents that constitute or
evidence each Contract has any marks or notations indicating
that it has been pledged, assigned or otherwise conveyed to
any Person other than the Issuer. 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. As of the Statistical
Calculation Date such Contract had (A) an Principal Balance of
not less than $506.59 nor more than $76,866.50, (B) an
original term of not less than 12 months nor greater than 84
months, (C) a remaining maturity of not less than three months
nor greater than 84 months and (D) an APR of not less than
5.00%.
(xviii) Identification. The Master Servicer and
WFS have clearly marked their electronic records to indicate
that such Contract is owned by the Issuer.
31
(xix) Maturity. At the Statistical Calculation
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 Principal Distribution Date.
(xx) Principal Balance. At the Statistical
Calculation Date the initial Principal 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. With respect to each
Contract, 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 5.00% for Rule of 78's Contracts and equal to or
greater than 5.00% for Simple Interest Contracts.
(xxiii) WFS, Bank and Third Party Lender
Originations. With respect to the Contracts, the aggregate
Principal Balance as of the Statistical Calculation Date of
such Contracts purchased by WFS from the Bank and Third Party
Lenders or originated directly by WFS is not more than
approximately 1.42% of the Statistical Calculation Date
Aggregate Principal Balance.
(xxiv) Simple Interest Contracts. As of the
Statistical Calculation Date, approximately 96.08% of the
aggregate Principal Balances of the Contracts shall be Simple
Interest Contracts and approximately 3.90% of the aggregate
Principal Balances of the Contracts shall be Rule of 78's
Contracts.
(xxv) New or Pre-Owned Vehicles. At least 28.42%
of the Contracts by Statistical Calculation Date Aggregate
Principal Balance shall be new vehicles and not greater than
71.58% shall be pre-owned vehicles.
(xxvi) States of Origination. Approximately
38.71% of the Contracts by Statistical Calculation Date
Aggregate Principal Balance were originated or purchased by
WFS or the Bank in California and approximately 61.29% of the
Contracts by Statistical Calculation Date Aggregate Principal
Balance were originated in states other than California.
(xxvii) No Government Entity Obligors. Each
Contract shall have an Obligor that is not a local, state or
federal governmental entity.
(xxviii) Chattel Paper. Each Contract constitutes
"chattel paper" within the meaning of the applicable UCC.
(xxix) Priority of Interest. This Agreement
creates a valid and continuing security interest (as defined
in the UCC) in the Contracts in favor of the Issuer, which
security interest subject to the Insurance Agreement is prior
to all other Liens, and is enforceable as such as against
creditors of and purchasers from the
32
Seller. Other than the security interest granted to the Issuer
pursuant to this Agreement and subject to the Insurance
Agreement, the Seller has not pledged, assigned, sold, granted
a security interest in, or otherwise conveyed any of the
Contracts. The Seller has not authorized the filing of and is
not aware of any financing statements against the Seller that
include a description of collateral covering the Contracts
other than any financing statement relating to the security
interest granted to the Issuer hereunder, the security
interest granted to the Indenture Trustee under the Indenture
and the security interest granted to the Insurer under the
Insurance Agreement or that has been terminated.
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 title to 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
enforce the Seller's obligation to repurchase Contracts pursuant to this
Section; provided, however, that the Seller shall indemnify the Owner Trustee,
the Indenture Trustee, the Insurer, the Issuer and the Securityholders against
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third-party claims arising out of the
events or facts giving rise to such breach.
Section 3.03. Custody of Contract Files.
(a) 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;
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(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.
(b) 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 Issuer as the owner of, and the security interest of the
Indenture Trustee and the Insurer in, the Contract Documents and shall xxxx 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 Issuer 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
9-313 of the UCC of the state in which the Contract Documents are located.
Section 3.04. Duties of Master Servicer as Custodian.
(a) Safekeeping. The Master Servicer shall hold the Contract Files
on behalf of the Owner Trustee, the Indenture Trustee and the Insurer for the
use and benefit of all present and future Securityholders, and maintain such
accurate and complete accounts, records and computer systems pertaining to each
Contract File as shall enable the Issuer to comply with this Agreement. In
performing its duties as custodian the Master Servicer shall act with reasonable
care, using that degree of skill and attention that the Master Servicer
exercises with respect to the files relating to all comparable automobile
contracts that the Master Servicer owns or services for itself or others. The
Master Servicer shall conduct, or cause to be conducted, periodic physical
inspections of the Contract Files held by it under this Agreement and of the
related accounts, records and computer systems, and shall maintain them in such
a manner as shall enable the Owner Trustee, the Indenture Trustee and the
Insurer to verify the accuracy of the Master Servicer's record keeping. The
Master Servicer shall promptly report to the Owner Trustee, the Indenture
Trustee and the Insurer any failure on its part to hold the Contract Files and
maintain its accounts, records and computer systems as herein provided and shall
promptly take appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. The Master Servicer shall
maintain each Contract File at one of its offices specified in Schedule B hereto
or at such other location as shall
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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 twentieth calendar day or, if such day
is not a Business Day, the next succeeding 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 as required by Section
5.02; (iii) that, if such Contract has been the subject of a Full Prepayment
pursuant to clause (i) of the definition of the term "Full Prepayment" or is a
Liquidated Contract pursuant to clause (iii) of the definition of the term
"Liquidated Contract," all proceeds received in respect thereof have been
deposited in or credited to the Collection Account 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 the related Net Liquidation Proceeds in accordance with
Section 5.02; (vi) the current Aggregate Principal Balance; (vii) Gross
Charge-Off Amount for the most recent Due Period; (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 Net Charge-Off Percentage for the most recent Due
Period; and (xi) the current Delinquency Percentage. The information called for
in clauses (vi) through (xi) above shall be presented as of the Calculation Day
in the month preceding the month in which such information is required to be
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.
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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 Issuer, 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 Issuer, 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 Issuer, the Trust Estate and the Securityholders against any taxes
that may be asserted at any time against any of them with respect to the
Contracts, including any sales, gross receipts, general corporation, personal
property, privilege or license taxes (but exclusive of federal or other income
taxes arising out of payments on the Contracts) and the costs and expenses in
defending against such taxes. The Master Servicer shall immediately notify the
Owner Trustee and the Indenture Trustee if a claim is made by a third party with
respect to the Contracts, shall assume, with the consent of the Owner Trustee
and the Indenture Trustee, the defense of any such claim, pay all expenses in
connection therewith, including counsel fees, and shall promptly pay, discharge
and satisfy any judgment or decree which may be entered against it or the
Issuer.
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 this Section, upon the
termination of the Issuer or the repurchase of all of the Contracts by the
Seller, whichever is first to occur. If the Master Servicer shall resign in
accordance with the provisions of this Agreement or if all of the rights and
obligations of the Master Servicer shall have been terminated pursuant to
Section 8.01, the appointment of the Master Servicer as custodian shall be
terminated by the Indenture Trustee, by the Holders of Notes evidencing not less
than 51% of the Outstanding Amount of the Notes, by the Owner Trustee, by
Certificateholders evidencing not less than 51% of the aggregate Certificate
Percentage Interest, or by the Insurer, in the same manner as the Indenture
Trustee, the Owner Trustee, the Insurer or such Holders may terminate the rights
and obligations of the Master Servicer pursuant to Section 8.01. As soon as
practicable after any termination of such appointment, the Master Servicer
shall, at its own expense, deliver the Contract Files to the Owner Trustee or
its agent or as designated by the Owner Trustee at such place or places as the
Owner Trustee may reasonably designate and shall cooperate in good faith to
effect such delivery.
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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 Issuer 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 Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
(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 respect of such Contract
shall be deemed to have been incorrect in a manner that materially and adversely
affects the Certificateholders.
Section 3.10. Optional Repurchase of Contracts by the
Certificateholders.
(a) On each Distribution Date, the Certificateholders shall have
the option to repurchase Contracts randomly selected by the Master Servicer from
the Issuer; provided, however, such option shall only be exercised once during
the term of this Agreement. The sum of the Principal Balances of the Contracts
purchased pursuant to this Section may not exceed $350,000,000. Notice of the
exercise of such option shall be given by the Certificateholders to the Owner
Trustee, the Indenture Trustee and the Insurer not later than 15 days prior to
such Distribution Date. To exercise such option, the Certificateholders shall,
on the Business Day immediately preceding the related Distribution Date, pay to
the Indenture Trustee for the benefit of the Securityholders, by deposit in the
Collection Account, the Optional Repurchase Payment. Upon such deposit of the
Optional Repurchase Payment, the Owner Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be requested by the Certificateholder to vest in such Certificateholder title to
any Contract purchased hereunder.
(b) The Optional Repurchase Payment other than the Repurchase Premium
shall constitute Net Collections and shall be distributed in accordance with
Section 5.05(a); provided, however, if, upon the exercise of its right to
repurchase pursuant to Section 3.10(a), the
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Certificateholders repurchase all remaining Contracts, the Optional Repurchase
Payment will be distributed pursuant to Section 9.01(e).
(c) Upon instruction of the Master Servicer, the Indenture Trustee
shall deposit the Repurchase Premium into the Note Distribution Account for
distribution on the related Distribution Date to each Class of Notes, pro rata,
based on the outstanding principal balance of each Class of Notes after making
the distributions (other than the distribution of the Base Price) described in
Section 5.05(a); provided, however, if, upon the exercise of its right to
repurchase pursuant to Section 3.10(a), the Certificateholders repurchase all
remaining Contracts, the Repurchase Premium will be distributed pursuant to
Section 9.01(e).
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ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer. The Master Servicer, acting
alone and/or through one or more Subservicers as provided in this Section,
shall, as agent for the Indenture Trustee, the Owner Trustee and the Insurer,
manage, service, administer and make collections on the Contracts. The Master
Servicer agrees that its servicing of the Contracts shall be carried out in
accordance with customary and usual procedures of financial institutions which
service motor vehicle retail installment sales contracts and installment loans
and, to the extent more exacting, the procedures used by the Master Servicer in
respect of such contracts serviced by it for its own account. In accordance with
the foregoing, the Master Servicer may, whenever an Obligor has become
delinquent or the Master Servicer believes an Obligor may become delinquent, in
order to preserve the ultimate collectability of amounts due on a Contract,
modify the payment schedule on any Contract by reducing the APR on such Contract
without the consent of the Insurer or any Rating Agency; provided, however, that
the new APR shall not be less than the sum of (i) the Class A-4 Rate and (ii)
the Servicing Fee Percent. In addition, in order to preserve the Trust Estate,
the Master Servicer may, without the consent of any Rating Agency or the
Insurer, reduce the principal amount of a Contract (i.e., write-down a portion
of the principal amount due on such Contract and, accordingly, lower the Monthly
P&I on such Contract) to the extent funds are available in the Spread Account to
cover such reduction; provided, however, the total amount of such modifications
pursuant to the immediately preceding sentence and this sentence and reductions
(i) may not affect more than 1% of the Original Pool Balance through the Class
A-4 Final Scheduled 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 Principal Balance greater than one-tenth 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 Issuer on an annual basis, based on a tax year for the
Issuer that is the calendar year. The Master Servicer shall have, subject to the
terms hereof, full power and authority, acting alone, and subject only to the
specific requirements and prohibitions of this Agreement, to do any and all
things in connection with such managing, servicing, administration and
collection that it may deem necessary or desirable; provided, however, that the
Master Servicer shall commence repossession efforts in respect of any Financed
Vehicle respecting which the related Contract is four or more months delinquent.
Without limiting the generality of the foregoing, but subject to the provisions
of this Agreement, the Master Servicer is authorized and empowered by the
Indenture Trustee and the Owner Trustee to execute and deliver, on behalf of
itself, the Trust, the Insurer, the Noteholders, the Certificateholders, the
Indenture Trustee, the Owner Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Contracts or to the
Financed Vehicles. The Owner Trustee shall furnish the Master Servicer all
documents necessary or
39
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties hereunder.
On the Closing Date, the Master Servicer shall deliver to the Insurer,
the Indenture Trustee and the Owner Trustee a list of Servicing Officers
involved in, or responsible for, the administration and servicing of the
Contracts, which list shall from time to time be updated by the Master Servicer
on request of the Owner Trustee, the Indenture Trustee or the Insurer.
The Master Servicer may enter into Subservicing Agreements with one or
more Subservicers approved by the Insurer for the servicing and administration
of certain of the Contracts (including holding the related Contract Files as
custodian). The Master Servicer shall notify each Rating Agency promptly if a
Subservicer is hired. References herein to actions taken or to be taken by the
Master Servicer in servicing the Contracts include actions taken or to be taken
by a Subservicer on behalf of the Master Servicer and the Insurer. Each
Subservicing Agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and as the Master Servicer and the Subservicer
have agreed. With the approval of the Master Servicer and the Insurer, a
Subservicer may delegate its servicing obligations to third-party servicers, but
such Subservicer will remain obligated under the related Subservicing Agreement.
The Master Servicer and a Subservicer may enter into amendments thereto or
different forms of Subservicing Agreements and the form attached as Exhibit D
hereto is merely provided for information and shall not be deemed to limit in
any respect the discretion of the Master Servicer to modify or enter into
different Subservicing Agreements; provided, however, that any such amendments
or different forms shall be consistent with and not violate the provisions of
this Agreement or materially adversely affect the rights of Noteholders,
Certificateholders or the Insurer hereunder.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the related Subservicer, the Master Servicer
shall either act directly as servicer of the related Contract or enter into a
Subservicing Agreement with a successor Subservicer approved by the Insurer
which will be bound by the terms of the related Subservicing Agreement.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through such Persons or
otherwise, the Master Servicer shall remain obligated and liable to the
Indenture Trustee, the Owner Trustee and the Securityholders for the servicing
and administering of the Contracts in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from a
Subservicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Contracts. The
Master Servicer shall be entitled to enter into an agreement with a Subservicer
for indemnification of the Master Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement that may be entered into and any other
transactions or servicing arrangements relating to the Contracts involving a
Subservicer or other Affiliate of the
40
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.
The Master Servicer shall deposit in or credit to the Collection
Account within two Business Days of receipt all collections of Monthly P&I
received on or after the Cut-Off Date on or in respect of the Contracts together
with the proceeds of all Prepayments and any accompanying interest; provided,
however, that, to the extent any such installment of Monthly P&I or any such
Prepayment proceeds are received in respect of a Contract as to which there is
an outstanding and unreimbursed Advance or Advances, such installment or
proceeds shall, to the extent of any such unreimbursed Advance or Advances, be
retained by the Master Servicer in reimbursement of itself. The Master Servicer
shall likewise deposit in the Collection Account within two Business Days of
receipt all Net Liquidation Proceeds and Net Insurance Proceeds after deducting
therefrom the amount of any outstanding and unreimbursed Advances made by it in
respect of such Contract. The foregoing notwithstanding, the Master Servicer
may, in the event it determines that it has made a Nonrecoverable Advance or
Advances, reimburse itself from unrelated installments of Monthly P&I or
Prepayment proceeds to the extent it shall, concurrently with the withholding of
any such installment or proceeds from deposit in or credit to the Collection
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; provided,
however, that the Master Servicer must provide such certificate within three
months of such Nonrecoverable Advance or Advances. 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
41
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.
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, as the case may be. The Master
Servicer acknowledges that the unremitted collections on the Contracts are part
of the Trust Estate and the Master Servicer agrees to act as custodian and
bailee of the Indenture Trustee, the Owner Trustee and the Insurer in holding
such monies and collections. The Master Servicer agrees, for the benefit of the
Indenture Trustee, the Owner Trustee, the Securityholders and the Insurer, to
act as such custodian and bailee, and to hold and deal with such monies and such
collections, as custodian and bailee for the Indenture Trustee, the Owner
Trustee and the Insurer, in accordance with the provisions of this Agreement.
The Master Servicer shall retain all data (including, without
limitation, computerized records) relating directly to or maintained in
connection with the servicing of the Contracts at the address of the Master
Servicer set forth as Schedule B to this Agreement, at the office of any
Subservicer or, upon 15 days' notice to the Insurer, the Indenture Trustee and
the Owner Trustee, at such other place where the servicing offices of the Master
Servicer are located, and shall give the Indenture Trustee, the Owner Trustee
and the Insurer access to all data at all reasonable times. While a Servicer
Default shall be continuing, the Master Servicer shall, on demand of the
Indenture Trustee, the Owner Trustee or the Insurer, deliver or cause to be
delivered to the Indenture Trustee, the Owner Trustee or the Insurer, as the
case may be, all data (including, 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.
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
42
last payment on such Contract; provided, however, the Master Servicer shall not
defer payments more than three times over the life of such Contract; provided,
further, that in the case of any extension granted pursuant to clause (ii) the
Master Servicer makes an Advance in respect of such extension and in no event
can the last payment on such Contract be extended beyond the last day of the Due
Period ending immediately prior to the Class A-4 Final Scheduled Distribution
Date. The Master Servicer shall not extend the Maturity Date of a Contract
except as provided in clause (ii) of the preceding sentence and shall not modify
any Contracts except in accordance with the criteria and limitations specified
in Section 4.01.
Section 4.03. Realization upon Defaulted Contracts and Liquidated
Contracts. The Master Servicer shall use its best efforts, consistent with the
servicing standard specified in Section 4.01, to repossess or otherwise convert
the ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Master Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual for prudent holders of motor vehicle
retail installment sales contracts and installment loans and as shall be in
compliance with all applicable laws, and, in connection with the repossession of
any Financed Vehicle or any Contract in default, may commence and prosecute any
proceedings in respect of such Contract in its own name or, if the Master
Servicer deems it necessary, in the name of the Owner Trustee or on behalf of
the Owner Trustee. The Master Servicer's obligations under this Section are
subject to the provision that, in the case of damage to a Financed Vehicle from
an uninsured cause, the Master Servicer shall not be required to expend its own
funds in repairing such Financed Vehicle unless it shall determine (i) that such
restoration will increase the proceeds of liquidation of the related Contract,
after reimbursement to itself for such expenses, and (ii) that such expenses
will be recoverable by it either as Liquidation Expenses or as expenses
recoverable under an applicable Insurance Policy. In the event that the Master
Servicer determines that, in its best judgment, further collection efforts by it
as to a Liquidated Contract will not result in the realization of additional Net
Liquidation Proceeds to the Trust, the Master Servicer may, in the name of the
Owner Trustee, and for the benefit of the Trust, sell the Liquidated Contract to
any party not affiliated with the Master Servicer free and clear of the rights
of the Issuer. 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, Net Insurance Proceeds and proceeds of the
sale of Contracts hereunder shall be deposited directly in or credited to the
Collection Account (without deposit in any intervening account) to the extent
required by Section 5.02.
Section 4.04. Insurance. To the extent the Obligor fails to maintain a
comprehensive and collision insurance policy in an amount at least equal to the
lesser of (i) the actual cash value of the Financed Vehicle or (ii) the
principal amount due from the Obligor under the related Contract, the Master
Servicer shall obtain the LDI Policy in respect of such Financed Vehicle;
provided, however, that the Master Servicer shall not be required to maintain
such insurance in respect of any Financed Vehicle as to which the related
Contract has an unpaid principal balance
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of less than $4,000 or the related Contract has six or fewer months remaining
before its Maturity Date.
Section 4.05. Maintenance of Security Interests in Financed Vehicles.
The Master Servicer shall take such steps as are necessary to maintain
continuous perfection and priority of the security interest created by each
Contract in the related Financed Vehicle, including but not limited to,
obtaining the execution by the Obligors and the recording, registering, filing,
re-recording, re-registering and refiling of all security agreements, financing
statements, continuation statements or other instruments as are necessary to
maintain the security interest granted by Obligors under the respective
Contracts. The Owner Trustee and the Indenture Trustee each hereby authorizes
the Master Servicer to take such steps as are necessary to re-perfect such
security interest on behalf of the Issuer in the event of the relocation of a
Financed Vehicle or for any other reason.
Section 4.06. Covenants, Representations and Warranties of the Master
Servicer. The Master Servicer hereby makes the following covenants,
representations and warranties on which (i) the Issuer is deemed to have relied
in acquiring the Contracts and (ii) the Insurer is deemed to have relied in
issuing the Note Policy. Such covenants, representations and warranties speak as
of the execution and delivery of this Agreement and as of the Closing Date, but
shall survive the sale, transfer and assignment of the Contracts to the Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) The Master Servicer covenants as to the Contracts:
(i) Lien in Force. The Financed Vehicle securing
each Contract shall not be released from the lien granted by
the Contract in whole or in part, except as contemplated
herein.
(ii) Impairment. The Master Servicer shall not
impair the rights of the Noteholders and Certificateholders in
the Contracts.
(iii) Amendments. The Master Servicer shall not
amend the terms of any Contract, except that extensions or
modifications may be granted in accordance with Section 4.02.
(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.
(v) Security Interest. The Master Servicer shall
maintain the perfection and priority of the Issuer's and the
Indenture Trustee's security interests in the Contracts.
(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
44
under the laws of the State of California, (B) has qualified
to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its
properties or the nature of its activities makes such
qualification necessary and (C) has full power, authority and
legal right to own its property, to carry on its business as
presently conducted and to enter into and perform its
obligations under this Agreement.
(ii) Power and Authority. The execution and
delivery by the Master Servicer of this Agreement are within
the corporate power of the Master Servicer and have been duly
authorized by all necessary corporate action on the part of
the Master Servicer. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions
herein contemplated, nor compliance with the provisions
hereof, will conflict with or result in a breach of, or
constitute a default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order
binding on the Master Servicer or its properties or the
articles of incorporation or bylaws of the Master Servicer, or
any of the provisions of any indenture, mortgage, contract or
other instrument to which the Master Servicer is a party or by
which it is bound or result in the creation or imposition of
any lien, charge or encumbrance upon any of its property
pursuant to the terms of any such indenture, mortgage,
contract or other instrument.
(iii) Governmental Consents. The Master Servicer
is not required to obtain the consent of any other party or
consent, license, approval or authorization, or registration
or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement,
except (in each case) such as have been obtained and are in
full force and effect.
(iv) Binding Obligation. This Agreement has been
duly executed and delivered by the Master Servicer and,
assuming the due authorization, execution and delivery thereof
by the Owner Trustee and the Indenture Trustee, constitutes a
legal, valid and binding instrument enforceable against the
Master Servicer in accordance with its terms (subject to
applicable bankruptcy and insolvency laws and other similar
laws affecting the enforcement of creditors' rights
generally).
(v) No Proceedings. There are no actions, suits
or proceedings pending or, to the knowledge of the Master
Servicer, threatened against or affecting the Master Servicer,
before or by any court, administrative agency, arbitrator or
governmental body with respect to any of the transactions
contemplated by this Agreement, or which will, if determined
adversely to the Master Servicer, materially and adversely
affect it or its business, assets, operations or condition,
financial or otherwise, or adversely affect the Master
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.
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(vi) Other Consents. The Master Servicer has
obtained or made all necessary consents, approvals, waivers
and notifications of creditors, lessors and other
nongovernmental persons, in each case in connection with the
execution and delivery of, and the consummation of the
transactions contemplated by, this Agreement.
Section 4.07. Repurchase of Contracts upon Breach of Covenant. The
Master Servicer or the Owner Trustee shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach pursuant to Section 4.02, 4.05 or 4.06. Unless the breach shall have
been cured within 30 days following such discovery, the Master Servicer shall
purchase any Contract materially and adversely affected by such breach. In
consideration of the purchase of such Contract, the Master Servicer shall remit
the Repurchase Amount in the manner specified in Section 5.04. The sole remedy
of the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders
or the Noteholders with respect to a breach pursuant to Section 4.02, 4.05 or
4.06 shall be to require the Master Servicer to purchase Contracts pursuant to
this Section; provided, however, that the Master Servicer shall indemnify the
Owner Trustee, the Indenture Trustee, the Insurer, the Issuer and the
Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third-party claims
arising out of the events or facts giving rise to such breach. The Owner Trustee
shall have no duty to conduct any affirmative investigation as to the occurrence
of any condition requiring the repurchase of any Contract pursuant to this
Section.
Section 4.08. Servicing Compensation. As compensation for the
performance of its obligations under this Agreement and subject to the terms of
this Section, the Master Servicer shall be entitled to receive on each
Distribution Date the Servicing Fee in respect of each Contract that was
Outstanding at the beginning of the Due Period ending immediately prior to such
Distribution Date, to the extent the related payment of Monthly P&I has been
collected or advanced pursuant to Section 5.04. As servicing compensation in
addition to the Servicing Fee, the Master Servicer shall be entitled (i) to
retain all late payment charges, extension fees and similar items paid in
respect of Contracts and (ii) to receive, in respect of each Rule of 78's
Contract that is prepaid in full prior to its Maturity Date, the amount by which
the outstanding principal balance of such Contract exceeds the Principal 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 E hereto (the
"Distribution Date Statement"), setting forth with respect to the next
succeeding Distribution Date:
(i) the Note Interest Distributable Amount for such
Distribution Date;
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(ii) the Note Principal Distributable Amount for such
Distribution Date;
(iii) the Net Collections for such Distribution Date;
(iv) the amount otherwise distributable to each Class of
Noteholders that will be distributed to a different Class of
Noteholders on such Distribution Date;
(v) the amount to be on deposit in the Spread Account on
such Distribution Date, before and after giving effect to deposits
thereto and withdrawals therefrom to be made in respect of such
Distribution Date;
(vi) the Servicing Fee with respect to the related Due
Period;
(vii) the amount of any Note Interest Carryover Shortfall
and Note Principal Carryover Shortfall on such Distribution Date and
the change in such amounts from those with respect to the immediately
preceding Distribution Date;
(viii) the aggregate amount of Monthly P&I which was due
on the Contracts during the related Due Period and was delinquent as of
the end of the related Due Period (any such payment of Monthly P&I
being presumed to be delinquent to the extent that it was not deposited
in or credited to the Collection Account during such Due Period);
(ix) the amount set forth in clause (viii) above which is
being advanced concurrently with such Distribution Date Statement by
the Master Servicer pursuant to Section 5.04, the amount of any such
Advance being deposited in or credited to the Collection Account on
such Master Servicer Report Date;
(x) the aggregate amount of any Nonrecoverable Advances
deducted by the Master Servicer from amounts otherwise required to be
deposited by the Master Servicer in the Collection Account during the
related Due Period;
(xi) the Aggregate Net Liquidation Losses for the related
Due Period;
(xii) the Delinquency Percentage and the Net Charge-Off
Percentage for the most recent Calculation Day;
(xiii) 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 Principal Balance of
Contracts so modified as a percentage of the Pool Balance for the most
recent Distribution Date;
(xiv) 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;
(xv) 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;
47
(xvi) the Certificate Distributable Amount;
(xvii) with respect to Contracts repurchased pursuant to
Section 3.10, the Base Price, the accrued interest on such Contracts,
the Optional Repurchase Payment and the Repurchase Premium;
(xviii) the amount otherwise distributable to the
Certificateholders; 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:
(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, the
Seller has elected to purchase pursuant to Section 9.01 or the
Certificateholder has elected to purchase pursuant to Section 3.10;
(ii) the net amount of funds which have been deposited in
or credited to the Collection Account in respect of such Due Period
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 Principal 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;
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(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 Principal Balance as of the prior
Distribution Date (or as of the Cut-Off Date in the case of
the first Distribution Date) and its Principal 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 "Principal Balance";
(v) the Contract Numbers, Monthly P&I, Principal 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 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 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, 2002, 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
49
balance sheet of the Master Servicer as of the last day of said fiscal year and
the related statements of operations, retained earnings and cash flows for such
fiscal year and have issued an opinion thereon, specifying the date thereof,
(ii) they have also audited certain documents and the records relating to the
servicing of the Contracts and the distributions on the Notes and the
Certificates hereunder, (iii) their audit as described under clauses (i) and
(ii) above was made in accordance with generally accepted auditing standards and
accordingly included such tests of the accounting records and such other
auditing procedures as they considered necessary in the circumstances and (iv)
their audits described under clauses (i) and (ii) above disclosed no exceptions
which, in their opinion, were material, relating to the servicing of such
Contracts in accordance with this Agreement and the making of distributions on
the Notes and Certificates in accordance with this Agreement, or, if any such
exceptions were disclosed thereby, setting forth such exceptions which, in their
opinion, were material.
Section 4.12. Access to Certain Documentation and Information Regarding
Contracts. The Master Servicer shall provide to the Insurer, the Indenture
Trustee and the Securityholders access to the Contract Files in such cases where
the Certificateholders or Noteholders shall be required by applicable statutes
or regulations to review such documentation. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the designated offices of the Master Servicer and each related Subservicer, if
any. Nothing in this Section shall affect the obligation of the Master Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Obligors and the failure of the Master Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
Section 4.13. Fidelity Bond. The Master Servicer shall maintain a
fidelity bond in such form and amount as is customary for banks acting as
custodian of funds and documents in respect of mortgage loans or consumer
contracts on behalf of institutional investors.
Section 4.14. Indemnification; Third Party Claims. Subject to Section
8.02, the Master Servicer agrees to indemnify and hold the Indenture Trustee,
the Owner Trustee and the Securityholders harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and any reasonable other costs, fees and expenses that the Indenture
Trustee, the Owner Trustee, the Noteholders or the Certificateholders may
sustain because of the failure of the Master Servicer to perform its duties and
service the Contracts in compliance with the terms of this Agreement. The Master
Servicer shall immediately notify the Indenture Trustee and the Owner Trustee if
a claim is made by a third party with respect to the Contracts, assume, with the
consent of the Indenture Trustee and the Owner Trustee, the defense of any such
claim and pay all expenses in connection therewith, including counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against it or Indenture Trustee, the Owner Trustee, the Noteholders or the
Certificateholders.
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ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts.
(a) Prior to the Closing Date, the Master Servicer shall open, at
a depository institution (which may be the Indenture Trustee or the Bank), 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
"Spread 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
"Note Distribution Account") bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Noteholders; and
(iv) 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 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).
(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, Commercial Paper 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 in Proprietary Funds or Commercial Paper, shall be
invested in the RIC. 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, Commercial Paper 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
51
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 one
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 Commercial Paper or
Proprietary Funds that mature on the Distribution Date 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)
(i) The Indenture Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Trust
Accounts and in all proceeds thereof (including all income thereon) and
all such funds, investments, proceeds and income shall be part of the
Trust Estate. The Trust Accounts, other than the Certificate
Distribution Account, shall be under the sole dominion and control of
the Indenture Trustee for the benefit of the Noteholders and the
Certificateholders, as the case may be. The Certificate Distribution
Account shall be in the name of the Owner Trustee for the benefit of
the Certificateholders. If, at any time, any of the Trust Accounts
ceases to be an Eligible Account, the Indenture Trustee (or the Master
Servicer on its behalf) shall within ten Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency
may consent) establish a new Trust Account as an Eligible Account and
shall transfer any cash and/or any investments to such new Trust
Account.
(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 continuous control of the Indenture
Trustee within the meaning of Section 9-104(a) of the
applicable UCC, and the Indenture Trustee shall have sole
signature authority with respect thereto;
52
(B) any Trust Account Property that constitutes
Physical Property shall be delivered to the Indenture Trustee
in accordance with paragraph (i) of the definition of the term
"Delivery" and shall be held, pending maturity or disposition,
solely by the Indenture Trustee or a Financial Intermediary
acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations shall be delivered in
accordance with paragraph (ii) of the definition of the term
"Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in
such paragraph; and
(D) any Trust Account Property that is an
"uncertificated security" under Article Eight of the UCC and
that is not governed by clause (C) above shall be delivered to
the Indenture Trustee in accordance with paragraph (iii) of
the definition of the term "Delivery" and shall be maintained
by the Indenture Trustee, pending maturity or disposition,
through continued registration of the Indenture Trustee's (or
its nominee's) ownership of such security.
(iii) The Master Servicer shall have the power, revocable
by the Indenture Trustee or by the Owner Trustee with the consent of
the Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of
permitting the Master Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
Section 5.02. Collections; Realization Upon Note Policy; Net Deposits.
(a) Subject to Section 5.03 and subsections (b) and (e) hereof,
the Master Servicer shall remit or credit all payments by the Obligors on the
Contracts, all payments on behalf of Obligors on the Contracts and all Net
Liquidation Proceeds and Net Insurance Proceeds to the Collection Account
(within two Business Days as specified in Section 4.01); provided that the
Master Servicer shall retain from collection of late payments and Net
Liquidation Proceeds or Net Insurance Proceeds in respect of a Contract an
amount equal to previously unreimbursed Advances in respect of such Contract
made pursuant to Section 5.04.
(b) [Reserved]
(c) Not later than 12:00 p.m., New York City time, on the fifth
Business Day prior to each Distribution Date, based on the information set forth
in the related Distribution Date Statement to the extent that there are
insufficient funds to make the distributions required to be made to each Class
of Notes as described in Sections 5.05 and 5.06, the Master Servicer shall
deliver to the Indenture Trustee, with a copy to the Insurer, the Owner Trustee
and the Fiscal Agent, if any, by hand delivery, telex or facsimile transmission,
a written notice (a "Deficiency Notice") specifying the Note Deficiency Claim
Amount, if any, for such Distribution Date, separately identifying the amount of
the applicable Note Deficiency Claim Amount payable in
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respect of each Class of Notes. Such Deficiency Notice shall direct the
Indenture Trustee to remit such Note Deficiency Claim Amount (to the extent of
funds then on deposit in the Spread Account are insufficient) to the Indenture
Trustee for deposit in the Note Distribution Account.
(d) Not later than 12:00 p.m., New York City time, on the fourth
Business Day prior to each Distribution Date, the Indenture Trustee shall make a
claim under the Note Policy for any Note Policy Claim Amount for such
Distribution Date by delivering to the Insurer and the Fiscal Agent, if any,
with a copy to the Master Servicer, by hand delivery, telex or facsimile
transmission, a claim for the related Note Policy Claim Amount, as the case may
be. In making any such claim, the Owner Trustee or the Indenture Trustee shall
comply with all the terms and conditions of the related Policy. The notice of
such claim shall direct the Insurer to remit such Note Policy Claim Amount to
the Owner Trustee or the Indenture Trustee for deposit in the Note Distribution
Account.
(e) So long as the Master Servicer is WFS, the Master Servicer
shall have the right, on a basis not more frequently than once per month
(although deposits shall be made into the Collection Account within two Business
Days pursuant to Section 4.01), to deduct from amounts received that are
otherwise required to be deposited in or credited to the Collection Account and,
to the extent such amounts are insufficient, to require that the Indenture
Trustee withdraw and deliver to it from the Collection Account, amounts due to
be paid hereunder to the Master Servicer or to the Seller after giving effect to
application of the payment priorities specified in this Article for the month
(or other applicable period), and to pay such amounts to itself as Master
Servicer or to the Seller, as the case may be. Notwithstanding the foregoing,
the Master Servicer shall maintain the records and accounts for such deposits
and credits on a gross basis.
Section 5.03. Application of Collections. As of each Record Date, all
collections for the related Due Period shall be applied by the Master Servicer
as follows: with respect to each Contract (including a Defaulted Contract),
payments by or on behalf of an Obligor shall be applied first to late payment
and extension fees, second to interest accrued on the Contract, third to
principal due on the Contract and fourth to administrative charges, if any. Any
excess shall be applied to prepay the principal balance of the Contract.
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 Principal Balance of such Contract at a
rate equal to the sum of (A) the Class A-4 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
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constitute a Nonrecoverable Advance. Any such determination shall be evidenced
by an Officers' Certificate furnished to the Indenture Trustee, the Owner
Trustee and the Insurer setting forth the basis for such determination.
(b) If the Master Servicer determines that it has made a
Nonrecoverable Advance or Advances, the Master Servicer shall reimburse itself,
without interest, from unrelated installments of Monthly P&I or Prepayment
proceeds to the extent it shall, concurrently with the withholding of any such
installment or proceeds from deposit in or credit to the Collection Account as
required by Section 5.02, furnish to the Indenture Trustee, the Owner Trustee
and the Insurer a certificate of a Servicing Officer setting forth the basis for
the Master Servicer's determination, the amount of, and Contract with respect to
which, such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken; provided,
however, that the Master Servicer must provide such certificate within three
months of such Nonrecoverable Advance or Advances.
(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.
(d) The Certificateholders shall remit or credit to the Collection
Account the Optional Repurchase Payment for the Seller Contracts repurchased
pursuant to Section 3.10 and the Master Servicer and the Seller shall deposit or
caused to be deposited into the Collection Account the Aggregate Repurchase
Amount of Contracts purchased pursuant to Section 9.01(a).
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) from Net Collections (after giving effect to the
reduction in Net Collections described in clause (i) above), to the
Indenture Trustee, any accrued and unpaid fees and expenses payable to
the Indenture Trustee and to the Owner Trustee, any accrued and unpaid
fees and expenses payable to the Owner Trustee, in each case to the
extent such fees and expenses 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) through (ii) above), the Note Interest
Distributable Amount;
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(iv) to the Note Distribution Account, from Net
Collections (after giving effect to the reduction in Net Collections
described in clauses (i) through (iii) above), the Note Principal
Distributable Amount (which amount includes, if such Distribution Date
is a Note Final Scheduled Distribution Date, the remaining principal
amount of the related Class of Notes), first to the holders of the
Class A-1 Notes until the principal amount of the Class A-1 Notes has
been reduced to zero, second to the holders of the Class A-2 Notes
until the principal amount of the Class A-2 Notes has been reduced to
zero, 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; and
(v) from Net Collections (after giving effect to the
reduction in Net Collections described in clauses (i) through (iv)
above), to the Insurer, any Unreimbursed Insurer Amounts.
(b) On each Distribution Date, the Master Servicer shall instruct
the Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09), to distribute any excess amounts remaining from Net Collections
after making the distributions described in Section 5.05(a) ("Excess Amounts")
to the Spread Account. On each Distribution Date, the Master Servicer shall
instruct the Indenture Trustee to distribute the Excess Spread Amount pursuant
to Section 5.06(b).
(c) To the extent that on any Distribution Date the amount on
deposit in the Note Distribution Account (after giving effect to any deposits
thereto on such Distribution Date) is less than the Note Distributable Amount,
Noteholders shall be entitled to receive distributions in respect of such
deficiency first, from amounts on deposit in the Spread Account pursuant to a
Deficiency Notice; and second, if such amounts are still insufficient, from a
claim made under the Note Policy for the Note Policy Claim Amount pursuant to
Section 5.02(d).
Section 5.06. Spread Account.
(a) On or prior to the Closing Date, WFSRC shall deposit the
Spread Account Initial Amount into the Spread Account. 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.
(b) On each Calculation Day and Distribution Date, the Master
Servicer shall instruct the Indenture Trustee to distribute the Excess Spread
Amount, (i) first, to the Insurer, to the extent of any Unreimbursed Insurer
Amounts, (ii) second, to WFSRC until WFSRC has received full payment of the
Spread Account Initial Deposit and (iii) third, on a Calculation Day that is not
a Distribution Date, all remaining funds to the Certificateholders in accordance
with their Certificate Percentage Interests and in the case of a Distribution
Date, to the Certificate Distribution Account for distribution to
Certificateholders in accordance with Section 5.02 of the Trust Agreement. Upon
any such distribution to the Insurer, neither the Seller nor the Securityholders
will have further rights in, or claims to, such amounts.
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(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 Issuer pursuant to Section 3.10 or
9.01, any amounts on deposit in the Spread Account, after payments of amounts
due to the Securityholders and the Insurer (if there exists any Unreimbursed
Insurer Amounts), will be distributed first, to WFSRC until WFSRC has received
full repayment of the Spread Account Initial Deposit and second, to the
Certificate Distribution Account for distribution to Certificateholders in
accordance with the Section 5.02 of the Trust Agreement.
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);
(ii) the amount of such distribution allocable to interest
(stated separately for each Class of Notes);
(iii) the Aggregate Principal Balance as of the close of
business on the last day of such Due Period;
(iv) the amount of the Servicing Fee paid to the Master
Servicer with respect to the related Due Period;
(v) the amount of any 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;
(vi) the Note Pool Factor for each Class of Notes as of
such Distribution Date, after giving effect to payments allocated to
principal reported under clause (i) above;
(vii) the Certificate Distributable Amount;
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(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; and
(ix) the amount of the Optional Repurchase Payment payable
on such Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii), (iv) or (v) above shall
be expressed as a dollar amount per $1,000.00 original principal amount of a
Note.
(b) Within a reasonable period of time after the end of each
calendar year, but not later than the latest date permitted by law, the
Indenture Trustee shall mail to each Person who at any time during such calendar
year shall have been a Holder of a Note a statement or statements, prepared by
the Master Servicer, which in the aggregate contain the sum of the amounts set
forth in clauses (i), (ii), (iv) and (v) above for such calendar year or, in the
event such Person shall have been a Holder of a Note during a portion of such
calendar year, for the applicable portion of such year, for the purposes of such
Noteholder's preparation of federal income tax returns. In addition, the Master
Servicer shall furnish to the Indenture Trustee for distribution to such Person
at such time any other information necessary under applicable law for the
preparation of such income tax returns.
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ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence. During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the other Basic
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.
Section 6.02. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by such 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 such Seller's willful
misfeasance, bad faith or negligence (other than errors in judgment) in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee and the Indenture Trustee from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in connection
with the acceptance or performance of the trusts and duties herein and, in the
case of the Owner Trustee, in the Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability, in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Seller shall have made any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are
59
made thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to such Seller, without interest.
Section 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller; Certain Limitations.
(a) The Seller shall not consolidate with nor 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 such 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. The Seller and WFS each 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 laws of California Revised
Statutes.
(ii) Notwithstanding paragraph (b)(i) above, the actual
business activities of the Seller shall be limited to those 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 an investment grade 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, such Seller shall not issue notes or
otherwise incur debt unless (1) 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
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the related nationally recognized statistical rating organization the
same as or higher than the rating afforded such debt or securities or
(2) such notes or borrowings (a) 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, (b) do not constitute a claim against
the Seller in the event such assets are insufficient to pay such notes
or borrowings and (c) where such notes or borrowings are secured by the
rated debt or Offered Securities, are fully subordinated (and which
shall provide for payment only after payment in respect of all
outstanding rated debt and/or Offered Securities) to such rated debt or
Offered Securities.
(c) Notwithstanding any other provision of this Section and any
provision of law, the Seller shall not do any of the following:
(i) engage in any business or activity other than as set
forth in clause (b) above;
(ii) without the affirmative vote of a majority of the
members of the Board of Directors of the Seller (which must include the
affirmative vote of at least two duly appointed Independent directors)
(A) dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent, (B) consent to the
institution of bankruptcy or insolvency proceedings against it, (C)
file a petition seeking or consent to reorganization or relief under
any applicable federal or state law relating to bankruptcy, (D) consent
to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the corporation or a
substantial part of its property, (E) make a general assignment for the
benefit of creditors, (F) admit in writing its inability to pay its
debts generally as they become due or (G) take any corporate action in
furtherance of the actions set forth in clauses (A) through (F) above;
provided, however, that no director may be required by any shareholder
of the Seller to consent to the institution of bankruptcy or insolvency
proceedings against the Seller so long as it is solvent; or
(iii) merge or consolidate with any other corporation,
company or entity or sell all or substantially all of its assets or
acquire all or substantially all of the assets or capital stock or
other ownership interest of any other corporation, company or entity
(except for the acquisition of Vehicle Receivables and the sale of
Vehicle Receivables to one or more trusts in accordance with the terms
of clause (b)(ii) above, which shall not be otherwise restricted by
this Section 6.03(c)).
Section 6.04. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on any document of any kind, prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Seller and any
director or officer or employee or agent of the Seller shall be reimbursed by
the Owner Trustee or the Indenture Trustee, as the case may be, for any
contractual damages, liability or expense incurred by reason of the Owner
Trustee's or the Indenture Trustee's willful misfeasance, bad faith or
negligence (except for errors in judgment) in the performance of their
respective duties hereunder, or by reason of reckless disregard of their
respective obligations and duties hereunder. The Seller shall not be under any
obligation to
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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 such 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 an Affiliate
thereof shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority or distinction as among all of the
Notes.
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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 or the Trust
Agreement contained, except to the extent that such cost, expense,
loss, claim, damage or liability (i) shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of
the Owner Trustee or the Indenture Trustee, as the case may be; (ii)
relates to any tax other than the taxes with respect to which either
the Seller or Master Servicer shall be required to indemnify the Owner
Trustee and the Indenture Trustee; (iii) shall arise from the Owner
Trustee's or the Indenture Trustee's breach of any of their respective
representations or warranties set forth herein, in the Trust Agreement
or in the Indenture; or (iv) shall be one as to which the Seller is
required to indemnify the Owner Trustee or the Indenture Trustee, as
the case may be.
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(e) The Master Servicer shall pay the Owner Trustee
compensation, reimbursement or other payments owed to it by the Seller
pursuant to Sections 8.01 and 8.02 of the Trust Agreement if the Seller
fails to remit such compensation, reimbursement or payment in a timely
manner.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement of the Trust 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
64
effect. No such resignation shall become effective unless and until (i) a new
servicer acceptable to the Owner Trustee, the Indenture Trustee and the Insurer
is willing to service the Contracts and enters into a servicing agreement with
the Issuer 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 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 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
Issuer shall have been terminated as provided by the terms of the Trust
Agreement, and shall survive the exercise by the Owner Trustee, the Indenture
Trustee or the Insurer of any right or remedy under this Agreement, or the
enforcement by the Owner Trustee, the Indenture Trustee, any Certificateholder
or Noteholder, or the Insurer of any provision of the Notes, the Certificates,
the Insurance Agreement or this Agreement.
(d) The resignation of the Master Servicer in accordance with this
Section shall not affect the rights of the Seller hereunder. If the Master
Servicer resigns pursuant to this Section, its appointment as custodian can be
terminated pursuant to Section 3.07.
Section 7.05. Limitation on Liability of Master Servicer and Others.
(a) Neither the Master Servicer nor any of the directors,
officers, employees or agents of the Master Servicer shall be under any
liability to the Issuer, the Noteholders or the Certificateholders, except as
provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Master Servicer or
any such person against any liability that would otherwise be imposed by reason
of willful misfeasance, bad faith or negligence (except errors in judgment) in
the performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement. The Master Servicer and any director, officer,
employee or agent of the Master Servicer may rely in good faith on any document
of any kind prima facie properly executed and submitted by any person respecting
any matters arising under this Agreement.
(b)The Master Servicer and any director or officer or employee or
agent of the Master Servicer shall be reimbursed by the Owner Trustee or the
Indenture Trustee, as the case may be, for any contractual damages, liability or
expense incurred by reason of such Trustee's willful misfeasance, bad faith or
negligence (except errors in judgment) in the performance of such Trustee's
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
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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 the Note Policy;
(b) any failure by the Master Servicer or the Issuer, to
deposit or credit, or to deliver to the Indenture Trustee for deposit,
in any of the Trust Accounts any amount required hereunder to be as
deposited, credited or delivered or to direct the Indenture Trustee to
make any required distributions therefrom, that shall continue
unremedied for a period of three Business Days after written notice of
such failure is received from the Owner Trustee, the Indenture Trustee
or the Insurer or after discovery of such failure by an officer of the
Master Servicer;
(c) any failure by the Master Servicer to deliver to the
Insurer, the Indenture Trustee or the Owner Trustee a report in
accordance with Section 4.09 and/or Section 4.10 by the fourth Business
Day prior to the Distribution Date with respect to which such report is
due, or the Master Servicer shall have defaulted in the due observance
of any provision of Section 7.02 (other than failure to enter into an
assumption agreement under Section 7.02, which is a Servicer Default
only if such failure continues for ten Business Days);
(d) failure on the part of the Seller, the Issuer or the
Master Servicer duly to observe or to perform in any material respect
any other covenants or agreements of the Master Servicer or the Seller
set forth in this Agreement or any other Basic Document, which failure
shall (i) materially and adversely affect the rights of the Insurer,
the Owner Trustee, the Indenture Trustee, the Certificateholders or
Noteholders and (ii) continue unremedied for a period of 30 days after
the date on which written notice of such failure, requiring the same to
be remedied, shall have been given (A) to the Master Servicer or the
Seller (as the case may be) by the Insurer, the Owner Trustee or the
Indenture Trustee or (B) to the Master Servicer or the Seller (as the
case may be), and to the Owner Trustee and the Indenture Trustee by the
Holders of Notes evidencing not less than 25% of the Outstanding Amount
of the Notes, or, if the Notes have been paid in full, by
Certificateholders evidencing not less than 25% of the aggregate
Certificate Percentage Interest, or so long as no default under the
Note Policy has occurred and is continuing and no insolvency of the
Insurer has occurred, by the Insurer;
(e) the occurrence of an Insolvency Event with respect to the
Seller, the Issuer or the Master Servicer; or
(f) any representation, warranty or statement of the Master
Servicer, the Issuer or the Seller made in this Agreement or any
certificate, report or other writing delivered pursuant hereto shall
prove to be incorrect in any material respect as of the time when the
same shall have been made (excluding, however, any representation or
warranty
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to which Section 3.01 or 4.06 shall be applicable so long as the Master
Servicer or the Seller shall be in compliance with Section 3.02 or
4.07, as the case may be), and the incorrectness of such
representation, warranty or statement has a material adverse effect on
the Noteholders or the Certificateholders and, within 30 days after
written notice thereof shall have been given to the Master Servicer or
the Seller by the Indenture Trustee or the Owner Trustee or by the
Holders of Notes evidencing not less than 25% of the Outstanding Amount
of the Notes, or Certificateholders evidencing not less than 25% of the
aggregate Certificate Percentage Interest or, so long as no default has
occurred under the Note Policy and is continuing and no Insurer
Insolvency has occurred, by the Insurer, the circumstance or condition
in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured;
then, and in each and every case, so long as such Servicer Default shall not
have been remedied and subject to the limitations set forth in Section 6.07 of
the Insurance Agreement, either the Indenture Trustee, the Insurer, the Holders
of Notes evidencing not less than 25% of the Outstanding Amount of the Notes
(or, if the Notes have been paid in full and the Indenture has been discharged
in accordance with its terms, by the Owner Trustee or by Certificateholders
evidencing not less than 25% of the aggregate Certificate Percentage Interest),
by notice then given in writing to the Master Servicer (and to the Insurer, the
Indenture Trustee and the Owner Trustee if given by the Noteholders 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. Indenture Trustee to Act; Appointment of Successor. Upon
the Master Servicer's receipt of notice of termination pursuant to Section 8.01
or resignation pursuant to Section 7.04, the Indenture Trustee shall be the
successor to the Master Servicer in its capacity as servicer under this
Agreement, and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions of this Agreement, except that the Indenture Trustee shall not be
obligated to purchase Contracts pursuant to Section 4.07 unless the obligation
to repurchase arose after the date of the notice of termination given to the
Master Servicer pursuant to Section 8.01 or be subject to any obligation of the
Master Servicer to indemnify or hold harmless any Person as set forth in this
Agreement arising from the acts or omissions of the previous Master Servicer. As
compensation therefor,
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the Indenture Trustee shall be entitled to such compensation (whether payable
out of the Collection Account or otherwise) as the Master Servicer would have
been entitled to under this Agreement if no such notice of termination shall
have been given. If, however, a bankruptcy trustee or similar official has been
appointed for the Master Servicer, and no Servicer Default other than such
appointment has occurred, such trustee or official may have the power to prevent
the Indenture Trustee, Insurer or the Noteholders 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 aggregate
Certificate Percentage Interest (in the case of any default which does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
Securityholders, with the consent of the Insurer, waive in writing any default
by the Master Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with this Agreement or in respect
of a covenant or provisions hereof which cannot be modified without the consent
of each Securityholder. Upon any such waiver of a past default, such default
shall cease to exist, and any Servicer Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.
Section 8.06. Insurer Direction of Insolvency Proceedings. Upon receipt
of actual knowledge thereof by a Responsible Officer, the Indenture Trustee
shall promptly notify the
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Insurer of (i) the commencement of any of the events or proceedings
(individually, an "Insolvency Proceeding") described in the definition of the
term "Insolvency Event" or any such event or proceeding applicable to an Obligor
under a Contract and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of, or interest on, a Contract
or any Notes or Certificates. Each Noteholder and Note Owner, by its purchase of
Notes or a beneficial interest therein, each Certificateholder, by its purchase
of Certificates or a beneficial interest therein, the Owner Trustee and the
Indenture Trustee hereby agree that, so long as neither a default under the Note
Policy nor an Insurer Insolvency has occurred and is continuing, the Insurer may
at any time during the continuation of an Insolvency Proceeding direct all
matters relating to such Insolvency Proceeding, including, without limitation,
(i) all matters relating to any Preference Claim, (ii) the direction of any
appeal of any order relating to any Preference Claim and (iii) the posting of
any surety, supersedes or performance bond pending any such appeal. The Insurer
shall be subrogated to the rights of the Indenture Trustee, the Owner Trustee
and each Securityholder in the conduct of any Insolvency Proceeding, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Insolvency
Proceeding. 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 the sum of the Principal
Balances of the Contracts is less than or equal to $175,000,000, the Seller
shall have the option to purchase the remaining Contracts from the Issuer.
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 the related 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, and shall succeed to all interests in and to the Issuer. Such
purchase shall be deemed to have occurred on the last day of such Due Period. In
addition, if the Master Servicer or the Seller has outstanding senior debt and
such debt is not rated "investment grade" by Xxxxx'x at the time of exercising
the option pursuant to this Section, then the Master Servicer or such Seller
shall deliver to the Owner Trustee, the Indenture Trustee and Xxxxx'x, 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 Issuer pursuant to Section
5.02(b) of the Indenture, the Master Servicer shall instruct the Indenture
Trustee to deposit the proceeds from such sale after all payments and reserves
therefrom have been made (the "Insolvency Proceeds") in the Collection Account.
On the Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Master
Servicer shall instruct the Indenture Trustee to make the following deposits
(after the application on such Distribution Date of Net Collections and funds on
deposit in the Spread Account pursuant to Sections 5.05 and 5.06) from the
Insolvency Proceeds and any funds remaining on deposit in the Spread Account
(including the proceeds of any sale of investments therein as described in the
following sentence):
(i) to the Note Distribution Account, any portion of the
Note Interest Distributable Amount not otherwise deposited into the
Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding
principal amount of the Notes (after giving effect to the reduction in
the outstanding principal amount of the Notes to result from the
deposits made in the Note Distribution Account on such Distribution
Date and on prior Distribution Dates);
(iii) to the Insurer, to the extent of any Unreimbursed
Insurer Amounts;
(iv) to WFSRC until WFSRC has received full repayment of
the Spread Account Initial Deposit; and
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(v) to the Certificate Distribution Account, for
distribution to Certificateholders in accordance with Section 5.02 of
the Trust Agreement as determined by the Master Servicer.
(c) As described in Article Nine of the Trust Agreement, notice of
any termination of the Issuer 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.
(e) On a Distribution Date on which an optional purchase pursuant
to Section 9.01(a) or an Optional Repurchase of all remaining Contracts in the
Issuer occur, the Master Servicer shall instruct the Indenture Trustee to make
the following distributions of the Optional Repurchase Payment or the Aggregate
Repurchase Amount, as the case may be, and any Net Collections on deposit in the
Collection Account in the following priorities:
(i) to the Master Servicer, any accrued and unpaid
Servicing Fees with respect to one or more prior Due Periods;
(ii) to the Owner Trustee and Indenture Trustee, any
accrued and unpaid fees and expenses;
(iii) to the Note Distribution Account, the Redemption
Price for full payment of outstanding principal and accrued interest on
the Notes;
(iv) in the case of an Optional Repurchase, to the Note
Distribution Account, the Repurchase Premium for pro rata distribution
to the Noteholders based on the principal balance of each Noteholder
reduced by the Note Principal Distributable Amount calculated for the
Due Period preceding the date of the Optional Repurchase;
(v) to the Insurer, to the extent of any Unreimbursed
Insurer Amounts;
(vi) to WFSRC until WFSRC has received full repayment of
the Spread Account Initial Deposit; and
(vii) to the Certificate Distribution Account, for
distribution to Certificateholders in accordance with Section 5.02 of
the Trust Agreement as determined by the Master Servicer.
Section 9.02. Transfer to the Insurer. If (i) there is one or more
Outstanding Contracts at the end of the Due Period ending immediately prior to
the Class A-4 Final Scheduled Distribution Date and (ii) an amount sufficient to
pay the Note Distributable Amount on the Class A-4 Final Scheduled Distribution
Date has been deposited with the Indenture Trustee by the Insurer for the
benefit of the Class A-4 Noteholders then on the Class A-4 Final Scheduled
Distribution Date the Class A-4 Notes shall be deemed to be transferred by the
Class A-4
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Noteholders to the Insurer or its designee as purchaser thereof at the opening
of business on the Class A-4 Final Scheduled Distribution Date and the Owner
Trustee, on behalf of the Trust, shall execute, and the Indenture Trustee shall
authenticate and deliver to the Insurer or its designee, in the name of the
Insurer or its designee, as the case may be, a new Class A-4 Note evidencing the
entire Note Balance. Such new Class A-4 Note shall have the same terms as the
Class A-4 Notes deemed transferred by the Class A-4 Noteholders. No service
charge shall be made for the issuance of such Class A-4 Note to the Insurer or
its designee, but the Owner Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith. Such
transfer shall not diminish or restrict the Insurer's rights hereunder or under
the Insurance Agreement.
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ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment.
(a) This Agreement may be amended by the Seller, the Master
Servicer and the Owner Trustee on behalf of the Issuer, collectively, without
the consent of any Securityholders, (i) to cure any ambiguity, to correct or
supplement any provisions in this Agreement which are inconsistent with the
provisions herein, or to add any other provisions with respect to matters or
questions arising under this Agreement that shall not be inconsistent with the
provisions of this Agreement, (ii) to add or provide any credit enhancement for
any Class of Notes and (iii) to change any provision applicable for determining
the Specified Spread Account Balance or the manner in which the Spread Account
is funded (in each case with the approval of the Insurer); provided, however,
that any such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Securityholder and provided,
further, that in connection with any amendment pursuant to clause (ii) and (iii)
above, the Master Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and the Insurer a letter from Standard & Poor's to the effect that such
amendment will not cause its then-current rating on any Class of Notes to be
qualified, reduced or withdrawn, without giving any consideration to the effect
of the guaranty under the Note Policy of payments owing to Noteholders, and the
Master Servicer shall provide Xxxxx'x 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 Percentage Interest, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that no such amendment
shall increase or reduce in any manner the amount of, or accelerate or delay the
timing of (i)(A) collections of payments on the Contracts or distributions that
shall be required to be made on any Note or Certificate or any Interest Rate,
(B) except as otherwise provided in Section 10.01(a), the Specified Spread
Account Balance, or the manner in which the Spread Account is funded or (ii)
reduce the aforesaid percentage of the Outstanding Amount of the Notes, the
Holders of which are required to consent to any such amendment, without the
consent of the Insurer and the Holders of all Notes and Certificates of the
relevant Class then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, as prepared by the Seller, the Master Servicer and the
Owner Trustee on behalf of the Issuer, at the expense of the such party,
together with a copy thereof, to each Rating Agency and the Insurer.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish the
written notification of the
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substance of the amendment or consent described in Section 10.01(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 perfection and priority of 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 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 9-507
of the UCC, unless it shall have given the Insurer, the Owner Trustee and the
Indenture Trustee at least 60 days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) WFS, the Seller and the Master Servicer shall give the
Insurer, the Owner Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of the principal executive office of WFS or the
Seller and the Master Servicer or the Subservicers (in the case of notice
provided by the Master Servicer) if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and shall promptly file any such amendment or new financing statement.
The Master Servicer shall at all times maintain each office from which it shall
service Contracts, and its principal executive office, within the United States.
(d) The Master Servicer shall maintain or cause to be maintained
accounts and records as to each Contract accurately and in sufficient detail to
permit (i) the reader thereof to know at any time the status of such Contract,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries
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on (or with respect to) each Contract and the amounts from time to time
deposited in or credited to the Collection 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 Issuer.
(i) The Master Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, each Rating Agency and the Insurer:
(i) 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 Issuer 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
(ii) within 90 days after the beginning of each calendar
year beginning with the first calendar year beginning more than three
months after the Cut-Off Date, an Opinion of Counsel, dated as of a
date during such 90-day period, either (A) stating that, in the opinion
of such counsel, all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and the Indenture Trustee in
the Contracts, and reciting the details of such
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filings or referring to prior Opinions of Counsel in which such details
are given or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest.
Section 10.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee and the
Indenture Trustee shall be governed by the laws of the State of New York.
Section 10.04. Notices. All demands, notices and communications upon or
to the Seller, the Master Servicer, the Owner Trustee, the Indenture Trustee,
the Insurer or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt in the case of (i) WFSRC,
at 000 Xxxx Xxxx Xxxxxxx Xxxx #000, Xxx Xxxxx, Xxxxxx 00000, Attention: Xxxxx
Xxxx, (ii) the Master Servicer, 00 Xxxxxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention:
Legal Department, (iii) the Issuer or the Owner Trustee, at the Corporate Trust
Office (with, in the case of the Issuer, a copy to the Seller), (iv) the
Indenture Trustee, at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Corporate Trust & Agency Services -- Structured Finance Services, (v) Moody's,
to Xxxxx'x Investors Service, Inc., ABS Monitoring Department, 00 Xxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, (vi) Standard & Poor's, to Standard & Poor's, 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset Backed Surveillance
Department and (vii) the Insurer, at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Transaction Oversight Department, with a copy to the Senior Vice
President -- Transaction Oversight; or, as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties. Any
notice required or permitted to be to be mailed to a Securityholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Note Register or the Certificate Register, as the case may be. Any
notice so mailed within the time prescribed herein shall be conclusively
presumed to have been duly given, whether or not such Securityholder shall
receive such notice.
Section 10.05. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificates or the rights of the Holders thereof.
Section 10.06. Assignment. Notwithstanding anything to the contrary
contained herein, as provided in Sections 6.03, 7.02 and 8.04, this Agreement
may not be assigned by the Seller or the Master Servicer without the prior
written consent of Holders of Notes of each Class evidencing not less than
662/3% of the Outstanding Amount of Notes of such Class and Certificateholders
evidencing not less than 662/3% of the aggregate Certificate Percentage
Interest.
Section 10.07. Third Party Beneficiaries. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party other than the Insurer
77
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 the
Note Policy has occurred and is continuing or an 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 USA, National Association not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Chase Manhattan Bank USA, National Association 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.
Section 10.13. Effect of Policy Expiration Date. Notwithstanding
anything to the contrary set forth herein, all references to any right of the
Insurer to direct, appoint, consent to, accept, approve of, take or omit to take
any action under this Sale and Servicing Agreement or any other Basic Document
shall be inapplicable at all times after the Policy Expiration Date, and (i) if
such reference provides for another party or parties to take or omit to take any
such action following an Insurer Default, such party or parties shall be
entitled to take or omit to take such action following the Policy Expiration
Date and (ii) if such reference does not provide for another party or parties to
take or omit to take any such action following an Insurer Default, then the
Trustee acting at the written direction of the Certificateholders holding in the
aggregate more than 51% of the outstanding Certificateholders Note Balance shall
have the right to take or omit to take any such action following the Policy
Expiration Date. In addition, any other provision of this Sale and Servicing
Agreement or any other Basic Document which is operative based in
78
whole or in part on whether an Insurer Default has or has not occurred shall, at
all times on or after the Policy Expiration Date, be deemed to refer to whether
or not the Policy Expiration Date has occurred.
Section 10.14. Limitation on Recourse Against WFSRC. Notwithstanding
anything to the contrary contained in this Agreement, the obligations of WFSRC
under the Basic Documents are solely the corporate obligations of WFSRC, and
shall be payable by WFSRC, solely as provided by the Basic Documents. WFSRC
shall only be required to pay (i) any fees, expenses, indemnities or other
liabilities that it may incur under the Basic Documents from funds available
pursuant to, and in accordance with, the payment priorities set forth in this
Agreement and (ii) to the extent WFSRC has additional funds available (other
than funds described in the preceding clause (i)) that would be in excess of
amounts that would be necessary to pay the debt and other obligations of WFSRC
incurred in accordance with WFSRC's certificate of incorporation and all
financing documents to which WFSRC is a party. The agreement set forth in the
preceding sentence shall constitute a subordination agreement for purposes of
Section 510(a) of the Bankruptcy Code. In addition, no amount owing by WFSRC
hereunder in excess of the liabilities that it is required to pay in accordance
with the preceding sentence shall constitute a "claim" (as defined in Section
101(5) of the Bankruptcy Code) against it.
79
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 2002-2 OWNER TRUST
By: CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
on behalf of the Trust
By:
-------------------------------------
Name:
Title:
WFS RECEIVABLES CORPORATION,
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:
DEUTSCHE BANK TRUST COMPANY
AMERICAS (formerly known as Bankers
Trust Company), not in its individual
capacity but solely as Indenture Trustee
By:
-------------------------------------
Name:
Title:
80
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.]
SA-1
SCHEDULE B
LOCATION OF CONTRACT FILES
WFS Financial Inc WFS Financial Inc
23 Pasteur 0000 X. Xxxxx Xxxxxxx 000
Xxxxxx, XX 00000 Xxxxxx, XX 00000
000-000-0000 000-000-0000
SB-1
SCHEDULE C
NET CHARGE-OFF PERCENTAGE TRIGGERS
Net Charge-Off Percentage
Calculation Day Trigger
--------------- -------------------------
May 2002 0.00%
June 2002 - August 2002 0.34%
September 2002 - November 2002 1.03%
December 2002 - February 2003 1.72%
March 2003 - May 2003 2.32%
June 2003 - August 2003 2.87%
September 2003 - November 2003 3.35%
December 2003 - February 2004 3.77%
March 2004 - May 2004 4.12%
June 2004 - August 2004 4.39%
September 2004 - November 2004 4.61%
December 2004 - February 2005 4.77%
March 2005 - May 2005 4.90%
June 2005 - August 2005 5.00%
September 2005 - November 2005 5.07%
December 2005 - February 2006 5.11%
March 2006 - May 2006 5.15%
June 2006 - August 2006 5.18%
September 2006 - November 2006 5.21%
December 2006 - February 2007 5.22%
March 2007 - May 2007 5.24%
June 2007 - August 2007 5.24%
September 2007 - February 2010 5.25%
SC-1
EXHIBIT A
[FORM OF INSURANCE AGREEMENT]
A-1
EXHIBIT B
[FORM OF NOTE POLICY]
B-1
EXHIBIT C
[FORM OF RIC]
C-1
EXHIBIT D
[FORM OF SUBSERVICING AGREEMENT]
D-1
EXHIBIT E
[FORM OF DISTRIBUTION DATE STATEMENT]
E-1
