EXECUTION COPY
EXHIBIT 10.2
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SALE AND SERVICING AGREEMENT
among
WFS FINANCIAL 2003-_ OWNER TRUST,
as Issuer,
WFS RECEIVABLES CORPORATION 3,
as Seller,
and
WFS FINANCIAL INC,
as Master Servicer
Dated as of ____________, 200___
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TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions............................................................ 2
Section 1.02. Usage of Terms......................................................... 23
Section 1.03. Section References..................................................... 23
Section 1.04. Calculations........................................................... 23
Section 1.05. Accounting Terms....................................................... 23
ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts................................................ 24
ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller........................... 26
Section 3.02. Purchase of Certain Contracts.......................................... 31
Section 3.03. Custody of Contract Files.............................................. 32
Section 3.04. Duties of Master Servicer as Custodian................................. 33
Section 3.05. Instructions; Authority to Act......................................... 34
Section 3.06. Indemnification........................................................ 34
Section 3.07. Effective Period and Termination....................................... 34
Section 3.08. Nonpetition Covenant................................................... 35
Section 3.09. Collecting Title Documents Not Delivered at the Closing Date........... 35
ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer.............................................. 36
Section 4.02. Collection of Contract Payments........................................ 39
Section 4.03. Realization upon Defaulted Contracts and Liquidated Contracts.......... 40
Section 4.04. Insurance.............................................................. 40
Section 4.05. Maintenance of Security Interests in Financed Vehicles................. 41
Section 4.06. Covenants, Representations and Warranties of the Master Servicer....... 41
Section 4.07. Repurchase of Contracts upon Breach of Covenant........................ 43
Section 4.08. Servicing Compensation................................................. 43
Section 4.09. Reporting by the Master Servicer....................................... 43
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Section 4.10. Annual Statement as to Compliance...................................... 46
Section 4.11. Annual Independent Certified Public Accountants' Report................ 46
Section 4.12. Access to Certain Documentation and Information Regarding Contracts.... 46
Section 4.13. Fidelity Bond.......................................................... 47
Section 4.14. Indemnification; Third Party Claims.................................... 47
ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts........................................ 48
Section 5.02. Collections; Net Deposits.............................................. 50
Section 5.03. Application of Collections............................................. 50
Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts............... 51
Section 5.05. Distributions.......................................................... 51
Section 5.06. Spread Account......................................................... 54
Section 5.07. Statements to Securityholders.......................................... 54
ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence.................................................... 57
Section 6.02. Liability of Seller; Indemnities....................................... 57
Section 6.03. Merger or Consolidation of, or Assumption of the Obligations of, the
Seller; Certain Limitations............................................ 58
Section 6.04. Limitation on Liability of Seller and Others........................... 59
Section 6.05. Seller Not to Resign................................................... 60
Section 6.06. Seller May Own Securities.............................................. 60
ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities.............................. 61
Section 7.02. Corporate Existence; Status as Master Servicer; Merger................. 62
Section 7.03. Performance of Obligations............................................. 62
Section 7.04. Master Servicer Not to Resign; Assignment.............................. 62
Section 7.05. Limitation on Liability of Master Servicer and Others.................. 63
ARTICLE EIGHT
DEFAULT
Section 8.01. Servicer Default....................................................... 65
Section 8.02. Indenture Trustee to Act; Appointment of Successor..................... 66
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Section 8.03. Repayment of Advances.................................................. 67
Section 8.04. Notification to Noteholders and Certificateholders..................... 67
Section 8.05. Waiver of Past Defaults................................................ 67
Section 8.06. Backup Servicer........................................................ 67
ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts..................................... 69
ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment............................................................. 71
Section 10.02. Protection of Title to Trust.......................................... 72
Section 10.03. Governing Law......................................................... 74
Section 10.04. Notices............................................................... 74
Section 10.05. Severability of Provisions............................................ 74
Section 10.06. Assignment............................................................ 74
Section 10.07. Third Party Beneficiaries............................................. 74
Section 10.08. Counterparts.......................................................... 74
Section 10.09. Headings.............................................................. 75
Section 10.10. Assignment by Issuer.................................................. 75
Section 10.11. Limitation of Liability of Owner Trustee.............................. 75
Section 10.12. Limitation on Recourse Against WFSRC3................................. 75
SCHEDULES
Schedule A Schedule of Contracts................................................. SA-1
Schedule B Location of Contract Files............................................ SB-1
Schedule C Sequential Payment Triggers........................................... SC-1
Schedule D Spread Account Step Down Triggers..................................... SD-1
EXHIBITS
Exhibit A Form of RIC........................................................ A-1
Exhibit B Form of Subservicing Agreement..................................... B-1
Exhibit C Form of Distribution Date Statement................................ C-1
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This SALE AND SERVICING AGREEMENT, dated as of ____________, 200___, is
among WFS Financial 2003-__ Owner Trust, as issuer (the "Issuer"), WFS
Receivables Corporation 3, 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 Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Interest Distributable Amounts for all Classes
of Notes.
"Aggregate Net Liquidation Losses" means, with respect to any
Collection 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
Collection Period plus accrued and unpaid interest thereon (adjusted to the Net
Contract Rate) to the last Due Date in such Collection Period exceeds (ii) the
Net Liquidation Proceeds for such Contract.
"Aggregate Principal Balance" means, with respect to any date and the
Outstanding Contracts, the aggregate of the Principal Balances of such Contracts
as of such date.
"Aggregate Principal Distributable Amount" means the sum of the Class A
Undercollateralization Amount, the Class B Undercollateralization Amount, the
Class C Undercollateralization Amount and the Class D Undercollateralization
Amount.
"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, 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) which is in a form sufficient under the laws of the jurisdiction
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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 which 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.
"Available Funds" means, with respect to a Distribution Date, the sum
of Net Collections and the Spread Account Withdrawal Amount.
"Backup Servicer" means ____________________________, and its
successor.
"Backup Servicer Event" means the occurrence any of the following
events: (i) the Bank's long term senior debt rating is downgraded to B3 or less
by Xxxxx'x, (ii) an Event of Default or (iii) a Servicer Default.
"Bank" means Western Financial Bank, and its successors.
"Basic Documents" shall have the meaning specified in the Indenture.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banking institutions in Los Angeles, California, Newark, Delaware
or New York, New York are authorized or obligated by law, executive order or
government decree to remain closed.
"Certificate Distributable Amount" means the aggregate amount of the
Excess Spread Amount distributed to Certificateholders pursuant to Section
5.06(c).
"Certificate Distribution Account" shall have the meaning specified in
the Trust Agreement.
"Certificate Final Principal Distribution Date" means the ____________,
200___ 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 ______.___%.
"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 Distributable Amount" means, with respect to any Distribution
Date, the sum of (i) the Class A Principal Distributable Amount and (ii) the
aggregate Interest Distributable Amount for the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes and the Class A-4 Notes.
"Class A Notes" means, collectively, the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes and the Class A-4 Notes.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the amount distributable in respect of principal on the Class
A Notes on such Distribution Date which amount shall equal the greater of (i)
the outstanding principal balance of the Class A-1 Notes on that Distribution
Date (before giving effect to any payments made to holders of the Class A Notes
on that Distribution Date) and (ii) the excess of the principal balance of the
Class A Notes immediately prior to that Distribution Date over ______.___% of
the Aggregate Principal Balance as of the last day of the related Collection
Period; provided, however, that on any Distribution Date that the Net Charge-Off
Percentage exceeds the Sequential Payment Trigger for that Distribution Date,
the Class A Principal Distributable Amount will be equal to the lesser of (i)
the Aggregate Principal Distributable Amount and (ii) the outstanding principal
balance of the Class A Notes; provided, further, that on the Final Scheduled
Distribution Date of any class of Class A Notes, the Class A Principal
Distributable Amount will not be less than the amount that is necessary to pay
that class of the Class A Notes in full.
"Class A Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, as of the last day of the related
Collection Period of the Class A Note principal balance over the Aggregate
Principal Balance as of the last day of the related Collection Period.
"Class A-1 Final Scheduled Distribution Date" means the ____________,
200___ Distribution Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register, as such term is defined in the Indenture.
"Class A-1 Rate" means ______.___% per annum.
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"Class A-2 Final Scheduled Distribution Date" means the ____________,
200___ Distribution Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
"Class A-2 Rate" means ______.___% per annum.
"Class A-3 Final Scheduled Distribution Date" means the ____________,
200___ Distribution Date.
"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"Class A-3 Rate" means ______.___% per annum.
"Class A-4 Final Scheduled Distribution Date" means the ____________,
200___ Distribution Date.
"Class A-4 Noteholder" means the Person in whose name a Class A-4 Note
is registered in the Note Register.
"Class A-4 Rate" means ______.___% per annum.
"Class B Distributable Amount" means, with respect to any Distribution
Date, the sum of (i) the Class B Principal Distributable Amount and (ii) the
Interest Distributable Amount for the Class B Notes.
"Class B Final Scheduled Distribution Date" means the ____________,
200___ Distribution Date.
"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Note Register.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the amount distributable in respect of principal on the Class
B Notes on such Distribution Date which amount shall equal the excess of (i) the
sum of (a) the principal balance of the Class A Notes (after taking into account
payment of the Class A Principal Distribution Amount for that Distribution Date)
and (b) the principal balance of the Class B Notes immediately prior to such
Distribution Date over (ii) ______.___% of the Aggregate Principal Balance as of
the last day of the related Collection Period; provided, however, that on any
Distribution Date that the Net Charge-Off Percentage exceeds the Sequential
Payment Trigger for that Distribution Date, the Class B Principal Distributable
Amount will be equal to the lesser of (i) the excess of the Aggregate Principal
Distributable Amount over the Class A Distributable Amount and (ii) the
outstanding principal balance of the Class B Notes; provided, further, that on
the Final Scheduled Distribution Date of the Class B Notes, the Class B
Principal Distributable Amount will not be less than the amount that is
necessary to pay the Class B Notes in full.
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"Class B Rate" means ______.___% per annum.
"Class B Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, as of the last day of the related
Collection Period of the sum of the principal balances of the Class A Notes and
Class B Notes over the sum of the Class A Undercollateralization Amount and the
Aggregate Principal Balance as of the last day of the related Collection Period.
"Class C Distributable Amount" means, with respect to any Distribution
Date, the sum of (i) the Class C Principal Distributable Amount and (ii) the
Interest Distributable Amount for the Class C Notes.
"Class C Final Scheduled Distribution Date" means the ____________,
200___ Distribution Date.
"Class C Noteholder" means the Person in whose name a Class C Note is
registered in the Note Register.
"Class C Principal Distributable Amount" means, with respect to any
Distribution Date, the amount distributable in respect of principal on the Class
C Notes on such Distribution Date which amount shall equal the excess of (i) the
sum of (a) the aggregate principal balances of the Class A Notes and the Class B
Notes (after taking into account payment of the Class A Principal Distribution
Amount and the Class B Principal Distribution Amount for that Distribution Date)
and (b) the principal balance of the Class C Notes immediately prior to such
Distribution Date over (ii) ______.___% of the Aggregate Principal Balance as of
the last day of the related Collection Period; provided, however, that on any
Distribution Date that the Net Charge-Off Percentage exceeds the Sequential
Payment Trigger for that Distribution Date, the Class C Principal Distributable
Amount will be equal to the lesser of (i) the excess of the Aggregate Principal
Distributable Amount over the sum of (a) the Class A Distributable Amount and
(b) the Class B Distributable Amount and (ii) the outstanding principal balance
of the Class C Notes; provided, further, that on the Final Scheduled
Distribution Date of the Class C Notes, the Class C Principal Distributable
Amount will not be less than the amount that is necessary to pay the Class C
Notes in full.
"Class C Rate" means ______.___% per annum.
"Class C Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, as of the last day of the related
Collection Period of the sum of the principal balances of the Class A Notes,
Class B Notes and Class C Notes over the sum of the Class A
Undercollateralization Amount, the Class B Undercollateralization Amount and the
Aggregate Principal Balance as of the last day of the related Collection Period.
"Class D Distributable Amount" means, with respect to any Distribution
Date, the sum of (i) the Class D Principal Distributable Amount and (ii) the
Interest Distributable Amount for the Class D Notes.
"Class D Final Scheduled Distribution Date" means the ____________,
200___ Distribution Date.
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"Class D Noteholder" means the Person in whose name a Class D Note is
registered in the Note Register.
"Class D Principal Distributable Amount" means, with respect to any
Distribution Date, the amount distributable in respect of principal on the Class
D Notes on such Distribution Date which amount shall equal the excess of (i) the
sum of (a) the aggregate principal balances of the Class A Notes, Class B Notes
and the Class C Notes (after taking into account payment of the Class A
Principal Distribution Amount, Class B Principal Distribution Amount and the
Class C Principal Distribution Amount for that Distribution Date) and (b) the
principal balance of the Class D Notes immediately prior to such Distribution
Date over (ii) the Aggregate Principal Balance as of the last day of the related
Collection Period; provided, however, that on any Distribution Date that the Net
Charge-Off Percentage exceeds the Sequential Payment Trigger for that
Distribution Date, the Class D Principal Distributable Amount will be equal to
the lesser of (i) the excess of the Aggregate Principal Distributable Amount
over the sum of (a) the Class A Distributable Amount, (b) the Class B
Distributable Amount and (c) the Class C Distributable Amount and (ii) the
outstanding principal balance of the Class D Notes; provided, further, that on
the Final Scheduled Distribution Date of the Class D Notes, the Class D
Principal Distributable Amount will not be less than the amount that is
necessary to pay the Class D Notes in full.
"Class D Rate" means ______.___% annum.
"Class D Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, as of the last day of the related
Collection Period of the principal balance of the Notes over the sum of the
Class A Undercollateralization Amount, the Class B Undercollateralization
Amount, Class C Undercollateralization Amount and the Aggregate Principal
Balance as of the last day of the related Collection Period.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means ____________, 200___.
"Collection Account" means the account established and maintained as
such pursuant to Section 5.01.
"Collection Period" means, with respect to any Distribution Date, the
period commencing on the first day of the month preceding the month in which
such Distribution Date occurs (or from, but excluding, the Cut-Off Date in the
case of the first Distribution Date) through the last day of such month.
"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
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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.
"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 Master Servicer and the Seller.
"Cut-Off Date" means ____________, 200___.
"Cut-Off Date Aggregate Principal Balance" means $______________, 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 Collection Period, a
Contract (i) which is, at the end of such Collection Period, delinquent in the
amount of at least two monthly
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payments or (ii) with respect to which the related Financed Vehicle has been
repossessed or repossession efforts have been commenced.
"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 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
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(iii) with respect to any Trust Account Property that is
an uncertificated security under Article 8 of the UCC and that is not
governed by clause (ii) above, registration of the transfer to, and
ownership of such Trust Account Property by, the Indenture Trustee or
the Owner Trustee, as the case may be, its custodian or its nominee
by the issuer of such Trust Account Property.
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement, and its successors.
"Distribution Date" means the 20th day of each calendar month or, if
any such date shall not be a Business Day, the next succeeding Business Day,
commencing ____________, 200___.
"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.
"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+", from
Moody's equal to "Prime-1" and from Fitch equal to "F1+", 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
each of Standard & Poor's and Fitch 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+", from Moody's equal to "Prime-1" and from Fitch equal to "F1+"
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. 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 or FHLMC;
(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
10
state banking authorities, so long as at the time of such investment
or contractual commitment providing for such investment either the
long-term, unsecured debt obligations of such depository institution
or trust company have credit ratings from Moody's at least equal to
"Aa2" and shall have commercial paper or other short-term debt
obligations rated at least "A-1+" by Standard & Poor's, "Prime-1" by
Moody's and "F1+" by Fitch;
(iv) 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 each of Standard
& Poor's and Fitch;
(v) 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 any of its
affiliates is investment manager or advisor;
(vi) the RIC, provided that (A) it is guaranteed by an
entity which has long-term, unsecured debt obligations rated "AAA" by
each of Standard & Poor's and Fitch and at least "Aa2" by Moody's,
(B) it has not ceased to be an Eligible Investment in accordance with
Section 1 thereof and (C) such investment will not result in a
qualification, reduction or withdrawal by any Rating Agency of its
then-applicable rating on any Class of Notes; if the investments in
this paragraph fall below the specified ratings, the invested monies
shall be moved to Eligible Investments within two Business Days such
investments fall below the specified ratings; however, no new monies
may be invested in the RIC until the RIC once again becomes an
Eligible Investment; and
(vii) 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 (and in accordance with its
credit and collection policy) by the Master Servicer as of the related
Charge-Off Date.
"Excess Spread Amount" means, with respect to a Distribution Date, 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(c)) from the Spread Account on such
Distribution Date).
"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.
"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, the Class A-4 Final Scheduled
Distribution Date, the Class B Final Scheduled Distribution Date, the Class C
Final Scheduled Distribution Date or the Class D Final Scheduled Distribution
Date, as the case may be.
11
"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.
"Fitch" means Fitch, Inc., and its successors.
"Floor Amount" means $______________; provided, however, that if the
Net Charge-Off Percentage for a Distribution Date is less than the Spread
Account Step Down Trigger, the Floor Amount for that Distribution Date will be
equal to (i) $______________ if such Distribution Date is on or between
____________, 200___ and ____________, 200___ and (ii) $______________ if such
Distribution Date is on or after the ____________, 200___ Distribution Date.
"FNMA" means the Federal National Mortgage Association, and its
successors.
"Gross Charge-Off Amount" means, with respect to any Collection
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 Collection Period over the aggregate Estimated Sale
Values of the related Repossessed Vehicles, (ii) the excess of the aggregate
Estimated Sale Values of Repossessed Vehicles sold during the related
Collection 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 Collection Period, (iv) the amount by which the outstanding
Principal Balances of Contracts that have become Chapter 13 Contracts during
the related Collection 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 Collection Period; provided that, with respect to any Contract, in no
event shall the aggregate amount included in the Gross Charge-Off Amounts for
all Collection 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 ____________, 200___,
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 _______________.
12
"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 ______.___% 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 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 Proceeds" shall have the meaning specified in Section
9.01(b).
"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.
"Interest Carryover Shortfall" means, with respect to any Distribution
Date and a Class of Notes, the excess, if any, of the sum of the Interest
Distributable Amount for such Class on 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.
13
"Interest Distributable Amount" means, with respect to any
Distribution Date and a Class of Notes, the sum of the Monthly Interest
Distributable Amount and the Interest Carryover Shortfall, in each case for
such Class of Notes on 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 ____________, 200___) and
(ii) Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C
Notes and Class D Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
"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, ____________, 200___) to, but excluding,
such Distribution Date and (ii) the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D 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 ____________,
200___) to, but excluding, the 20th day of the month of such Distribution Date.
"Interest Rate" means the Class A-1 Rate, the Class A-2 Rate, the
Class A-3 Rate, the Class A-4 Rate, the Class B Rate, the Class C Rate or the
Class D 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 2003-__ 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 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
14
such attempted liquidation) and the sale of any property acquired in respect
thereof which are not recoverable under any Insurance Policy.
"Liquidation Proceeds" means amounts received by the Master Servicer
(before reimbursement for Liquidation Expenses) in connection with the
realization of the amounts due and to become due under any Defaulted Contract
and the sale of any property acquired in respect thereof.
"Master Servicer" means WFS in its capacity as the master servicer of
the Contracts under Section 4.01, and, in each case upon succession in
accordance herewith, each successor servicer in the same capacity pursuant to
Section 4.01 and each successor master servicer pursuant to Section 8.02.
"Master Servicer Report Date" means, with respect to any Distribution
Date, the fifth Business Day prior to such Distribution Date.
"Maturity Date" means, with respect to any Contract, the date on which
the last scheduled payment of such Contract shall be due and payable (after
giving effect to all Prepayments received prior to the date of determination)
as such date may be extended pursuant to Section 4.02.
"Monthly 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).
"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 Collection
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
Collection Period and all prior Collection Periods over the sum of Recoveries
for such Collection Period and all prior Collection Periods and (b) the
denominator of which is equal to the Cut-Off Date Aggregate Principal Balance.
"Net Collections" means, with respect to any Distribution Date and the
related Collection Period, the sum of (i) all amounts collected on or in
respect of the Contracts during such Collection Period, including, Monthly P&I,
the Aggregate Repurchase Amount, if any, Liquidation Proceeds (only to the
extent of the related Net Liquidation Proceeds), Insurance Proceeds (only to
the extent of the related Net Insurance Proceeds), less the sum of (A) any late
payments of interest retained by the Master Servicer as reimbursement for
Advances pursuant to Section 5.04, (B) any installments of Monthly P&I or
Prepayments retained by the Master
15
Servicer as reimbursement for Nonrecoverable Advances pursuant to Section 5.04
and (C) amounts retained by the Master Servicer as compensation pursuant to
Section 4.08; (ii) the Advance for such Collection 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 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, Class A-4 Notes, Class B Notes, Class C Notes and Class D
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 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, the Class A-4 Final Scheduled
Distribution Date, the Class B Final Scheduled Distribution Date, the Class C
Final Scheduled Distribution Date or the Class D Final Scheduled Distribution
Date, as the case may be.
"Note Register" shall have the meaning specified in the Indenture.
"Obligee" means the Person to whom an Obligor is indebted under a
Contract.
"Obligor" on a Contract means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Contract.
16
"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.
"Original Class A-1 Note Balance" means $______________.
"Original Class A-2 Note Balance" means $______________.
"Original Class A-3 Note Balance" means $______________.
"Original Class A-4 Note Balance" means $______________.
"Original Class B Note Balance" means $______________.
"Original Class C Note Balance" means $______________.
"Original Class D Note Balance" means $______________.
"Original Pool Balance" means $______________.
"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, 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:
(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,
17
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 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 date on which the
Notes have been paid in full, 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 ________________________.
"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".
"Prepayment" means any of the following: (i) payment to the Master
Servicer of ______.___% 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.
"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
18
amount being the total of all Monthly P&I received on or after ____________,
200___ less any unearned interest as of the Due Date for such Contract
immediately preceding ____________, 200___, computed in accordance with the
Rule of 78's, less all amounts received on or in respect of such Contract on or
after ____________, 200___ that are allocable to principal and (ii) Simple
Interest Contract, the actual principal balance under the terms thereof.
"Rating Agency" means each of Xxxxx'x, Standard & Poor's and Fitch.
"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 Collection Period, the sum of
(i) the excess of actual sales proceeds for Repossessed Vehicles sold during
such Collection 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 Collection 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.
"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 Collection Period
in which such repurchase occurs.
"Repurchased Contract" means a Contract repurchased as of the related
Master Servicer Report Date by the Master Servicer pursuant to Section 4.07 or
by the Seller pursuant to Section 3.02.
"Responsible Officer" means any officer within the Corporate Trust and
Agency Group (or any successor group) of the Indenture Trustee including any
Vice President, assistant secretary or any other officer or assistant officer
of the Indenture Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred at the Indenture Trustee's
Corporate Trust Office because of his knowledge of and familiarity with the
particular subject.
"RIC" means the reinvestment contract provided by the Bank and WFAL2
or a subsidiary thereof, substantially in the form of Exhibit A hereto.
19
"RIC Reinvestment Earnings" means, with respect to any Distribution
Date, the related Collection Period and the Contracts that were Outstanding at
the beginning of such Collection Period, the amount by which the sum of the
Monthly 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 D 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 Contract (other
than Liquidated Contracts) for which the Master Servicer has not received one
or more payments of Monthly P&I due under such 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 WFSRC3, in its capacity as the Seller of Contracts
under this Agreement, and each successor thereto (in the same capacity)
pursuant to Section 6.03.
"Sequential Payment Trigger" means, with respect to any Distribution
Date, the percentage set forth in Schedule C.
"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 Collection Period,
which shall equal an amount equal to the product of the Servicing Fee Percent
and the Principal Balance of such Contract as of the last day of the related
Collection Period, but only to the extent that the Monthly P&I for such
Contract for such Collection Period has been collected or advanced by the
Master Servicer pursuant to Section 5.04.
20
"Servicing Fee Percent" means one-twelfth of ______.___% per annum.
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers furnished to the Indenture Trustee
and the Owner Trustee by the Master Servicer pursuant to Section 4.01.
"Simple Interest Contract" means a Contract as to which interest is
calculated each day on the basis of the actual principal balance of such
Contract on such day.
"Specified Spread Account Balance" means, with respect to any
Distribution Date, the greater of (i) ______.___% of the Aggregate Principal
Balance as of the last day of the related Collection Period and (ii) the Floor
Amount. Notwithstanding the foregoing, in no event shall the Specified Spread
Account Balance be greater than the Outstanding Amount of the Notes.
"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 Collateral" means (i) the Spread Account Initial
Deposit, (ii) all other amounts deposited in or credited to the Spread Account
from time to time hereunder, (iii) all Eligible Investments made with amounts
on deposit in such Account, and (iv) all earnings and distributions on, and
proceeds of, any and all of the foregoing.
"Spread Account Step Down Trigger" means, with respect to any
Distribution Date, the percentage set forth in Schedule D.
"Spread Account Initial Deposit" means $______________, ______.___% of
which will be cash.
"Spread Account Withdrawal Amount" means, with respect to a
Distribution Date, the lesser of (i) the Spread Account Balance (prior to any
deposits and withdrawals therefrom on such Distribution Date) and (ii) the
excess of (a) the sum of the Aggregate Principal Amount, the Aggregate Interest
Distributable Amount, the Servicing Fee (including any unpaid Servicing Fees
with respect to one or more prior Collection Periods) and the accrued and
unpaid fees and expenses due to each of the Indenture Trustee and the Owner
Trustee over (b) Net Collections.
"Standard & Poor's" means Standard & Poor's, a Division of The
XxXxxx-Xxxx Companies, Inc., and its successors in interest.
"Statistical Calculation Date" means ____________, 200___.
"Statistical Calculation Date Principal Balance" means the sum of the
Principal Balances of selected Contracts as of the Statistical Calculation
Date, which amount is equal to $______________.
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"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 B 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.
"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 ____________,
200___, as amended and restated as of ____________, 200___, among the Depositor
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.
"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.
"WFSRC3" means WFS Receivables Corporation 3, a wholly-owned
subsidiary of WFS, and its successors and assigns.
22
(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."
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 Notes,
Class A-4 Notes, Class B Notes, the Class C Notes and Class D 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.
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ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts.
(a) In consideration of the Issuer's delivery to or upon the order
of the Seller of the Certificates and $______________ aggregate principal
balance of Notes, the Seller hereby grants, transfers, assigns and otherwise
conveys to the Issuer, without recourse (subject to the obligations herein),
and hereby grants a security interest in 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 on or 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.
(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 hereby authorizes, and will cause, 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 hereby authorizes, and will
cause, the filing of UCC-1 financing statements, naming the Seller as debtor
and the Trust as secured party and describing the Contracts 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 and the Trust
in the Contracts and to continue the first priority security interest of the
Indenture Trustee in the Financed Vehicles and their proceeds (other than, as
to such priority, any statutory lien arising by operation of law after the
Closing Date which is prior to such interest), including, without limitation,
the filing of financing statements, amendments thereto or continuation
statements and the making of notations on records or documents of title.
If any change in the name, identity or corporate structure of the
Seller or WFS or the relocation of the chief executive office of any of them
would make any financing or continuation statement or notice of lien filed
under this Agreement or the other Basic Documents seriously misleading within
the meaning of applicable provisions of the UCC or any title statute, the
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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 and the
Securityholders in the Contracts, Financed Vehicles and the proceeds thereof.
Promptly thereafter, the Master Servicer shall deliver to the Indenture Trustee
and the Owner Trustee 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
and Securityholders 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 in the Financed Vehicles and the proceeds thereof.
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ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller. The Seller
hereby makes the following representations and warranties on which the Issuer
is deemed to have relied in acquiring the Contracts. 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 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
26
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 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
27
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.
(v) Current in Payment. As of the Cut-Off Date, such
Contract is no more than 30 days delinquent in payment as to all or
any portion of any installment of Monthly P&I.
(vi) Tax Liens. As of the Closing Date, there is no lien
against the related Financed Vehicle for delinquent taxes.
(vii) Rescission, Offset, Etc. As of the Closing Date,
there is no right of rescission, offset, defense or counterclaim to
the obligation of the Obligor to pay the unpaid principal or interest
due under such Contract; the operation of the terms of such Contract
or the exercise of any right thereunder will not render such Contract
unenforceable in whole or in part or subject to any right of
rescission, offset, defense or counterclaim, and no such right of
rescission, offset, defense or counterclaim has been asserted.
(viii) Mechanics' Liens. As of the Closing Date, there are
no liens or claims for work, labor, material or storage affecting the
related Financed Vehicle which are or may become a lien prior to or
equal with the security interest granted by such Contract.
(ix) Compliance with Laws. Such Contract, and the sale of
the Financed Vehicle sold thereunder, complied, at the time it was
made, in all material respects with all applicable state and federal
laws (and regulations thereunder), including without limitation
usury, equal credit opportunity, fair credit reporting,
truth-in-lending or other similar laws, the Federal Trade Commission
Act, and applicable state laws regulating retail installment sales
contracts and loans in general and motor vehicle retail installment
contracts and loans in particular; and the consummation of the
transactions herein contemplated, including, without limitation, the
transfer of ownership of the Contracts to
28
the Issuer and the receipt of interest by the Securityholders, will
not involve the violation of any applicable state or federal law.
(x) Valid and Binding. Such Contract is the legal, valid
and binding obligation of the Obligor thereunder and is enforceable
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally; all parties to such Contract had full
legal capacity to execute and deliver such Contract and all other
documents related thereto and to grant the security interest
purported to be granted thereby; and the terms of such Contract have
not been waived or modified in any respect, except by instruments
that are part of the Contract Documents.
(xi) Enforceability. Such Contract contains customary and
enforceable provisions such as to render the rights and remedies of
the holder or assignee thereof adequate for the realization against
the collateral of the benefits of the security, subject, as to
enforceability, to bankruptcy, insolvency, reorganization or similar
laws affecting the enforcement of creditors' rights generally.
(xii) No Default. As of the Cut-Off Date, there was no
default, breach, violation or event permitting acceleration existing
under such Contract (except payment delinquencies permitted by
subparagraph (v) above) and no event which, with notice and the
expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under
such Contract, and the Seller has not waived any such default,
breach, violation or event permitting acceleration except payment
delinquencies permitted by subparagraph (v) above.
(xiii) Insurance. At the Closing Date, the related
Financed Vehicle will be covered by (A) a comprehensive and collision
insurance policy (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 collision coverage or (B) a LDI Policy; provided,
however, that if such Financed Vehicle has an unpaid principal
balance of less than $______________ or the related Contract has six
or fewer months remaining before its Maturity Date, it will not be
required to be covered by the insurance described in this
subparagraph. Each of the Seller, WFS and the Master Servicer shall
at all times comply with all of the provisions of such insurance
policies and the LDI Policy applicable to such Financed Vehicle.
(xiv) Acquisition of Contract. Such Contract was either
acquired by WFS (or its predecessor in interest) from a Dealer or a
Third Party Lender with which it ordinarily does business or the Bank
or originated directly by WFS in the ordinary course of its business,
and no adverse selection procedures have been utilized in selecting
such Contract from all other similar contracts purchased by the
Seller.
(xv) Scheduled Payments. As of the Cut-Off Date, scheduled
payments under such Contract are applied in accordance with the Rule
of 78's method or the simple
29
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.
(xvii) Characteristics. As of the Statistical Calculation
Date such Contract had (A) a Principal Balance of not less than
$______________nor more than $______________, (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 3 months nor
greater than 84 months and (D) an APR of not less than ______.___%.
(xviii) Identification. The Master Servicer and WFS have
clearly marked their electronic records to indicate that such
Contract is owned by the Issuer.
(xix) Maturity. As ofthe Statistical Calculation Date such
Contract did not have a Maturity Date later than the 90th day prior
to the end of the Collection 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 ______.___% for Rule of
78's Contracts and Simple Interest Contracts.
(xxiii) WFS, Bank and Third Party Lender Originations. With
respect to the Contracts, the aggregate Principal Balance as of the
Cut-Off Date of such Contracts purchased by WFS from the Bank and
Third Party Lenders or originated directly by WFS is not more than
approximately ______.___% of the Statistical Calculation Date
Principal Balance.
(xxiv) Simple Interest Contracts. As of the Statistical
Calculation Date, approximately ______.___% of the Statistical
Calculation Date Principal Balance of the Contracts shall be Simple
Interest Contracts and approximately ______.___% of the
30
Statistical Calculation Date Principal Balance of the Contracts shall
be Rule of 78's Contracts.
(xxv) New or Pre-Owned Vehicles. At least ______.___% of
the Contracts by Statistical Calculation Date Principal Balance shall
be new vehicles and not greater than ______.___% shall be pre-owned
vehicles.
(xxvi) States of Origination. Approximately ______.___% of
the Contracts by Statistical Calculation Date Principal Balance were
originated or purchased by WFS in California and approximately
______.___% of the Contracts by Statistical Calculation Date
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 is prior to
all other Liens, and is enforceable as such as against creditors of
and purchasers from the Seller. Other than the security interest
granted to the Issuer pursuant to this 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 or that has been
terminated.
(xxx) Contract Characteristics as of the Cut-Off Date. The
representations and warranties made in this Section with respect to
certain Contracts as of the Statistical Calculation Date shall be
true and correct in every material respect for all Contracts as of
the Cut-Off Date.
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 or the Issuer 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
31
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 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;
(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 in, the Contract Documents and shall xxxx the Contracts in
the same manner. Notwithstanding the foregoing, if failure to do so will not
result in the qualification, reduction or withdrawal by any Rating Agency of
its then-applicable rating on any Class of Notes, the Master Servicer shall not
be required to segregate or xxxx the Contracts and the 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
32
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 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 and the Indenture Trustee to verify the accuracy of
the Master Servicer's record keeping. The Master Servicer shall promptly report
to the Owner Trustee and the Indenture Trustee any failure on its part to hold
the Contract Files and maintain its accounts, records and computer systems as
herein provided and shall promptly take appropriate action to remedy any such
failure.
(b) Maintenance of and Access to Records. The Master Servicer
shall maintain each Contract File at one of its offices specified in Schedule B
hereto or at such other location as shall be specified to the Owner Trustee and
the Indenture Trustee by 30 days' prior written notice. The Master Servicer
shall permit the Owner Trustee and the Indenture Trustee 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. Concurrently with
the delivery of each Distribution Date Statement, the Master Servicer shall
deliver a data tape to the Backup Servicer containing information necessary for
the Backup Servicer to generate the statement required pursuant to Section
3.07(h) of the Indenture and otherwise necessary for the servicing and
administration of the Contracts.
(c) Release of Documents. Upon instruction from the Indenture
Trustee (a copy of which shall be furnished to the Owner Trustee), 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) Title Documents. The Master Servicer shall deliver to the
Indenture Trustee and the Owner Trustee (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) 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
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 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 a majority of the Outstanding Amount of the Notes, by the Owner
Trustee or by Certificateholders evidencing not less than a majority of the
aggregate Certificate Percentage Interest, in the same manner as the Indenture
Trustee, the Owner Trustee 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.
(c) Collecting Title Documents Not Delivered at the Closing Date.
In the case of any Contract in respect of which written evidence from the
Dealer selling or transferring the related Financed Vehicle that the Title
Document for such Financed Vehicle showing the Master Servicer as first
lienholder has been applied for from the Registrar of Titles was delivered to
the Owner Trustee on the Closing Date in lieu of a Title Document, the Master
Servicer shall use its best efforts to collect such Title Document from the
Registrar of Titles as promptly as possible. If such Title Document showing the
Master Servicer as first lienholder is not received by the Master Servicer or
the related Subservicer within 180 days after the Closing Date, then the
representation and warranty in Section 3.01(b)(iii) in respect of such Contract
shall be deemed to have been incorrect in a manner that materially and
adversely affects the Certificateholders.
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ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer. The Master Servicer, acting
alone and/or through one or more Subservicers as provided in this Section,
shall, as agent for the Indenture Trustee and the Owner Trustee, 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 any Rating Agency; provided, however, that the new APR shall not
be less than the sum of (i) the Class D 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, 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 ______.___% of the Original Pool Balance through the
Distribution Date nine months prior to the Class D Final Scheduled Distribution
Date and (ii) during the 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 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 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 and the Owner Trustee 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 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.
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The Owner Trustee shall furnish the Master Servicer all documents necessary or
appropriate to enable the Master Servicer to carry out its servicing and
administrative duties hereunder.
On the Closing Date, the Master Servicer shall deliver to the
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 or the Indenture Trustee.
The Master Servicer may enter into Subservicing Agreements with one or
more Subservicers approved by the Indenture Trustee 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.
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, 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 B
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 or
Certificateholders 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
Indenture Trustee which will be bound by the terms of the related Subservicing
Agreement.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through such Persons or
otherwise, the Master Servicer shall remain obligated and liable to the
Indenture Trustee, the Owner Trustee and the Securityholders for the servicing
and administering of the Contracts in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from a
Subservicer and to the same extent and under the same terms and conditions as
if the Master Servicer alone were servicing and administering the Contracts.
The Master Servicer shall be entitled to enter into an agreement with a
Subservicer for indemnification of the Master Servicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement that may be entered into and any other
transactions or servicing arrangements relating to the Contracts involving a
Subservicer or other Affiliate of the
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Master Servicer in its capacity as such and not as an originator shall be
deemed to be between the Subservicer or such other Affiliate, as the case may
be, and the Master Servicer alone, and none of the Indenture Trustee, the Owner
Trustee, the Noteholders nor the Certificateholders shall be deemed parties
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to the Subservicer except as set forth in the immediately
succeeding paragraph.
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 and the Owner Trustee 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 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.
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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 and the Owner Trustee in holding such monies
and collections. The Master Servicer agrees, for the benefit of the Indenture
Trustee, the Owner Trustee and the Securityholders, 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 and the Owner Trustee, 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 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 and the Owner Trustee 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 or
the Owner Trustee, deliver or cause to be delivered to the Indenture Trustee or
the Owner Trustee, 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 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
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such extension and in no event can the last payment on such Contract be
extended beyond the last day of the Collection Period ending immediately prior
to the Class D 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 of less than $______________ or the
related Contract has six or fewer months remaining before its Maturity Date.
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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 the Issuer is deemed to have relied in
acquiring the Contracts. 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 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
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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.
(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
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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 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 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 Collection 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 to
retain all late payment charges, extension fees and similar items paid in
respect of Contracts. 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, the Backup Servicer
and each Rating Agency a statement, substantially in the form of Exhibit C
hereto (the "Distribution Date Statement"), setting forth with respect to the
next succeeding Distribution Date:
(i) the Interest Distributable Amount for each Class of
Notes;
(ii) the Class A Principal Distributable Amount, the Class
B Principal Distributable Amount, the Class C Principal Distributable
Amount and the Class D Principal Distributable Amount for such
Distribution Date;
(iii) the amount of principal actually distributed to each
Class of Noteholders on such Distribution Date;
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(iv) with respect to each Class of Notes, the excess, if
any, of the Aggregate Principal Distributable Amount over the amount
of principal actually distributed on the Notes on such Distribution
Date;
(v) the Net Collections for such Distribution Date;
(vi) 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;
(vii) the Servicing Fee with respect to the related
Collection Period;
(viii) the amount of any Interest Carryover Shortfall on
such Distribution Date and the change in such amounts from those with
respect to the immediately preceding Distribution Date;
(ix) the aggregate amount of Monthly P&I which was due on
the Contracts during the related Collection Period and was delinquent
as of the end of the related Collection 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
Collection Period);
(x) 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;
(xi) 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 Collection Period;
(xii) the Aggregate Net Liquidation Losses for the related
Collection Period;
(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 Aggregate Principal
Balance for the most recent Distribution Date;
(xiv) the Spread Account Withdrawal Amount and the Excess
Spread Account Amount, if any, for such Distribution Date;
(xv) the Certificate Distributable Amount;
(xvi) the sum of the Principal Balances of Delinquents
Contracts;
(xvii) the sum of the Principal Balance of Contracts that
became Defaulted Contracts during the related Collection Period;
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(xviii) the Aggregate Principal Balance at the beginning and
end of the related Collection Period; and
(xix) the amount otherwise distributable to the
Certificateholders.
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 and each Rating Agency a
report, in respect of the immediately preceding Collection 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;
(ii) the net amount of funds which have been deposited in
or credited to the Collection Account in respect of such Collection
Period after giving effect to all permitted deductions therefrom
pursuant to Section 5.02;
(iii) upon request of any of the Owner Trustee, the
Indenture Trustee or a Rating Agency, with respect to each Contract
that became a Liquidated Contract during such Collection 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 ______.___% 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) upon request of any of the Owner Trustee, the
Indenture Trustee or a Rating Agency, the Contract Numbers, Monthly
P&I, Principal Balances and Maturity Dates of all Contracts which
became Defaulted Contracts during such Collection Period;
(v) any other information relating to the Contracts
reasonably requested by the Owner Trustee, the Indenture Trustee and
each Rating Agency; and
(vi) 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
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Collection 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 Collection Periods.
Section 4.10. Annual Statement as to Compliance. The Master Servicer
shall deliver to the Owner Trustee, the Indenture Trustee and each Rating
Agency, on or before 90 days after the end of each fiscal year of the Master
Servicer, beginning with the fiscal year ended ____________, 200___, 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 and each Rating Agency to the effect that
(i) they have audited the balance sheet of the Master Servicer as of the last
day of said fiscal year and the related statements of operations, retained
earnings and cash flows for such fiscal year and have issued an opinion
thereon, specifying the date thereof, (ii) they have also audited certain
documents and the records relating to the servicing of the Contracts and the
distributions on the Notes and the Certificates hereunder, (iii) their audit as
described under clauses (i) and (ii) above was made in accordance with
generally accepted auditing standards and accordingly included such tests of
the accounting records and such other auditing procedures as they considered
necessary in the circumstances and (iv) their audits described under clauses
(i) and (ii) above disclosed no exceptions which, in their opinion, were
material, relating to the servicing of such Contracts in accordance with this
Agreement and the making of distributions on the Notes and Certificates in
accordance with this Agreement, or, if any such exceptions were disclosed
thereby, setting forth such exceptions which, in their opinion, were material.
Section 4.12. Access to Certain Documentation and Information Regarding
Contracts. The Master Servicer shall provide to the 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
46
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.
47
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 and the Owner Trustee 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. 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, 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 shall direct
the Indenture Trustee in writing to invest funds in the foregoing Trust
Accounts in Eligible Investments, other than the RIC. 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
48
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. No investment in Eligible Investments may be
sold prior to its maturity.
(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;
(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 disposi-
49
tion, 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; Net Deposits.
(a) Subject to Section 5.03 and subsection (b) 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) 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 Collection Period shall be applied by the
Master Servicer as follows: with respect to each
50
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 Collection Period, one or more
payments of Monthly P&I due under any Contract (other than a Liquidated
Contract) Outstanding at the end of such Collection 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 Collection
Period by depositing in or crediting to the Collection Account with respect to
each Contract 30 days of interest on the Principal Balance of such Contract at
a rate equal to the sum of (i) the Class D Rate and (ii) the Servicing Fee
Percent for each month that the related Monthly P&I is delinquent at the end of
such Collection Period. The Master Servicer shall account for such deposit or
credit in accordance with Section 4.01. The foregoing notwithstanding, the
Master Servicer shall not make an Advance in respect of a Contract if the
Master Servicer shall have determined that any such Advance, if made, would
constitute a Nonrecoverable Advance. Any such determination shall be evidenced
by an Officers' Certificate furnished to the Indenture Trustee and the Owner
Trustee 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 and the Owner
Trustee 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.
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.
51
(New York time), to the extent of the Available Funds 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
Collection Periods;
(ii) from Available Funds (after giving effect to the
reduction in Available Funds 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 Available
Funds (after giving effect to the reduction in Available Funds
described in clauses (i) through (ii) above), the Interest
Distributable Amount for each class of Class A Notes, for payment of
interest on each class of Class A Notes, pro rata in proportion to
the respective outstanding principal balances;
(iv) to the Note Distribution Account, from Available
Funds (after giving effect to the reduction in Available Funds
described in clauses (i) through (iii) above), the Class A
Undercollateralization Amount, for payment of principal on the Notes
in the priority set forth in Section 5.05(b);
(v) to the Note Distribution Account, from Available
Funds (after giving effect to the reduction in Available Funds
described in clauses (i) through (iv) above), the Interest
Distributable Amount for the Class B Notes, for payment of interest
on the Class B Notes;
(vi) to the Note Distribution Account, from Available
Funds (after giving effect to the reduction in Available Funds
described in clauses (i) through (v) above), the Class B
Undercollateralization Amount, for payment of principal on the Notes
in the priority set forth in Section 5.05(b);
(vii) to the Note Distribution Account, from Available
Funds (after giving effect to the reduction in Available Funds
described in clauses (i) through (vi) above), the Interest
Distributable Amount for the Class C Notes, for payment of interest
on the Class C Notes;
(viii) to the Note Distribution Account, from Available
Funds (after giving effect to the reduction in Available Funds
described in clauses (i) through (vii) above), the Class C
Undercollateralization Amount, for payment of principal on the Notes
in the priority set forth in Section 5.05(b);
(ix) to the Note Distribution Account, from Available
Funds (after giving effect to the reduction in Available Funds
described in clauses (i) through (viii) above), the Interest
Distributable Amount for the Class D Notes, for payment of interest
on the Class D Notes;
52
(x) to the Note Distribution Account, from Available
Funds (after giving effect to the reduction in Available Funds
described in clauses (i) through (ix) above), the Class D
Undercollateralization Amount, for payment of principal on the Notes
in the priority set forth in Section 5.05(b).
(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 amount deposited into the Note Distribution
Account as payment of principal on the Notes pursuant to Section 5.05(a) in the
following amounts and order of priority:
(i) to the Holders of the Class A Notes, in the priority
set forth Section 5.05(c), the Class A Principal Distributable
Amount, until the Class A Notes are paid in full;
(ii) to the Holders of the Class B Notes, the Class B
Principal Distributable Amount, until the Class B Notes are paid in
full;
(iii) to the Holders of the Class C Notes, the Class C
Principal Distributable Amount, until the Class C Notes are paid in
full; and
(iv) to the Holders of the Class D Notes, the Class D
Principal Distributable Amount, until the Class D Notes are paid in
full.
(c) 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 the Class A Principal Distributable Amount in the
following order of priority:
(i) to the Holders of the Class A-1 Notes until the
Class A-1 Notes are paid in full;
(ii) to the Holders of the Class A-2 Notes until the
Class A-2 Notes are paid in full;
(iii) to the Holders of the Class A-3 Notes until the
Class A-3 Notes are paid in full; and
(iv) to the Holders of the Class A-4 Notes until the
Class A-4 Notes are paid in full.
(d) 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 Available Funds
after making the distributions described in Section 5.05(a) 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(c).
53
(e) Notwithstanding the foregoing, after the Notes have been
declared due and payable pursuant to Section 5.02 of the Indenture, all
Available Funds shall be remitted to the Indenture Trustee for distribution in
accordance with Section 2.07(c) of the Indenture.
Section 5.06. Spread Account.
(a) On or prior to the Closing Date, WFSRC3 shall deposit the
Spread Account Initial Amount into the Spread Account. The Spread Account will
be held for the benefit of the Securityholders in order to effectuate the
subordination of the rights of the Securityholders to the extent described
above.
(b) On each Distribution Date, the Master Servicer shall instruct
the Indenture Trustee to withdraw the Spread Account Withdrawal Amount from the
Spread Account and distribute such amount as part of Available Funds in
accordance with Section 5.05(a).
(c) On each Distribution Date, the Master Servicer shall instruct
the Indenture Trustee to distribute the Excess Spread Amount, first, to WFSRC3
until WFSRC3 has received full payment of the Spread Account Initial Deposit
and second, all remaining funds to the Certificate Distribution Account for
distribution to Certificateholders in accordance with Section 5.02 of the Trust
Agreement.
(d) 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.
(e) Upon termination of the Issuer pursuant to Section 9.01, any
amounts on deposit in the Spread Account, after payments of amounts due to the
Securityholders, will be distributed first, to WFSRC3 until WFSRC3 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);
54
(ii) the amount of such distribution allocable to interest
(stated separately for each Class of Notes);
(iii) the Interest Distributable Amount for each Class of
Notes;
(iv) the amount of any Interest Carryover Shortfall on
such Distribution Date and the change in such amounts from those with
respect to the immediately preceding Distribution Date;
(v) the amount of the Servicing Fee paid to the Master
Servicer with respect to the related Collection Period;
(vi) the Class A Principal Distributable Amount, the
Class B Principal Distributable Amount, the Class C Principal
Distributable Amount and the Class D Principal Distributable Amount;
(vii) with respect to each Class of Notes, the excess, if
any, of the amount distributable in respect of principal on such
Class of Notes over the amount allocated to principal on such Class
of Notes;
(viii) the Aggregate Net Liquidation Losses for the related
Collection Period;
(ix) the aggregate Principal Balance of Delinquent
Contracts as of the close of business on the last day of such
Collection Period;
(x) the Aggregate Principal Balance as of the close of
business on the last day of such Collection Period;
(xi) the principal balance of each Class of Notes as of
such Distribution Date, after giving effect to payments allocated to
principal reported under clause (i) above;
(xii) the Certificate Distributable Amount;
(xiii) 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;
(xiv) the Spread Account Withdrawal Amount and the Excess
Spread Account Amount; and
(xv) the amount of Net Collections.
Each amount set forth pursuant to subclauses (i), (ii), (iv) or (v) above shall
be expressed in the aggregate and as a dollar amount per $______________
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,
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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
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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 Owner Trustee and the Indenture Trustee an agreement in form
and substance reasonably satisfactory to the Owner Trustee and the Indenture
Trustee, 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 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 the related nationally recognized statistical rating organization
the same as or higher than
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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 appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under
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this Agreement, and that in its opinion may involve it in any expense or
liability. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement.
Section 6.05. Seller Not to Resign. Subject to the provisions of
Section 6.03, the Seller shall not resign from the obligations and duties
hereby imposed on it as Seller hereunder.
Section 6.06. Seller May Own Securities. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Securities with the same rights as it would have if it were not
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 and the
Securityholders 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 and the Indenture Trustee 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 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 and the Indenture Trustee 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 and the Owner Trustee, 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
62
effect. No such resignation shall become effective unless and until (i) a new
servicer acceptable to the Owner Trustee and the Indenture Trustee is willing
to service the Contracts and enters into a servicing agreement with the Issuer
in form and substance substantially similar to this Agreement and satisfactory
to the Owner Trustee and the Indenture Trustee 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 or the Indenture
Trustee of any right or remedy under this Agreement, or the enforcement by the
Owner Trustee, the Indenture Trustee or any Certificateholder or Noteholder of
any provision of the Notes, the Certificates 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) 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 or the
Indenture Trustee or after discovery of such failure by an officer of
the Master Servicer;
(b) any failure by the Master Servicer to deliver to 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);
(c) 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
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 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 ______.___% of the
Outstanding Amount of the Notes, or, if the Notes have been paid in
full, by Certificateholders evidencing not less than ______.___% of
the aggregate Certificate Percentage Interest;
(d) the occurrence of an Insolvency Event with respect to
the Seller, the Issuer or the Master Servicer; or
(e) any representation, warranty or statement of the
Master Servicer, the Issuer or the Seller made in this Agreement or
any certificate, report or other writing delivered pursuant hereto
shall prove to be incorrect in any material respect as of the time
when the same shall have been made (excluding, however, any
representation or warranty to which Section 3.01 or 4.06 shall be
applicable so long as the Master Servicer or the Seller shall be in
compliance with Section 3.02 or 4.07, as the case may be), and the
incorrectness of such representation, warranty or statement has a
material adverse effect on the Noteholders or the Certificateholders
and, within 30 days after written notice thereof
65
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 ______.___% of the Outstanding Amount of the
Notes, or Certificateholders evidencing not less than ______.___% of
the aggregate Certificate Percentage Interest, 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, either the Indenture Trustee, the Holders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes,
voting as a single Class (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 a majority of the
aggregate Certificate Percentage Interest), by notice then given in writing to
the Master Servicer (and to 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 or a termination pursuant to Section 8.06, 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 written notice of termination pursuant to
this Section or Section 8.06, 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, the Backup Servicer or such successor Master Servicer as
may be appointed under Section 8.02, as the case may be; 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 or the Backup Servicer, as the case may be,
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 Section 8.06 or resignation pursuant to Section 7.04, the Indenture
Trustee, or in the case of a termination pursuant to Section 8.06, the Backup
Servicer, 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 neither the
Indenture Trustee nor the Backup Servicer shall 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 Section 8.06, as the case may be, 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
predecessor Master Servicer. Any successor Master Servicer, including the
Backup Servicer, shall have the rights (including any right of indemnity) of
the Master Servicer. As compensation therefor, the Indenture Trustee or the
Backup Servicer, as the case may be, shall be
66
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 or
the Noteholders from effecting a transfer of servicing. Notwithstanding the
above, in the event of a termination of the Master Servicer pursuant to Section
8.01, the Indenture Trustee may, if it shall be unwilling to act, or shall, if
it shall be legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, any established financial institution, having a net
worth of not less than $______________ and whose regular business shall include
the servicing of motor vehicle retail installment sales contracts, as the
successor to the Master Servicer under this Agreement. Pending appointment of
any such successor Master Servicer, the Indenture Trustee shall act in such
capacity as provided above. In connection with such appointment, the Indenture
Trustee may make such arrangements for the compensation of such successor out
of payments on Contracts it and such successor shall agree. 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 a majority 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 a
majority 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 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. Backup Servicer. If a Backup Servicing Event has
occurred and continuing, the Holders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes, voting together as a single
Class, by notice then given in writing to the Master
67
Servicer, the Indenture Trustee and the Owner Trustee may terminate all the
rights and obligations of the Master Servicer under this Agreement. Upon such
termination, the Backup Servicer shall become successor Master Servicer in
accordance with Sections 8.01 and 8.02.
68
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 $______________, 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 and the Indenture Trustee 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 Collection Period. In
addition, if the Master Servicer or the Seller has outstanding senior debt and
such debt is not rated "investment grade" by Moody's at the time of exercising
the option pursuant to this Section, then the Master Servicer or such Seller
shall deliver to the Owner Trustee, the Indenture Trustee and Moody's, an
Opinion of Counsel to the effect that such optional purchase is not a
fraudulent conveyance.
(b) Upon any sale of the assets of the Issuer pursuant to
Section 5.04 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 distribute funds on deposit in
the Collection Account (including Insolvency Proceeds) and any funds remaining
on deposit in the Spread Account in accordance with Section 2.07(c) of the
Indenture.
(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 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) of all remaining Contracts in the Issuer occurs, the Master
Servicer shall instruct the Indenture Trustee to make the following
distributions of the Aggregate Repurchase Amount 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 Collection Periods;
69
(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) to WFSRC3 until WFSRC3 has received full repayment
of the Spread Account Initial Deposit; and
(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.
70
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; 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 and the Indenture Trustee 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 and the Master
Servicer shall provide Moody's notice of such amendment; and provided, further,
that this Agreement may not be amended to alter the rights or obligations of
the Indenture Trustee without the prior consent of the Indenture Trustee.
(b) This Agreement may also be amended from time to time by the
Seller, the Master Servicer and the Owner Trustee on behalf of the Issuer, with
the consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the consent of Certificateholders
evidencing not less than a majority 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 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.
(d) Promptly after the execution of any such amendment or consent,
the Owner Trustee and the Indenture Trustee, as the case may be, shall furnish
the written notification of the substance of the amendment or consent described
in 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,
71
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 and the Owner Trustee 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 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 Owner
Trustee and the Indenture Trustee at least 60 days' prior written notice of any
relocation of the principal executive office of WFS or the Seller and the
Master Servicer or the Subservicers (in the case of notice provided by the
Master Servicer) if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and shall
promptly file any such amendment or new financing statement. The Master
Servicer shall at all times maintain each office from which it shall service
Contracts, and its principal executive office, within the United States.
(d) The Master Servicer shall maintain or cause to be maintained
accounts and records as to each Contract accurately and in sufficient detail to
permit (i) the reader thereof to know at any time the status of such Contract,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries on (or with
respect to) each Contract and the amounts from time to time deposited in or
credited to the Collection Account in respect of such Contract.
72
(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 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 and the Indenture Trustee, 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 and each Rating Agency:
(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
(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
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.
73
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
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) WFSRC3, 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 and (vi) Standard & Poor's, to Standard &
Poor's, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset Backed
Surveillance Department; 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
______.___% of the Outstanding Amount of Notes of such Class and
Certificateholders evidencing not less than ______.___% 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 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. 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.
74
Section 10.09. 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 10.10. 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 10.11. Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by ___________________ not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer and in no event shall
________________________ 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 10.12. Limitation on Recourse Against WFSRC3.
Notwithstanding anything to the contrary contained in this Agreement, the
obligations of WFSRC3 under the Basic Documents are solely the corporate
obligations of WFSRC3, and shall be payable by WFSRC3, solely as provided by
the Basic Documents. WFSRC3 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 WFSRC3 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 WFSRC3 incurred in accordance with WFSRC3's
certificate of incorporation and all financing documents to which WFSRC3 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 WFSRC3 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.
75
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 2003-__ OWNER TRUST
By: ______________________________________,
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust
By: _________________________________________________
Name:
Title:
WFS RECEIVABLES CORPORATION 3,
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:
_________________________________________,
not in its individual capacity but solely as
Indenture Trustee and Backup Servicer
By: __________________________________________
Name:
Title:
76
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
SEQUENTIAL PAYMENT TRIGGERS
Distribution Date Sequential Payment Trigger
----------------- --------------------------
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
SB-1
Distribution Date Sequential Payment Trigger
----------------- --------------------------
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
On and after _________, 200___ ______.___%
SB-2
SCHEDULE D
SPREAD ACCOUNT STEP DOWN TRIGGERS
Distribution Date Spread Account Step Down Trigger
----------------- --------------------------------
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
____________, 200___ ______.___%
On and after _________, 200___ ______.___%
SB-1
EXHIBIT A
[FORM OF RIC]
A-1
EXHIBIT B
[FORM OF SUBSERVICING AGREEMENT]
B-1
EXHIBIT C
[FORM OF DISTRIBUTION DATE STATEMENT]
C-1
