EXHIBIT 10.2
EXECUTION COPY
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SALE AND SERVICING AGREEMENT
among
WFS FINANCIAL 2004-1 OWNER TRUST,
as Issuer,
WFS RECEIVABLES CORPORATION 4,
as Seller,
WESTCORP
as Indemnifier,
and
WFS FINANCIAL INC,
as Master Servicer
Dated as of February 1, 2004
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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.................................................................... 22
Section 1.03. Calculations...................................................................... 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..................................................... 32
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.................................................. 35
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......................................................... 37
Section 4.02. Collection of Contract Payments................................................... 40
Section 4.03. Realization upon Defaulted Contracts and Liquidated Contracts..................... 41
Section 4.04. Insurance......................................................................... 42
Section 4.05. Maintenance of Security Interests in Financed Vehicles............................ 42
Section 4.06. Covenants, Representations and Warranties of the Master Servicer and Westcorp..... 42
Section 4.07. Repurchase of Contracts upon Breach of Covenant................................... 45
Section 4.08. Servicing Compensation............................................................ 45
Section 4.09. Reporting by the Master Servicer.................................................. 46
Section 4.10. Annual Statement as to Compliance................................................. 48
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Section 4.11. Annual Independent Certified Public Accountants' Report........................... 49
Section 4.12. Access to Certain Documentation and Information Regarding Contracts............... 49
Section 4.13. Fidelity Bond..................................................................... 49
Section 4.14. Indemnification; Third Party Claims............................................... 49
ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts................................................... 50
Section 5.02. Collections; Net Deposits......................................................... 52
Section 5.03. Application of Collections........................................................ 52
Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts.......................... 53
Section 5.05. Distributions..................................................................... 54
Section 5.06. Spread Account.................................................................... 56
Section 5.07. Statements to Securityholders..................................................... 56
ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence............................................................... 59
Section 6.02. Liability of Seller; Indemnities.................................................. 59
Section 6.03. Merger or Consolidation of, or Assumption of the Obligations of,
the Seller; Certain Limitations. ................................................................ 60
Section 6.04. Limitation on Liability of Seller and Others...................................... 61
Section 6.05. Seller Not to Resign.............................................................. 62
Section 6.06. Seller May Own Securities......................................................... 62
ARTICLE SEVEN
THE MASTER SERVICER AND WESTCORP
Section 7.01. Liability of Master Servicer and Westcorp; Indemnities............................ 63
Section 7.02. Corporate Existence; Status of Master Servicer and Westcorp; Merger............... 64
Section 7.03. Performance of Obligations........................................................ 64
Section 7.04. Not to Resign; Assignment......................................................... 64
Section 7.05. Limitation on Liability of Master Servicer, Westcorp and Others................... 65
ARTICLE EIGHT
DEFAULT
Section 8.01. Servicer Default.................................................................. 67
Section 8.02. Indenture Trustee to Act; Appointment of Successor................................ 68
Section 8.03. Repayment of Advances............................................................. 69
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Section 8.04. Notification to Noteholders and Certificateholders................................ 69
Section 8.05. Waiver of Past Defaults........................................................... 69
Section 8.06. Backup Servicer................................................................... 69
ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts................................................ 71
ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment........................................................................ 73
Section 10.02. Protection of Title to Trust..................................................... 74
Section 10.03. Governing Law.................................................................... 76
Section 10.04. Notices.......................................................................... 76
Section 10.05. Severability of Provisions....................................................... 77
Section 10.06. Assignment....................................................................... 77
Section 10.07. Third Party Beneficiaries........................................................ 78
Section 10.08. Counterparts..................................................................... 78
Section 10.09. Headings......................................................................... 78
Section 10.10. Assignment by Issuer............................................................. 78
Section 10.11. Limitation of Liability of Owner Trustee......................................... 78
Section 10.12. Limitation on Recourse Against WFSRC4............................................ 78
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 Triggers.......................................................... SD-1
EXHIBITS
Exhibit A Form of RIC...................................................................... A-1
Exhibit B Form of Distribution Date Statement.............................................. B-1
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This SALE AND SERVICING AGREEMENT, dated as of February 1, 2004, is
among WFS Financial 2004-1 Owner Trust, as issuer (the "Issuer"), WFS
Receivables Corporation 4, as seller (the "Seller"), Westcorp, as indemnifier,
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;
WHEREAS, the Master Servicer is willing to service the Contracts
pursuant to the terms hereof; and
WHEREAS, Westcorp is willing to provide certain indemnities 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. Except as otherwise specified herein or as
the context may otherwise require, the following terms have the respective
meanings set forth below for all purposes of this Agreement. Capitalized terms
used herein that are not otherwise defined herein shall have the meanings
ascribed thereto in the Indenture.
"Administrator" shall have the meaning specified in the administration
agreement, dated as of February 1, 2004, among the Trust, the Depositor, the
Indenture Trustee and the Administrator.
"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).
"Advanced Insurance Premiums" mean any amounts due to the Master
Servicer for amounts advanced by the Master Servicer to acquire an LDI Policy as
to a Financed Vehicle. Advanced Insurance Premiums shall not be a part of
Monthly P&I and shall be retained by or reimbursed to the Master Servicer as set
forth in Sections 4.01 and 5.03.
"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, the Class D Undercollateralization Amount
and the Overcollateralization Distributable Amount.
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"Xxxxxxxxx Xxxxxxxxxx Xxxxxx" means, with respect to the purchase of
Contracts pursuant to Section 9.01(a), an amount equal to the sum of the amounts
described in clauses (i) through (iii) of Section 9.01(e).
"Agreement" means this Sale and Servicing Agreement.
"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
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 Balance.
"Backup Servicer" means Deutsche Bank Trust Company Americas.
"Backup Servicer Event" means the occurrence of 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.
"Bankruptcy Code" has the meaning specified in the Trust Agreement.
"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 Percentage Interest" means, with respect to a Certificate,
the percentage specified on such Certificate as the Certificate Percentage
Interest, which percentage represents
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the beneficial interest of such Certificate in the Issuer. The initial
Certificate Percentage Interest held by the Seller shall be 100%.
"Certificate Register" shall have the meaning specified in the Trust
Agreement.
"Certificate Registrar" shall have the meaning specified in the Trust
Agreement.
"Certificateholders" shall have the meaning specified in the Trust
Agreement.
"Certificates" means the Trust Certificates (as such term is defined in
the Trust Agreement).
"Chapter 13 Bankruptcy Proceeding" means a bankruptcy proceeding under
Chapter 13 of Title 11 of the United States Code.
"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 that
has been approved by a court with jurisdiction over an Obligor under a Contract
in a Chapter 13 Bankruptcy Proceeding.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"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 amount 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) or (ii) the excess of the principal amount of the
Class A Notes immediately prior to that Distribution Date over the lesser of (a)
the Class A Principal Percentage of the Aggregate Principal Balance as of the
last day of the related Collection Period or (b) the excess of such Aggregate
Principal Balance over the Overcollateralization Floor Amount; provided,
however, that on any Distribution Date that the Net Chargeoff Percentage exceeds
the Sequential Payment Trigger, the Class A Principal Distributable Amount will
be equal to the lesser of (i) the Aggregate Principal Distributable Amount or
(ii) the outstanding principal amount of the Class A Notes; provided, further,
that on any Distribution Date on and after 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 the outstanding principal
amount of that class of Class A Notes.
"Class A Principal Percentage" means, with respect to any Distribution
Date, 80.93%; provided, however, that if, on any Distribution Date, the related
Net Chargeoff Percentage is
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greater than the Sequential Payment Trigger, the Class A Principal Percentage
for each subsequent Distribution Date will equal 80.07%.
"Class A Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, of the outstanding principal amount of
the Class A Notes on that Distribution Date (before giving effect to any
payments made to Holders of the Notes on such Distribution Date) over the
Aggregate Principal Balance as of the last day of the related Collection Period.
"Class A-1 Final Scheduled Distribution Date" means the February 2005
Distribution Date.
"Class A-1 Note" shall have the meaning specified in the Indenture.
"Class A-1 Rate" means 1.08% per annum.
"Class A-2 Final Scheduled Distribution Date" means the July 2007
Distribution Date.
"Class A-2 Note" shall have the meaning specified in the Indenture.
"Class A-2 Rate" means 1.51% per annum.
"Class A-3 Final Scheduled Distribution Date" means the June 2008
Distribution Date.
"Class A-3 Note" shall have the meaning specified in the Indenture.
"Class A-3 Rate" means 2.19% per annum.
"Class A-4 Final Scheduled Distribution Date" means the August 2011
Distribution Date.
"Class A-4 Note" shall have the meaning specified in the Indenture.
"Class A-4 Rate" means 2.81% per annum.
"Class B Final Scheduled Distribution Date" means the August 2011
Distribution Date.
"Class B Note" shall have the meaning specified in the Indenture.
"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 the outstanding principal amount of (a) the Class A Notes (after taking
into account payment of the Class A Principal Distributable Amount for that
Distribution Date) and (b) the Class B Notes immediately prior to such
Distribution Date over (ii) the lesser of (a) the Class B Principal Percentage
of the Aggregate Principal Balance as of the last day of the related Collection
Period or (b) the excess of such Aggregate Principal Balance over the
Overcollateralization Floor Amount; provided, however, that on any Distribution
Date that the Net Chargeoff Percentage exceeds the Sequential Payment Trigger,
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
Principal Distributable Amount or (ii) the outstanding principal amount of the
Class B Notes; provided, further, that on any
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Distribution Date on and after the Class B Final Scheduled Distribution Date,
the Class B Principal Distributable Amount will not be less than the amount that
is necessary to pay the outstanding principal amount of the Class B Notes.
"Class B Principal Percentage" means, with respect to any Distribution
Date, 85.12%; provided, however, that if, on any Distribution Date, the related
Net Chargeoff Percentage is greater than the Sequential Payment Trigger, the
Class B Principal Percentage for each subsequent Distribution Date will equal
84.21%.
"Class B Rate" means 2.34% per annum.
"Class B Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, of the aggregate outstanding principal
amount of the Class A Notes and Class B Notes on that Distribution Date (before
giving effect to any payments made to Holders of the Notes on such Distribution
Date) 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 Final Scheduled Distribution Date" means the August 2011
Distribution Date.
"Class C Note" shall have the meaning specified in the Indenture.
"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 the aggregate outstanding principal amount of (a) the Class A Notes and
the Class B Notes (after taking into account payment of the Class A Principal
Distributable Amount and the Class B Principal Distributable Amount for that
Distribution Date) and (b) the Class C Notes immediately prior to such
Distribution Date over (ii) the lesser of (a) the Class C Principal Percentage
of the Aggregate Principal Balance as of the last day of the related Collection
Period or (b) the excess of such Aggregate Principal Balance over the
Overcollateralization Floor Amount; provided, however, that on any Distribution
Date that the Net Chargeoff Percentage exceeds the Sequential Payment Trigger,
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 Principal Distributable Amount and (b) the Class B Principal
Distributable Amount or (ii) the outstanding principal amount of the Class C
Notes; provided, further, that on any Distribution Date on and after the Class C
Final Scheduled Distribution Date, the Class C Principal Distributable Amount
will not be less than the amount that is necessary to pay the outstanding
principal amount of the Class C Notes.
"Class C Principal Percentage" means, with respect to any Distribution
Date, 89.87%; provided, however, that if, on any Distribution Date, the related
Net Chargeoff Percentage is greater than the Sequential Payment Trigger, the
Class C Principal Percentage for each subsequent Distribution Date will equal
88.91%.
"Class C Rate" means 2.49% per annum.
"Class C Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, of the aggregate outstanding principal
amount of the Class A Notes, Class B Notes and Class C Notes on such
Distribution Date (before giving effect to any payments made
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to Holders of the Notes on that Distribution Date) 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 Final Scheduled Distribution Date" means the August 2011
Distribution Date.
"Class D Note" shall have the meaning specified in the Indenture.
"Class D Principal Distributable Amount" means, with respect to any
Distribution Date, the excess of the Aggregate Principal Distributable Amount
over the sum of the Class A Principal Distributable Amount, the Class B
Principal Distributable Amount and the Class C Principal Distributable Amount;
provided, however, that, on any Distribution Date on and after the Class D Note
Final Scheduled Distribution Date, the Class D Principal Distributable Amount
will not be less than the amount that is necessary to pay the outstanding
principal amount of the Class D Notes; provided, further, that the Class D
Principal Distributable Amount on any Distribution Date will not exceed the
outstanding principal amount of the Class D Notes.
"Class D Rate" means 3.17% annum.
"Class D Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, of the outstanding principal amount of
the Notes on such Distribution Date (before giving effect to any payment to
Holders of the Notes on such Distribution Date) over the sum of the Class A
Undercollateralization Amount, the Class B Undercollateralization Amount, the
Class C Undercollateralization Amount and the Aggregate Principal Balance as of
the last day of the related Collection Period.
"Closing Date" means February 27, 2004.
"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, in each case
transferred by the Seller to the Issuer hereunder, which has been executed by an
Obligor and pursuant to which such Obligor purchased, financed or pledged the
Financed Vehicle described therein, agreed to pay the deferred purchase price
(i.e., the purchase price net of any down payment) or amount borrowed, together
with interest, as therein provided in connection with such purchase or loan,
granted a security interest in such Financed Vehicle, and undertook to perform
certain other obligations as specified in such Contract and which has been
conveyed to the Issuer pursuant to this Agreement.
"Contract Documents" means, with respect to each Contract, (i) the
Contract; (ii) either the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued
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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 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 each
Subservicer, as the case may be, in servicing contracts and loans comparable to
the Contracts.
"Contract Number" means, with respect to any Contract, 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.
"Controlling Class" shall have the meaning specified in the Indenture.
"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, 00xx Xxxxx, XX XXX00-0000, 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 February 26, 2004.
"Cut-Off Date Aggregate Principal Balance" means $1,500,000,000, the
Aggregate Principal Balance 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 payments or (ii) with respect to which the
related Financed Vehicle has been repossessed or repossession efforts have
commenced.
"Definitive Notes" shall have the meaning specified in the Indenture.
"Delinquent Contract" means any Contract that is 60 days or more
delinquent.
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"Delivery" means, when used with respect to Trust Account Property:
(i) with respect to certificated securities, bankers' acceptances,
commercial paper, negotiable certificates of deposit and any other obligations
which evidence a right to the payment of money and is not itself a security
agreement or lease and is of a type which is in ordinary course of business
transferred by delivery with necessary endorsement or assignment (collectively,
"Physical Property"): (A) the Indenture Trustee or the Owner Trustee, as the
case may be, or its Financial Intermediary acquires possession of the Physical
Property, and evidence that any such Physical Property that is in registerable
form has been registered in the name of the Trustee, its Financial Intermediary,
its custodian or its nominee; (B) the Financial Intermediary, not a clearing
corporation, sends the Indenture Trustee or the Owner Trustee, as the case may
be, confirmation of the transfer and also by book entry or otherwise identifies
as belonging to the Indenture Trustee or the Owner Trustee, as the case may be,
the Physical Property in the Financial Intermediary's possession; or (C) with
respect to a clearing corporation, appropriate entries to the account of the
Indenture Trustee or the Owner Trustee, as the case may be, or a Person
designated by him or her and, if certificated, it is both, in the custody of the
clearing corporation or another clearing corporation, a custodian bank or a
nominee of any of them and, in bearer form or endorsed in blank by the
appropriate person or registered in the name of the clearing corporation,
custodian bank, or a nominee of any of them;
(ii) with respect to any Trust Account Property that is a
book-entry security held through the Federal Reserve System pursuant to federal
book-entry regulations, the following procedures, all in accordance with
applicable law, including applicable federal regulations and Articles 8 and 9 of
the UCC: (A) book-entry registration of such property to an appropriate
book-entry account maintained with a Federal Reserve Bank by the Indenture
Trustee or the Owner Trustee, as the case may be, of a deposit advice or other
written confirmation of such book-entry registration; (B) the making by any such
custodian of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to federal book-entry
regulations as belonging to the Indenture Trustee or the Owner Trustee, as the
case may be, and indicating that such custodian holds such Trust Account
Property solely as agent for the Indenture Trustee or the Owner Trustee, as the
case may be, and the making by the Indenture Trustee or the Owner Trustee, as
the case may be, of entries in its books and records establishing that it holds
such Trust Account Property solely as trustee pursuant to Section 5.01; and (C)
such additional or alternative procedures as may hereafter become necessary to
effect complete transfer of ownership of any such Trust Account Property to the
Indenture Trustee or the Owner Trustee, as the case may be, consistent with
changes in applicable law or regulations or the interpretation thereof; and
(iii) with respect to any Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (ii) above, registration of the transfer to, and ownership of such Trust
Account Property by, the Indenture Trustee or the Owner Trustee, as the case may
be, its custodian or its nominee by the issuer of such Trust Account Property.
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"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement.
"Distribution Date" means (i) the 20th day of each calendar month or,
if any such date shall not be a Business Day, the next succeeding Business Day,
commencing April 20, 2004.
"Distribution Date Statement" shall have the meaning specified in
Section 4.09(a).
"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 federal 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 (A) with an entity whose long-term unsecured
debt obligations 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 10 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; general obligations of or obligations guaranteed as to
timely payment of principal and interest by FNMA or FHLMC;
(ii) 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 or 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+" (without an "r" suffix and with a
fixed dollar amount of principal due at maturity that cannot vary) by
Standard & Poor's, "Prime-1" by Moody's and "F1+" by Fitch;
(iii) means commercial paper given the highest rating by
each Rating Agency at the time of such investment; provided that the
issuer of such commercial paper must have a long-term unsecured debt
rating of at least "Aaa" from Moody's, "AAA"
10
from Fitch and "AAA" from Standard & Poor's or have a short-term
unsecured debt rating of at least "Prime-1" from Moody's, "F1+" from
Fitch and "A-1+" (without an "r" suffix and with a fixed dollar amount
of principal due at maturity that cannot vary) from Standard & Poor's;
(iv) means money market funds having a rating of at least
"AAAm" or "AAAm-G", as applicable, from Standard & Poor's and a rating
from each remaining Rating Agency in the highest investment category
granted by such Rating Agency, including funds for which the Indenture
Trustee or any of its affiliates is investment manager or advisor;
(v) the RIC, provided that (A)(1) 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 or
(2) 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 and (B) it has not ceased to be an Eligible Investment
in accordance with Section 2 thereof; 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 and no additional funds
may be invested in the RIC until the RIC once again becomes an Eligible
Investment; and
(vi) any other investments which satisfy the Rating Agency
Condition.
"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
Repossessed Vehicle Redemption Date.
"Excess Spread Amount" means, with respect to a Distribution Date, the
excess of the Spread Account Balance (after giving effect to all deposits to,
and withdrawals from the Spread Account on such Distribution Date, other than
withdrawals pursuant to Section 5.06(c)) over the Specified Spread Account
Balance.
"Exchange Act" means the Securities Exchange Act of 1934.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"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.
"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.
11
"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 Ratings.
"FNMA" means the Federal National Mortgage Association.
"Gross Chargeoff 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 Repossessed Vehicle
Redemption 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 Chapter
13 Plans of Reorganization, of Chapter 13 Contracts that are no longer in
compliance with their Chapter 13 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 Chargeoff Amounts for all Collection Periods exceed the
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 February 1, 2004, between
the Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture and, initially, will be Deutsche Bank Trust Company Americas.
"Independent", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Issuer, the Seller or WFS,
(ii) is not a director, officer or employee of any Affiliate of the Issuer, the
Seller or WFS, (iii) is not a person related to any officer or director of the
Issuer, the Seller, WFS or any of their respective Affiliates, (iv) is not a
holder (directly or indirectly) of more than 10% of any voting securities of the
Issuer, the Seller, WFS or any of their respective Affiliates and (v) is not
connected with the Issuer, the Seller or WFS as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions;
provided that a person who is an Independent director or Independent officer of
the Seller may be an Independent director or Independent officer of an Affiliate
of the Seller which is a special purpose bankruptcy remote entity.
12
"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 any rebated insurance 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 was 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 and interest due but not paid to Noteholders of such Class at the
related Interest Rate for the related Interest Period.
"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 shall be computed with respect to the (i) Class A-1 Notes on
the basis of a 360-day year and the actual number of days elapsed since the
immediately preceding Distribution Date (or, with respect to the first
Distribution Date, from, and including, February 27, 2004) and (ii) Class A-2
Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes and Class
D Notes 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
13
Distribution Date (or, in the case of the first Distribution Date from, and
including, February 27, 2004) 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, February 27, 2004) 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.
"Issuer" means the WFS Financial 2004-1 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 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.
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"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, Inc.
"Net Chargeoff Percentage" means, with respect to any Distribution Date
and the related Collection Period, the percentage equivalent of a fraction, (i)
the numerator of which is equal to the excess of the sum of the Gross Chargeoff
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
(ii) 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 Servicer as reimbursement for Nonrecoverable Advances pursuant to
Section 5.04 and (c) any Advanced Insurance Premiums that have been repaid by an
Obligor; (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 amounts applied to the repair of the related Financed Vehicle,
released to the related Obligor in
15
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, 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, in each case as of the immediately preceding
Distribution Date (after giving effect to any distributions of principal made on
such preceding Distribution Date) or as of the Closing Date with respect to the
first Distribution Date.
"Note Distribution Account" means the account established and
maintained as such pursuant to Section 5.01.
"Note Register" shall have the meaning specified in the Indenture.
"Note Registrar" shall have the meaning specified in the Indenture.
"Noteholder" means, with respect to a Note, the Holder of such Note.
"Obligee" means the Person to whom an Obligor is indebted under a
Contract.
"Obligor" on a Contract means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Contract.
"Offered Securities" shall have the meaning specified in Section
6.03(b)(ii).
"Officers' Certificate" means a certificate signed by the chairman, the
president or a Vice President, and by the treasurer, an assistant treasurer, the
controller, an assistant controller, the secretary or an assistant secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered. In the case of an Officers' Certificate
of the Master Servicer, at least one of the signing officers must be a Servicing
Officer. Unless otherwise specified, any reference herein to an Officers'
Certificate shall be to an Officers' Certificate of the Master Servicer.
"Opinion of Counsel" means a written opinion of counsel (who may be
counsel to the Seller or the Master Servicer) acceptable to the Indenture
Trustee or the Owner Trustee, as the case may be.
16
"Original Pool Balance" means $1,500,000,000.
"Outstanding" means, with respect to:
(i) 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) 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, 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.
"Overcollateralization Amount" means, with respect to a Distribution
Date, the greater of (i) 6.50% of the Aggregate Principal Balance as of the last
day of the related Collection Period; provided, however, that if, on any
Distribution Date, the related Net Chargeoff Percentage is greater than the
Sequential Payment Trigger, the Overcollateralization Amount for such
Distribution Date and each subsequent Distribution Date will equal 7.50% of the
Aggregate
17
Principal Balance as of the last day of the related Collection Period and (ii)
the Overcollateralization Floor Amount.
"Overcollateralization Distributable Amount" means, with respect to any
Distribution Date, the lesser of (i) the Overcollateralization Amount or (ii)
the amount by which (a) the sum of the Overcollateralization Amount and the
outstanding principal amount of the Notes on that Distribution Date (before
giving effect to any payments made to the Holders of the Notes on that
Distribution Date) exceeds (b) the Aggregate Principal Balance as of the last
day of the related Collection Period.
"Overcollateralization Floor Amount" means 1.30% of the Cut-Off Date
Aggregate Principal Balance.
"Owner" shall have the meaning specified in the Trust Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under the
Trust Agreement, its successors in interest and any successor owner trustee
under the Trust Agreement and, initially, will be Chase Manhattan Bank USA,
National Association.
"Owner Trustee Corporate Trust Office" shall have the meaning specified
in the Trust Agreement.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, limited liability company,
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 100% of the outstanding principal balance of a Contract, exclusive
of any Contract referred to in clause (ii) 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 amount being the total of all
Monthly P&I received on or after February 27, 2004 less any unearned interest as
of the Due Date for such Contract immediately preceding February 27, 2004,
computed in accordance with the Rule of 78's, less all amounts received on or in
respect of such Contract on or after February 27, 2004 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.
18
"Rating Agency Condition" shall have the meaning specified in the
Indenture.
"Record Date" means, with respect to a Class of Notes or the
Certificates and any Distribution Date or Redemption Date, the close of business
on the Business Day immediately preceding such Distribution Date or Redemption
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.
"Redemption Date" shall have the meaning specified in the Indenture.
"Redemption Price" shall have the meaning specified in the Indenture.
"Registrar" means the Note Registrar or the Certificate Registrar, as
the case may be.
"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.
"Repossessed Vehicle Redemption Date" means, with respect to a
Repossessed Vehicle Contract, the date 10 days (or longer if required by
applicable law) from the date the related Repossessed Vehicle is repossessed.
"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 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,
19
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.
"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 WFSRC4, 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.
20
"Servicing Fee" means, as to any Distribution Date, an amount equal to
the product of the Servicing Fee Percent and the Aggregate Principal Balance as
of the first day of the related Collection Period. The Servicing Fee for the
first Distribution Date will be adjusted to an appropriate amount to account for
the actual number of days in such Collection Period.
"Servicing Fee Percent" means one-twelfth of 1.25% per annum.
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers furnished to the Indenture Trustee
and the Owner Trustee by the Master Servicer pursuant to Section 4.01.
"Simple Interest Contract" means a Contract as to which interest is
calculated each day on the basis of the actual principal balance of such
Contract on such day.
"Specified Spread Account Balance" means, with respect to any
Distribution Date, an amount equal to the lesser of (i) the Outstanding Amount
of all Notes immediately prior to such Distribution Date, (ii) the greater of
(a) 1.00% of the Aggregate Principal Balance as of the last day of the related
Collection Period, (b) 0.50% of the Cut-Off Date Aggregate Principal Balance or
(c) if the Net Cumulative Chargeoff Percentage for the related Distribution Date
is greater than the Spread Account Trigger for that Distribution Date, 1.20% of
the Cut-Off Date Aggregate Principal Balance or (iii) the Outstanding Amount of
all Notes after giving effect to all payments made on such Distribution Date.
"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 Trigger" means, with respect to any Distribution Date,
the percentage set forth in Schedule D.
"Spread Account Initial Deposit" means $15,000,000.
"Standard & Poor's" means Standard & Poor's Rating Services, a Division
of The XxXxxx-Xxxx Companies, Inc.
"State" means any one of the 00 xxxxxx xx xxx Xxxxxx Xxxxxx or the
District of Columbia.
"Statistical Calculation Date" means January 26, 2004.
"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 $1,087,596,887.33.
"Subservicer" means any subservicer engaged by the Master Servicer to
subservice a Contract pursuant to Section 4.01.
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"Subservicing Agreement" means an agreement between the Master Servicer
and a Subservicer relating to the servicing of one or more Contracts.
"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 as of January 16,
2004, as amended and restated as of February 27, 2004, between the Depositor and
the Owner Trustee.
"Trust Estate" shall have the meaning specified in the Trust Agreement.
"Trustee" means the Indenture Trustee or the Owner Trustee, as the case
may be.
"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.
"WFS" means WFS Financial Inc, a majority-owned operating subsidiary of
the Bank.
"WFSRC4" means WFS Receivables Corporation 4, a wholly-owned subsidiary
of Westcorp.
Section 1.02. Usage of Terms. With respect to all terms in this
Agreement, unless the context otherwise requires: (i) a term has the meaning
assigned to it; (ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles as in
effect from time to time in the United States; (iii) "or" is not exclusive; (iv)
"including" means including without limitation; (v) words in the singular
include the plural and words in the plural include the singular; (vi) any
agreement, instrument or statute
22
defined or referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as from time to
time amended, modified or supplemented and includes (in the case of agreements
or instruments) references to all attachments thereto and instruments
incorporated therein; (vii) references to a Person are also to its successors
and permitted assigns; (viii) the words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; (ix)
Section, subsection, Schedule and Exhibit, as applicable, references contained
in this Agreement are references to Sections, subsections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and (x) references
to "writing" include printing, typing, lithography and other means of
reproducing words in a visible form.
Section 1.03. Calculations. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder shall be carried out to at
least six decimal places and, in the case of (i) the Class A-1 Notes, will be
made on the basis of a 360-day year and the actual number of days elapsed from,
and including, the immediately preceding Distribution Date to, but excluding,
the current Distribution Date or from, and including, the Closing Date in the
case of the first Distribution Date or (ii) each other Class of Notes, will be
made on the basis of a 360-day year and twelve 30-day months from, and
including, the 20th day of the month of the preceding Distribution Date to, but
excluding, the 20th day of the month of the current Distribution Date or from,
and including, the Closing Date in the case of the first Distribution Date.
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.
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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 $1,477,500,000 aggregate principal amount
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 all payments of Monthly P&I received 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 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) WFS hereby authorizes and will cause, on or prior to the
Closing Date, 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, on or prior to the Closing Date, 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 Nevada. 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 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 or
their reincorporation in a different jurisdiction would make any financing or
continuation statement or notice of lien filed under this Agreement or the other
Basic Documents seriously misleading within the meaning of applicable provisions
of the UCC or any title statute, the Master Servicer, within the time period
required by applicable law, shall file such financing statements or amendments
as may be required to preserve and protect the interests of the Indenture
Trustee, the Owner Trustee and the Securityholders in the Contracts, Financed
Vehicles and the proceeds thereof. Promptly
24
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
3.01(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 Nevada, 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 Tax Liens. The Seller is not aware of any
judgment or tax lien filings against it.
(vii) 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
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shows, or if a new or replacement Title Document is being applied for
with respect to such Financed Vehicle the Title Document will be
received within 180 days of the Closing Date and will show WFS named as
the original secured party under the related Contract as the holder of
a first priority security interest in such Financed Vehicle, and (B) if
the related Financed Vehicle was originated in a State in which the
filing of a financing statement under the UCC is required to perfect a
security interest in motor vehicles, such filings or recordings have
been duly made and show WFS named as the original secured party under
the related Contract, and in either case, the Indenture Trustee and the
Owner Trustee have the same rights as such secured party has or would
have (if such secured party were still the owner of the Contract)
against all parties claiming an interest in such Financed Vehicle. With
respect to each Contract for which the Title Document has not yet been
returned from the Registrar of Titles, WFS has received written
evidence from the related Dealer that such Title Document showing WFS
as first lienholder has been applied for.
(iv) Title to the Contracts. Immediately prior to
the issuance of the Notes and the Certificates, the Seller had good and
indefeasible title to and was the sole owner of each Contract to be
transferred to the Issuer pursuant to Section 2.01 free of liens,
claims, encumbrances and rights of any Person and, upon transfer of
such Contract to the Issuer pursuant to Section 2.01, the Issuer will
have good and indefeasible title to and will be the sole owner of such
Contract free of liens, claims, encumbrances and rights of any Person,
except for the Lien of the Indenture Trustee under the Indenture;
provided, however, the Issuer or Indenture Trustee may be required to
file or record a transfer of the lien on a Financed Vehicle prior to
enforcement of that lien in the name of the Issuer or Indenture
Trustee, respectively.
(v) Current in Payment. As of the Closing 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.
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(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 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
the transfer of ownership of the Contracts to the Issuer, and the
pledge of the Contracts to the Indenture Trustee by 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 Closing Date, there
was no default, breach, violation or event permitting acceleration
existing under such Contract (except payment delinquencies permitted by
clause (v) of this subsection) 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 clause (v) of this subsection.
(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) an LDI Policy; provided, however, that if
such Financed Vehicle has an unpaid principal balance of less than
$4,000.00 or the related Contract has six or fewer months remaining
before its Maturity Date, it will not be required to be covered by the
insurance described in this subparagraph; provided further, to the
extent not paid in full by the Obligor, the related Advanced Insurance
Premium shall be an expense of the Master Servicer. 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.
29
(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 Closing Date,
scheduled payments under such Contract are applied in accordance with
the Rule of 78's method or the simple interest method and are due
monthly in level payments through its Maturity Date sufficient to fully
amortize the principal balance of such Contract by its Maturity Date,
assuming timely payment by Obligors on Simple Interest Contracts,
except that the payment in the first or last month in the life of the
Contract may be minimally different from the level payment.
(xvi) One Original. There is only one original of
such Contract and such original, together with all other Contract
Documents, is being held by the Master Servicer pursuant to Section
3.04. The Seller has received a written acknowledgement from the Master
Servicer that the Master Servicer is holding the Contract Documents
that constitute or evidence the Contracts solely on behalf and for the
benefit of the Issuer. None of the Contract Documents that constitute
or evidence each Contract has any marks or notations indicating that it
has been pledged, assigned or otherwise conveyed to any Person other
than the Issuer.
(xvii) Characteristics. With respect to each
Contract owned by WFS at the Statistical Calculation Date, such
Contract had (A) a Principal Balance of not less than $503.25 nor more
than $88,001.56, (B) an original term of not less than 12 months nor
greater than 84 months, (C) a remaining maturity of not less than three
months nor greater than 84 months and (D) an APR of not less than
3.24%.
(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 of the Closing 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 Class D
Final Scheduled Distribution Date.
(xx) Principal Balance. At the Closing Date the
initial Principal Balance of such Contract was not greater than the
purchase price of the related vehicle and such Principal Balance does
not include any amounts the Master Servicer may have expended in
obtaining an LDI Policy, if any, for such Contract.
(xxi) Location of Contract Files. The Contract
Files are kept at one or more of the locations listed in Schedule B.
(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 3.24% for Rule of
78's Contracts and Simple Interest Contracts.
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(xxiii) WFS, Bank and Third Party Lender
Originations. With respect to the Contracts owned by WFS at the
Statistical Calculation Date, the aggregate Principal Balance as of the
Statistical Calculation Date of such Contracts purchased by WFS from
the Bank and Third Party Lenders or originated directly by WFS is not
more than approximately 2.91% of the Statistical Calculation Date
Principal Balance.
(xxiv) Simple Interest Contracts. With respect to
each Contract owned by WFS at the Statistical Calculation Date, as of
the Statistical Calculation Date, approximately 98.50% of the Contracts
by Statistical Calculation Date Principal Balance shall be Simple
Interest Contracts and approximately 1.50% of the Contracts by
Statistical Calculation Date Principal Balance shall be Rule of 78's
Contracts.
(xxv) New or Pre-Owned Vehicles. At least 35.63%
of the Contracts owned by WFS at the Statistical Calculation Date by
Statistical Calculation Date Principal Balance were Contracts that
financed new vehicles and not greater than 64.37% were Contracts that
financed pre-owned vehicles.
(xxvi) States of Origination. Approximately 38.49%
of the Contracts owned by WFS at the Statistical Calculation Date by
Statistical Calculation Date Principal Balance were originated or
purchased by WFS in California and approximately 61.51% 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
"tangible chattel paper" as defined in 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 or subordinated
to the rights of the Issuer and the Indenture Trustee.
(xxx) Contract Characteristics as of the Closing
Date. The representations and warranties made in this Section with
respect to certain Contracts as of the Statistical Calculation Date
shall also be true and correct in every material respect for all
Contracts as of the Closing Date.
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(xxxi) Obligor Bankruptcy. As of the Closing Date
with respect to the Contracts, the Seller is not aware of any Obligor
that is or has been, since the origination of the related Contract, the
subject of a bankruptcy proceeding.
(xxxii) No Extensions. The number of, or timing of,
scheduled payments has not been changed on any Contract on or before
the Closing Date, except as reflected on the computer tape delivered in
connection with the sale of the Contracts.
(xxxiii) Repossession. On or prior to the Closing
Date, no Financed Vehicle has been repossessed.
(xxxiv) Prepayment of Contracts. Any prepayment in
full of a Contract by an Obligor to the Master Servicer will consist of
the entire outstanding principal balance of such Contract together with
all accrued and unpaid interest thereon.
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 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
32
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
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
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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
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. On or prior to the first
Business Day after the 14th day of each calendar month, 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 within (i) 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) 180 days of
the Closing Date, a schedule of Title Documents for Financed Vehicles which as
of the date prior to such delivery do not show the Master Servicer as first
lienholder and as to which the Seller is obligated to repurchase pursuant to the
provisions hereof.
Section 3.05. Instructions; Authority to Act. The Master Servicer shall
be deemed to have received proper instructions (a copy of which shall be
furnished to the Owner Trustee) with respect to the Contract Files upon its
receipt of written instructions signed by a Responsible Officer of the Indenture
Trustee.
Section 3.06. Indemnification. Subject to Section 8.02, the Master
Servicer shall indemnify the Issuer, the Owner Trustee, the Indenture Trustee,
the Backup Servicer 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 Backup Servicer, 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
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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, the Indenture
Trustee and the Backup Servicer if a claim is made by a third party with respect
to the Contracts, shall assume, with the consent of the Owner Trustee, the
Indenture Trustee and the Backup Servicer, 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.
Section 3.08. Nonpetition Covenant.
(a) Neither the Seller nor the Master Servicer shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
(b) The Master Servicer shall not, nor cause the Seller to,
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Seller under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
Section 3.09. Collecting Title Documents Not Delivered at the Closing
Date. In the case of any Contract in respect of which written evidence from the
Dealer selling or transferring the related Financed Vehicle that the Title
Document for such Financed Vehicle showing the Master Servicer as first
lienholder has been applied for from the Registrar of Titles was delivered to
the
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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 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
1% of the Original Pool Balance through the Distribution Date nine months prior
to the Class D Final Scheduled Distribution Date and (ii) during a Collection
Period shall not affect Contracts having an aggregate Principal Balance greater
than 0.1% of the Aggregate Principal Balance at the beginning of such Collection
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 United States 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. 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.
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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; 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 an Affiliate of the Master Servicer in its capacity as such, and
not as an originator of Contracts, shall be deemed to be between the Subservicer
or such 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.
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In the event the Master Servicer shall for any reason no longer be
acting as servicer under this Agreement (including by reason of a Servicer
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, each Subservicer, and any new servicer appointed
following the resignation or termination of the Master Servicer, including any
Subservicer, shall at all times comply with all applicable federal, state and
local laws, rules, regulations and ordinances governing or relating to the
privacy rights of the Obligors in connection with its performance of its duties
under this Agreement including the Xxxxx-Xxxxx-Xxxxxx Act. The Master Servicer,
each Subservicer, and any new servicer appointed following the resignation or
termination of the Master Servicer, including any Subservicer, shall implement
such physical and other security measures as shall be necessary to (a) ensure
the security and confidentiality of the "nonpublic personal information" of each
Obligor, (b) protect against any threats or hazards to the security and
integrity of such nonpublic personal information and (c) protect against any
unauthorized access to or use of such nonpublic personal information.
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 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. The foregoing
requirements for deposit in the Collection Account are exclusive,
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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, including
Advanced 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.
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, within two Business Days of receipt, 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 the 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 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 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.
The Master Servicer shall, or cause the Administrator to, prepare,
execute and deliver all certificates or other documents required to be delivered
by the Trust pursuant to the Xxxxxxxx-Xxxxx Act of 2002 or the rules and
regulations promulgated thereunder.
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
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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 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 proviso 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 are paid by an
Obligor. 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.
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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 $4,000 or the related
Contract has six or fewer months remaining before its Maturity Date.
Section 4.05. Maintenance of Security Interests in Financed Vehicles.
The Master Servicer shall take such steps as are necessary to maintain
continuous perfection and priority of the security interest created by each
Contract in the related Financed Vehicle, including 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 and Westcorp. The Master Servicer and Westcorp, as applicable, hereby
make 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 the 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 only if
the original Obligor under the related Contract remains liable under
such Contract and the transferee assumes all of the Obligor's
obligations thereunder.
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(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 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,
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or adversely affect the Master Servicer's ability to perform its
obligations hereunder. The Master Servicer is not in default with
respect to any order of any court, administrative agency, arbitrator or
governmental body so as to materially and adversely affect the
transactions contemplated by the above-mentioned documents.
(vi) Other Consents. The Master Servicer has
obtained or made all necessary consents, approvals, waivers and
notifications of creditors, lessors and other nongovernmental persons,
in each case in connection with the execution and delivery of, and the
consummation of the transactions contemplated by, this Agreement.
(c) Westcorp represents, warrants and covenants:
(i) Organization and Good Standing. Westcorp (A)
has been duly organized and is validly existing as a corporation in
good standing under the laws of the State of California, (B) has
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of its properties or
the nature of its activities makes such qualification necessary and (C)
has full power, authority and legal right to own its property, to carry
on its business as presently conducted and to enter into and perform
its obligations under this Agreement.
(ii) Power and Authority. The execution and
delivery by Westcorp of this Agreement are within the corporate power
of Westcorp and have been duly authorized by all necessary corporate
action on the part of Westcorp. 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 Westcorp or its properties or the articles
of incorporation or bylaws of Westcorp, or any of the provisions of any
indenture, mortgage, contract or other instrument to which Westcorp 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. Westcorp 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 Westcorp 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 Westcorp in accordance with its terms
(subject to applicable bankruptcy and insolvency laws and other similar
laws affecting the enforcement of creditors' rights generally).
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(v) No Proceedings. There are no actions, suits
or proceedings pending or, to the knowledge of Westcorp, threatened
against or affecting Westcorp, 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 Westcorp, materially and adversely affect it or
its business, assets, operations or condition, financial or otherwise,
or adversely affect Westcorp's ability to perform its obligations
hereunder. Westcorp 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. Westcorp has obtained or
made all necessary consents, approvals, waivers and notifications of
creditors, lessors and other nongovernmental persons, in each case in
connection with the execution and delivery of, and the consummation of
the transactions contemplated by, this Agreement.
Section 4.07. Repurchase of Contracts upon Breach of Covenant. The
Master Servicer or the Owner Trustee shall inform the other party and the
Indenture Trustee 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. 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 the
Contracts. The Master Servicer shall pay all expenses incurred by it in
connection with its servicing activities hereunder, which expenses shall include
all out-of-pocket expenses incurred in connection with the repossession of a
Financed Vehicle and any Advanced Insurance Premium to the extent that any such
amounts are not paid or otherwise reimbursed by the related Obligor, and shall
not be entitled to reimbursement of such expenses except to the extent provided
in this Section or in Section 4.03.
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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 B (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;
(i) the amount of principal actually distributed
to each Class of Noteholders on such Distribution Date;
(ii) 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;
(iii) the Net Collections for such Distribution
Date;
(iv) 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;
(v) the Servicing Fee with respect to the
related Collection Period;
(vi) 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;
(vii) 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);
(viii) the amount set forth in clause (vii) 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;
(ix) 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;
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(x) the Aggregate Net Liquidation Losses for the
related Collection Period;
(xi) 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;
(xii) the Spread Account Balance and the Excess
Spread Amount, if any, for such Distribution Date;
(xiii) the Certificate Distributable Amount;
(xiv) the Net Chargeoff Percentage;
(xv) the sum of the Principal Balances of
Delinquents Contracts;
(xvi) the sum of the Principal Balance of
Contracts that became Defaulted Contracts during the related Collection
Period;
(xvii) the Aggregate Principal Balance at the
beginning and end of the related Collection Period;
(xviii) Repurchase Amounts included in Net
Collections for such Distribution Date;
(xix) the Overcollateralization Amount and the
amount by which the Aggregate Principal Balance exceeds the Outstanding
Amount of the Notes (after giving effect to any payments made to
Holders of the Notes on that Distribution Date);
(xx) Net Collections excluding any Advance and
Repurchase Amounts included in Net Collections for such Distribution
Date; and
(xxi) 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 or the Seller has elected to purchase pursuant to Section 9.01;
47
(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 100% of the
outstanding principal balance of and accrued and unpaid
interest was recovered on such Liquidated Contract, the amount
of the Net Liquidation Proceeds or Net Insurance Proceeds;
(iv) 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; and
(v) any other information relating to the
Contracts reasonably requested by the Owner Trustee, the Indenture
Trustee and each Rating Agency.
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 December 31, 2004, 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 (i) Certificateholder or Certificate Owner by a request in
writing to the Owner Trustee addressed to the Owner Trustee Corporate Trust
Office or (ii) Noteholder or Note Owner by a request in writing to the Indenture
Trustee addressed to the Corporate Trust Office. Upon the telephone request of
the Owner Trustee, the Indenture Trustee will promptly furnish the Owner Trustee
a list of Noteholders as of the date specified by the Owner Trustee.
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Section 4.11. Annual Independent Certified Public Accountants' Report.
On or before 90 days after the end of the first fiscal year of the Master
Servicer which ends more than three months after the Closing Date and each
fiscal year thereafter, the Master Servicer at its expense shall cause a firm of
nationally-recognized independent certified public accountants (who may also
render other services to the Master Servicer) to furnish a report to the
Indenture Trustee, the Owner Trustee 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 prohibiting disclosure of information regarding
the Obligors and the failure of the Master Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
Section 4.13. Fidelity Bond. The Master Servicer shall maintain a
fidelity bond in such form and amount as is customary for banks acting as
custodian of funds and documents in respect of mortgage loans or consumer
contracts on behalf of institutional investors.
Section 4.14. Indemnification; Third Party Claims. Subject to Section
8.02, the Master Servicer agrees to indemnify and hold the Indenture Trustee,
the Owner Trustee and the Securityholders harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and any reasonable other costs, fees and expenses that the Indenture
Trustee, the Owner Trustee, the Noteholders or the Certificateholders may
sustain because of the failure of the Master Servicer to perform its duties and
service the Contracts in compliance with the terms of this Agreement. The Master
Servicer shall immediately notify the Indenture Trustee and the Owner Trustee if
a claim is made by a third party with respect to the Contracts, assume, with the
consent of the Indenture Trustee and the Owner Trustee, the defense of any such
claim and pay all expenses in connection therewith, including counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against it or Indenture Trustee, the Owner Trustee, the Noteholders or the
Certificateholders.
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ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts.
(a) Prior to the Closing Date, the Master Servicer shall open, at
a depository institution (which may be the Indenture Trustee or the Bank), the
following accounts (the "Trust Accounts"):
(i) an account in the name of the Indenture
Trustee (the "Collection Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Securityholders;
(ii) an account in the name of the Indenture
Trustee (the "Spread Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Securityholders;
(iii) an account in the name of the Indenture
Trustee (the "Note Distribution Account") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Noteholders; and
(iv) an account in the name of the Owner Trustee
(the "Certificate Distribution Account") bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Certificateholders.
The Trust Accounts shall be Eligible Accounts and relate solely to the
Securities and to the Contracts and Eligible Investments. The Master Servicer
shall give the Indenture Trustee 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; provided, however, that funds in the Spread Account, the
Note Distribution Account and the Certificate Distribution Account may only be
invested in the RIC with the consent of Xxxxx'x. 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 Collection
Account (including the RIC Reinvestment Earnings) shall be deposited in or
credited to the Collection Account immediately upon receipt, and any
50
loss resulting from such investment shall be charged to the Collection Account.
All income or other gain from investment of monies deposited in or credited to
the Spread Account (including 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 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 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,
other than the Certificate Distribution Account, 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; provided however, that the Indenture
Trustee shall invest funds in the Certificate Distribution Account pursuant to
Section 5.01(b). 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 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(c)(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
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disposition, solely by the Indenture Trustee or a Financial
Intermediary acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a
book-entry security held through the Federal Reserve System
pursuant to federal book-entry regulations shall be delivered
in accordance with paragraph (ii) of the definition of the
term "Delivery" and shall be maintained by the Indenture
Trustee, pending maturity or disposition, through continued
book-entry registration of such Trust Account Property as
described in such paragraph; and
(D) any Trust Account Property that is an
"uncertificated security" under Article Eight of the UCC and
that is not governed by clause (C) above shall be delivered to
the Indenture Trustee in accordance with paragraph (iii) of
the definition of the term "Delivery" and shall be maintained
by the Indenture Trustee, pending maturity or disposition,
through continued registration of the Indenture Trustee's (or
its nominee's) ownership of such security.
(iii) The Master Servicer shall have the power, revocable
by the Indenture Trustee or by the Owner Trustee with the consent of
the Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of
permitting the Master Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
Section 5.02. Collections; Net Deposits.
(a) Subject to Sections 4.01, 5.02 (b) and 5.03, 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. On or prior to the last day
of each Collection Period, all collections for such Collection Period shall be
applied by the Master Servicer as
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follows: with respect to each Contract (including a Defaulted Contract),
payments by or on behalf of an Obligor shall be applied in the following order:
(a) unpaid amounts due on the Contract in a prior Collection Period; (b)
interest due on the Contract; (c) interest due on any Advanced Insurance
Premium; (d) principal due on the Contract; (e) principal due on any Advanced
Insurance Premium; (f) extension fees, if any; (g) late payment fees, if any;
and (h) 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.
(d) The Master Servicer and the Seller shall deposit or caused to
be deposited into the Collection Account the Aggregate Repurchase Amount of
Contracts purchased pursuant to Section 9.01(a).
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Section 5.05. Distributions.
(a) Subject to Section 5.05(d), on each Distribution Date, the
Master Servicer shall instruct the Indenture Trustee (based on the information
contained in the Distribution Date Statement delivered on the related Master
Servicer Report Date pursuant to Section 4.09) to make the following deposits
and distributions for receipt by the Master Servicer or deposit in the
applicable account by 11:00 a.m. (New York time), to the extent of the 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) 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, 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 their respective outstanding principal amounts;
(iv) to the Note Distribution Account, 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, the
Interest Distributable Amount for the Class B Notes, for payment of
interest on the Class B Notes;
(vi) to the Note Distribution Account, 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, the
Interest Distributable Amount for the Class C Notes, for payment of
interest on the Class C Notes;
(viii) to the Note Distribution Account, 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, the
Interest Distributable Amount for the Class D Notes, for payment of
interest on the Class D Notes;
(x) to the Note Distribution Account, an amount
equal to the sum of the Class D Undercollateralization Amount, for
payment of principal on the Notes in the priority set forth in Section
5.05(b);
(xi) to the Spread Account, the Specified Spread
Account Balance;
(xii) to the Note Distribution Account, the
Overcollateralization Distributable Amount, for payment of principal on
the Notes in the priority set forth in Section 5.05(b); and
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(xiii) to the Spread Account, any excess amounts
remaining from Available Funds after making the distributions described
in clauses (i) through (xii) of this subsection, and the Master
Servicer shall instruct the Indenture Trustee to distribute such Excess
Spread Amount pursuant to Section 5.06(c).
(b) On each Distribution Date, the Master Servicer shall instruct
the Indenture Trustee (based on the information contained in the Distribution
Date Statement 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 in 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 Distribution
Date Statement 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) Notwithstanding Section 5.02(a), 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 Sections 2.07(c) and 5.06(a) of the Indenture.
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Section 5.06. Spread Account.
(a) On or prior to the Closing Date, WFSRC4 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 Balance from the Spread
Account and distribute such amount as part of Available Funds in accordance with
Section 5.05(a).
(c) If any Class of Notes has not been paid in full on any
Distribution Date on and after its Final Scheduled Distribution Date (after
giving effect to the distribution of Available Funds on such Distribution Date),
the Master Servicer shall instruct the Indenture Trustee to distribute from
amounts on deposit in the Spread Account to the Holders of that Class of Notes,
an amount equal to the lesser of (i) the amount on deposit in the Spread Account
and (ii) the Outstanding Amount of that Class of Notes. On each Distribution
Date, the Master Servicer shall instruct the Indenture Trustee to distribute the
Excess Spread Amount, after giving effect to the distribution described in the
preceding sentence, first, to WFSRC4 until WFSRC4 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 WFSRC4 until WFSRC4 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:
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(i) the amount of such distribution allocable to
principal (stated separately for each Class of Notes);
(ii) the amount of such distribution allocable to
interest (stated separately for each Class of Notes);
(iii) the 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 for the payment of
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 amount 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 Overcollateralization Amount and the
amount by which the Aggregate Principal Balance exceeds the Outstanding
Amount of the Notes (after giving effect to any payments made to
Holders of the Notes on that Distribution Date);
(xv) the disposition amounts withdrawn from the
Spread Account, including the amounts used to increase the level of
overcollateralization to the Overcollateralization Amount, and the
Excess Spread Amount, if any, for such Distribution Date; and
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(xvi) the amount of Net Collections.
Each amount set forth pursuant to clauses (i), (ii), (iv) and (v) above shall be
expressed in the aggregate and as a dollar amount per $1,000.00 original
principal amount of a Note.
(b) Within a reasonable period of time after the end of each
calendar year, but not later than the latest date permitted by law, the
Indenture Trustee shall mail to each Person who at any time during such calendar
year shall have been a Holder of a Note a statement or statements, prepared by
the Master Servicer, which in the aggregate contain the sum of the amounts set
forth in clauses (i), (ii), (iv) and (v) of 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, the Backup Servicer 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, the Backup Servicer 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, the Indenture Trustee and the Backup Servicer 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, (ii) the Indenture Trustee, shall be due to the willful
misfeasance, bad faith or negligence of the Indenture Trustee or (iii) the
Backup Servicer, shall be due to the willful misfeasance, bad faith or
negligence of the Backup Servicer.
Indemnification under this Section shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Seller shall have made
any indemnity payments pursuant to this
59
Section and the Person to or on behalf of whom such payments are made thereafter
shall collect any of such amounts from others, such Person shall promptly repay
such amounts to 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, Westcorp and WFS each shall maintain separate corporate offices.
(b) (i) Subject to clause (b)(ii) below, the purpose of
the Seller shall be to engage in any lawful activity for which a corporation may
be organized under the Nevada Revised Statutes.
(ii) Notwithstanding clause (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 any sale and servicing agreement, indenture,
reimbursement agreement, credit support agreement, receivables purchase
agreement or underwriting agreement or similar agreements or to engage
in any lawful activity which is incidental to the activities
contemplated by any such agreement. So long as any outstanding debt of
the Seller or Offered Securities are rated by any nationally recognized
statistical rating organization, the Seller shall not issue notes or
otherwise incur debt unless (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 the rating afforded such debt or securities or
(2) such notes or borrowings (a) are fully subordinated (and
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which shall provide for payment only after payment in respect of all
outstanding rated debt 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 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 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 this Agreement, and that in its opinion may
involve it in any expense or liability. The
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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 AND WESTCORP
Section 7.01. Liability of Master Servicer and Westcorp; Indemnities.
Subject to Section 8.02, the Master Servicer and Westcorp shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Master Servicer and Westcorp under this Agreement. Such
obligations shall include the following:
(a) The Master Servicer shall indemnify, defend and hold
harmless the Issuer, the Owner Trustee, the Indenture Trustee, the
Backup Servicer 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) Westcorp shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee and the Backup
Servicer 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 any sales,
gross receipts, general corporation, tangible personal property,
privilege or license taxes (but not including any taxes asserted with
respect to, and as of the date of, the sale of the Contracts to the
Issuer or the issuance and original sale of the Securities, or asserted
with respect to ownership of the Contracts, or federal or other income
taxes arising out of distributions on the Securities) and costs and
expenses in defending against the same.
(c) The Master Servicer shall indemnify, defend and hold
harmless the Issuer, the Owner Trustee, the Indenture Trustee, the
Backup Servicer 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) Westcorp 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 any of the Seller, Westcorp 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) Westcorp 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 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 of Master Servicer and
Westcorp; Merger. Each of Westcorp and 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 Westcorp or the Master
Servicer, as applicable, has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of Westcorp or the Master
Servicer, as applicable, as an entirety can lawfully perform the obligations of
Westcorp or the Master Servicer, as applicable, 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 Westcorp or the Master Servicer, as applicable, under
this Agreement. Notice shall be sent to each Rating Agency by Westcorp or the
Master Servicer, as applicable, of any consolidation, merger or succession
pursuant to this Section.
Section 7.03. Performance of Obligations.
(a) Each of Westcorp and the Master Servicer shall punctually
perform and observe all of its obligations and agreements contained in this
Agreement.
(b) Neither Westcorp nor the Master Servicer shall 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. Not to Resign; Assignment.
(a) Each of Westcorp and 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 Westcorp or the Master Servicer, respectively,
or its financial condition, said determination to be evidenced by a resolution
of its
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board of directors to such effect accompanied by an Opinion of Counsel,
satisfactory to the Owner Trustee and the Indenture Trustee, to such effect. No
such resignation of the Master Servicer 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) the Rating
Agency Condition has been satisfied. No such resignation shall affect the
obligation of the Master Servicer to repurchase Contracts pursuant to Section
4.07. No such resignation of Westcorp as indemnifier shall become effective
unless and until a successor satisfactory to the Trustees has been appointed and
the Rating Agency Condition has been satisfied.
(b) Except as specifically permitted in this Agreement, neither
Westcorp nor the Master Servicer may assign this Agreement or any of its rights,
powers, duties or obligations hereunder; provided that each of Westcorp and 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 each of Westcorp and 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 either Westcorp or 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, Westcorp and
Others.
(a) Neither Westcorp nor the Master Servicer, as applicable, nor
any of the directors, officers, employees or agents of Westcorp or the Master
Servicer, as applicable, 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 Westcorp or the Master Servicer, as applicable, 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. Each of Westcorp and the Master Servicer and any
director, officer, employee or agent of Westcorp or the Master Servicer, as
applicable, 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) Each of Westcorp and the Master Servicer, as applicable, and
any director or officer or employee or agent of Westcorp or the Master Servicer,
as applicable, shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any
65
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.
(c) Except as provided in this Agreement, neither Westcorp nor the
Master Servicer shall be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to Westcorp's duties hereunder or
the Master Servicer's duties to service the Contracts in accordance with this
Agreement, and that in Westcorp's or the Master Servicer's, as applicable,
opinion may involve it in any expense or liability; provided, however, that each
of Westcorp and 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 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 25% of the Outstanding Amount of the
Notes of the Controlling Class, or, if the Notes have been paid in
full, by Certificateholders evidencing not less than 25% 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 by the Master Servicer
prepared based on information provided by the Master Servicer 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
67
on the Noteholders or the Certificateholders and, within 30 days after
written notice thereof shall have been given to the Master Servicer or
the Seller by the Indenture Trustee or the Owner Trustee or by the
Holders of Notes evidencing not less than 25% of the Outstanding Amount
of the Notes of the Controlling Class, or Certificateholders evidencing
not less than 25% 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 of
the Controlling 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.
68
Furthermore, the Backup Servicer shall have a right of indemnity under Articles
Six and Seven hereof in connection with the performance of its duties prior to
becoming the successor Master Servicer. As compensation therefor, the Indenture
Trustee or the Backup Servicer, as the case may be, shall be entitled to such
compensation (whether payable out of the Collection Account or otherwise) as the
Master Servicer would have been entitled to under this Agreement if no such
notice of termination shall have been given. If, however, a bankruptcy trustee
or similar official has been appointed for the Master Servicer, and no Servicer
Default other than such appointment has occurred, such trustee or official may
have the power to prevent the Indenture Trustee 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 $50,000,000 and whose regular business shall include the servicing of motor
vehicle retail installment sales contracts, as the successor to the Master
Servicer under this Agreement. Pending appointment of any such successor Master
Servicer, the Indenture Trustee shall act in such capacity as provided above. In
connection with such appointment, the Indenture Trustee may make such
arrangements for the compensation of such successor out of payments on Contracts
it and such successor shall agree. 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 of the
Controlling Class, 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.
69
Section 8.06. Backup Servicer. If a Backup Servicer Event has occurred
and continuing, the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes of the Controlling Class, by notice then given
in writing to the Master 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.
70
ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts.
(a) On any Distribution Date following the last day of a
Collection Period as of which the Aggregate Principal Balance is less than or
equal to $150,000,000, the Seller shall have the option to purchase the
remaining Contracts from the Issuer. Notice of the exercise of such option shall
be given by the Seller to the Owner Trustee 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 Xxxxx'x at the time of exercising the option pursuant to this Section,
then the Master Servicer or such Seller shall deliver to the Owner Trustee, the
Indenture Trustee and 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 such Insolvency Proceeds and any funds on
deposit in the Spread Account in accordance with Section 5.06(a) 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 of the Issuer occur, 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;
71
(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 WFSRC4 until WFSRC4 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.
72
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 and Fitch 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 holding not less than 66 2/3% of the
Outstanding Amount of the Notes and the consent of Certificateholders evidencing
not less than 66 2/3% 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), at the expense of the Seller, the Master Servicer or the
Owner Trustee on behalf of the Issuer, as the case may be, to
73
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. The prior sentence notwithstanding, WFS may change its
name to Western Financial Auto and the Seller may change its name to Western
Financial ABS 4 without prior notice to the Owner Trustee or the Indenture
Trustee, provided it shall timely comply with the requirements of Section
2.01(b).
(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) or the reincorporation of any of them in a different jurisdiction if,
as a result of such relocation or reincorporation, 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
74
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.
(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
75
filings or referring to prior Opinions of Counsel in which such details
are given or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest.
Section 10.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee and the
Indenture Trustee shall be governed by the laws of the State of New York.
Section 10.04. Notices. All demands, notices and communications under
this Agreement shall be in writing personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt in the case of:
(a) if to the Seller, to:
WFS Receivables Corporation 4
000 Xxxx Xxxx Xxxxxxx Xxxx #000,
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxxx Xxxx
(b) if to the Master Servicer, to:
WFS Financial Inc
00 Xxxxxxx,
Xxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
(c) if to Westcorp, to:
Westcorp
00 Xxxxxxx,
Xxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
(d) if to the Issuer or Owner Trustee, to:
WFS Financial 2004-1 Owner Trust
Chase Manhattan Bank USA, National Association
c/o XX Xxxxxx Xxxxx
500 Xxxxxxx Xxxxxxxxxx Rd., OPS4 /0xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Institutional Trust Services
76
(e) if to the Indenture Trustee, to:
Deutsche Bank Trust Company Americas
00 Xxxx Xxxxxx, 00xx Xxxxx
MS XXX00-0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust & Agency Services - Structured
Finance Services
(f) if to Moody's, to:
Xxxxx'x Investors Service, Inc.
ABS Monitoring Department
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(g) if to Standard & Poor's, to:
Standard & Poor's
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention of Asset Backed Surveillance Department
(h) if to Fitch, to:
Fitch Ratings
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Securities - Auto Group, 32nd Floor
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above. 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
77
the Master Servicer without the prior written consent of Holders of Notes of
each Class evidencing not less than 66 2/3% of the Outstanding Amount of Notes
of such Class and Certificateholders evidencing not less than 66 2/3% of the
aggregate Certificate Percentage Interest.
Section 10.07. Third Party Beneficiaries. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party 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.
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 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 Chase Manhattan Bank USA, National Association not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Chase Manhattan Bank USA, National Association in its
individual capacity or any beneficial owner of the Issuer have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles Six, Seven and Eight of the Trust Agreement.
Section 10.12. Limitation on Recourse Against WFSRC4. Notwithstanding
anything to the contrary contained in this Agreement, the obligations of WFSRC4
under the Basic Documents are solely the corporate obligations of WFSRC4, and
shall be payable by WFSRC4, solely as provided by the Basic Documents. WFSRC4
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 WFSRC4 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 WFSRC4
incurred in accordance with WFSRC4's certificate of incorporation and all
financing documents to which WFSRC4 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 WFSRC4
hereunder in
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excess of the liabilities that it is required to pay in accordance with the
preceding sentence shall constitute a "claim" (as defined in Section 101(5) of
the Bankruptcy Code) against it.
79
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
WFS FINANCIAL 2004-1 OWNER TRUST
By: CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee on
behalf of the Trust
By: ______________________________
Name:
Title:
WFS RECEIVABLES CORPORATION 4,
as Seller
By: ______________________________
Name:
Title:
WFS FINANCIAL INC,
as Master Servicer
By: ______________________________
Name:
Title:
Acknowledged and accepted as of the day
and year first above written:
DEUTSCHE BANK TRUST COMPANY
AMERICAS, not in its individual capacity
but solely as Indenture Trustee and Backup
Servicer
By: ______________________________________
Name:
Title:
Sale and Servicing Agreement
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
----------------- --------------------------
April 2004 0.15%
May 2004 0.30%
June 2004 0.45%
July 2004 0.60%
August 2004 0.75%
September 2004 0.90%
October 2004 1.05%
November 2004 1.20%
December 2004 1.37%
January 2005 1.54%
February 2005 1.71%
March 2005 1.88%
April 2005 2.05%
May 2005 2.22%
June 2005 2.39%
July 2005 2.56%
August 2005 2.73%
September 2005 2.90%
October 2005 3.07%
November 2005 3.24%
December 2005 3.37%
January 2006 3.50%
February 2006 3.63%
March 2006 3.76%
April 2006 3.89%
May 2006 4.02%
June 2006 4.15%
July 2006 4.28%
August 2006 4.41%
September 2006 4.54%
October 2006 4.67%
SB-1
Distribution Date Sequential Payment Trigger
----------------- --------------------------
November 2006 4.80%
December 2006 4.93%
January 2007 5.07%
February 2007 5.20%
March 2007 5.33%
April 2007 5.47%
May 2007 5.60%
June 2007 5.73%
July 2007 5.87%
August 2007 6.00%
September 2007 6.13%
October 2007 6.27%
November 2007 6.40%
December 2007 6.53%
January 2008 6.67%
February 2008 6.80%
March 2008 6.93%
April 2008 7.07%
May 2008 7.20%
June 2008 7.33%
July 2008 7.47%
August 2008 7.60%
September 2008 7.73%
October 2008 7.87%
On and after November 2008 8.00%
SB-2
SCHEDULE D
SPREAD ACCOUNT TRIGGERS
Distribution Date Spread Account Trigger
----------------- ----------------------
April 2004 0.15%
May 2004 0.30%
June 2004 0.45%
July 2004 0.60%
August 2004 0.75%
September 2004 0.90%
October 2004 1.05%
November 2004 1.20%
December 2004 1.37%
January 2005 1.54%
February 2005 1.71%
March 2005 1.88%
April 2005 2.05%
May 2005 2.22%
June 2005 2.39%
July 2005 2.56%
August 2005 2.73%
September 2005 2.90%
October 2005 3.07%
November 2005 3.24%
December 2005 3.37%
January 2006 3.50%
February 2006 3.63%
March 2006 3.75%
April 2006 3.95%
May 2006 4.15%
June 2006 4.25%
July 2006 4.25%
August 2006 4.35%
September 2006 4.45%
October 2006 4.55%
November 2006 4.65%
December 2006 4.65%
January 2007 4.75%
February 2007 4.85%
March 2007 4.95%
April 2007 4.95%
May 2007 5.05%
June 2007 5.05%
July 2007 5.15%
SB-1
Distribution Date Spread Account Trigger
----------------- ----------------------
August 2007 5.15%
September 2007 5.15%
October 2007 5.25%
November 2007 5.25%
December 2007 5.25%
January 2008 5.25%
On or after February 2008 5.35%
SB-2
EXHIBIT A
[FORM OF RIC]
A-1
EXHIBIT B
[FORM OF DISTRIBUTION DATE STATEMENT]
B-1
